MARSH TO KEEP GROWING THROUGH ACQUISITIONS

INDIANAPOLIS -- Marsh Supermarkets here plans to remain independent while growing through in-market acquisitions, Don E. Marsh, chairman and chief executive officer, said here last week.Speaking with securities analysts in a conference call following release of the chain's first-quarter financial results, Marsh said, "Our objective is to stay independent -- because we're better off that way -- and

INDIANAPOLIS -- Marsh Supermarkets here plans to remain independent while growing through in-market acquisitions, Don E. Marsh, chairman and chief executive officer, said here last week.

Speaking with securities analysts in a conference call following release of the chain's first-quarter financial results, Marsh said, "Our objective is to stay independent -- because we're better off that way -- and to buy [smaller local] stores like O'Malia and Ross.

"We can grow our business that way, and the stock will eventually reflect what it should reflect from the tack we're taking."

Marsh said the company is not discouraged by the amount of new competition coming into its marketplace, which he said will include 16 new supercenter openings this year, including six Wal-Marts, five Super Kmarts and five Super Targets.

"Our comparable store sales are extraordinarily strong, our market-share position is growing and we're looking for a good year," Marsh declared. "Despite the 16 new supercenters, we're still looking for good results. That may seem hard to imagine, but that's what's happening."

For the 12-week first quarter ended June 23, sales and other revenues rose 0.2% to $437.7 million, comparable store sales increased 2.7% and net income climbed 12.5% to $3.9 million.

Marsh said the company's comparable store-sales growth "demonstrates our ability to succeed in a highly competitive retail market. We are aggressively pursuing potential new customers to improve our returns in our wholesale business."

He also said he expects comps to continue to improve. "The way we're going [in the current quarter], we expect that level to remain up," he noted.

The company said sales in its retail businesses jumped $33 million, or 9.7%, during the quarter, while wholesale distribution sales fell $32 million, following the loss of two large customers.

Retail businesses include 101 supermarkets (67 Marsh, 32 LoBill Foods and two Saving*$ limited assortment stores) and 188 Village Pantry convenience stores in central Indiana and western Ohio, plus a catering business and a floral business. Marsh also operates Convenience Store Distributing Co., a wholesaler that services 960 non-affiliated stores in seven states.

Marsh told analysts one of the keys to the company's strong financial results was heavy promotional spending during the quarter. "We had a huge promotional emphasis in the first quarter to maintain and build our market share, and our results were solid," he said. "We remain customer-driven and we expect continued success."

He said the closing of 11 Cub Food Stores here is unlikely to have much impact on Marsh's results. "Those stores represent $4 million to $5 million a week, and while we're getting some benefit, the Cub shopper is not our profile customer, and Meijer and the new supercenters will probably absorb most of that volume."

Marsh said the acquisition of eight O'Malia Food Markets should be completed by the end of the month.

"O'Malia's is perfect for us. We operate 55,000- to 65,000-square-foot fresh stores, and they operate perfect smaller stores of 25,000 to 30,000 square feet with very personalized service and a hard-core customer base."