NEW CAMPAIGN AT FRESH BRANDS

SHEBOYGAN, Wis. -- Fresh Brands here said last week it will launch a major media campaign to publicize its new "value proposition" companywide beginning Wednesday after successfully testing the program since last May.Louis Stinebaugh, president and chief operating officer, said the new program features a more competitive pricing structure on center-store merchandise combined with everyday low prices

SHEBOYGAN, Wis. -- Fresh Brands here said last week it will launch a major media campaign to publicize its new "value proposition" companywide beginning Wednesday after successfully testing the program since last May.

Louis Stinebaugh, president and chief operating officer, said the new program features a more competitive pricing structure on center-store merchandise combined with everyday low prices in general merchandise/health and beauty care and competitive pricing on perishables "that has been received very positively" by franchisees and consumers.

The company has been introducing the initiative on a market-by-market basis and tweaking it along the way and is scheduled to launch a full-scale media campaign this week consisting of television, radio, print and outdoor advertising, Stinebaugh said.

"We are confident our new pricing and marketing strategy will significantly increase our sales volumes and provide significant momentum to our corporate and franchise store performance," he said.

Fresh Brands operates 21 corporate Piggly Wiggly stores, two corporate-owned convenience stores and 79 franchised stores that operate under the Piggly Wiggly and Dick's Supermarkets banners in Wisconsin and Illinois.

Stinebaugh made his remarks in a conference call with industry analysts to discuss financial results for the third quarter and 40-week period ended Oct. 9 -- a quarter in which the company returned to profitability for the first time in four quarters, he pointed out.

Net income for the 12-week quarter dropped 52.8% to $323,000, while the company reported a loss for the year to date of $3.5 million, compared with net income of $4.3 million a year ago. Sales rose 10.5% to $154.3 million for the quarter and 14.1% to $513.8 million for the 40 weeks, with comparable-store sales for corporate and franchise stores flat for the quarter and up 3% for the year to date.

John Dahly, senior vice president and chief financial officer, said earnings were driven "in large part by putting behind us the charges for six supermarkets that were closed earlier this year and by improvements in wholesale gross margins," which he said dropped during the first half of the year while the company was promotions-driven.

According to Dahly, two factors had a negative impact on third-quarter earnings: the opening of three new corporate stores over the last 12 months, "which rang up good sales but suffered losses that will disappear as the stores mature and realize the full benefits of the value program," he said; and costs associated with the opening of a new bakery-delicatessen facility in Platteville, Wis., and the subletting of the previous facility.

3RD-QUARTER RESULTS

Qtr Ended: 10/9/04; 10/4/03

Sales: $154.3 million; $139.6 million

Change: +10.5%

Comp-store: 0%

Net Income: $323,000; $684,000

Change: -52.8%

Inc/Share: 7 cents; 14 cents

40 Weeks: 2004; 2003

Sales: $513.8 million; $450.5 million

Change: +14.1%

Comp-store: +3.0%

Net Income: ($3.5 million); $4.3 million

Inc/Share: (72 cents); 84 cents