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    Stater Bros.' 3Q Sales Significantly Higher

    COLTON, Calif. - Aggressive marketing tactics in the face of tough competition netted Stater Bros. substantial gains in its third-quarter and year-to-date periods, the chain said yesterday.

    COLTON, Calif. - Aggressive marketing tactics in the face of tough competition netted Stater Bros. substantial gains in its third-quarter and year-to-date periods, the chain said yesterday.

    Jack H. Brown, Stater Bros. Holdings, Inc. chairman, president and c.e.o., said that sales for the 13 weeks ended June 27 increased 23.24 percent to $848.0 million, compared with $688.1 million for the 13 weeks ended June 29, 2003. Total sales for the 39 weeks ended June 27 rose 39.93 percent and amounted to $2.864 billion, compared with $2.047 billion for the same period in the prior year. Like-store sales grew 17.13 percent and 36.15 percent for the 13-week and 39-week periods ended June 27, respectively.

    Stater Bros. posted a net loss for the 13-week period ended June 27 of $5.8 million after taking $25.5 million of pre-tax interest expense ($15.1 million after tax) connected to the purchase of $397.8 million of the company's 10.75 percent senior notes due August 2006, the early retirement of the $20.0 million 5.0 percent subordinated note due 2007, and the redemption of Santee Dairies notes. Net income was $769,000 for the 13 weeks ended June 29.

    Net income for the fiscal year-to-date period came to $59.1 million in 2004 vs. $7.5 million in 2003. The 2004 year-to-date results include a $13.1 million after-tax gain from a litigation settlement that transferred the remaining 50 percent ownership interest in Santee Dairies, Inc. to the company. Santee's financial information after the Feb. 6 settlement date is consolidated in Stater Bros.' results.

    In a conference call yesterday, Brown lauded his employees, whom he credited for Stater Bros.' success: "The [3Q] results...are the direct result of some of the hardest work I've seen our people do in my over 23 years here as president and c.e.o." Acknowledging the difficult financial conditions of the recent past, he continued: "The past third quarter has been a hard-fought battlefield for...Ralphs, Vons, and Albertsons as they fight to regain all the lost sales volume, and the other supermarket chains are fighting to hold on to the sales gains coming from the California labor dispute." He attributed Stater Bros.' ability to do just that to its marketing plan, "which continues to hold and to build our customer base against all forms of competition." Brown additionally cited the company's "aggressive" EDLP and advertising programs.

    Brown later spoke of various training programs at Stater Bros., including a successful initiative to teach 700 store clerks to be "certified official store receivers" who check in all vendors, and a "weeks-long" course for produce managers and assistants, referring to such measures as "a great investment in the future of our company." He additionally set out the chain's main focus: "While others are searching to invest in new experimental formats, we continue to expand and improve our existing formats and merchandising programs."

    S.v.p. and c.f.o. Phil Smith, discussing the Santee transaction, said that it would "strengthen the company by guaranteeing a continued supply of high-quality dairy products." He concluded: "This has been another extraordinary quarter, as the results show."

    Stater Bros. Holdings, Inc., the largest privately held supermarket chain in Southern California, operates 159 supermarkets through its wholly owned subsidiary, Stater Bros. Markets. According the company, its new-store program is on schedule, with four to six stores slated to open in the next year. Stater Bros. Markets owns and runs Santee Dairies, Inc.

    --Bridget Goldschmidt

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