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Smart & Final Reports 3.2% Increase in Third-quarter Same-store Sales

LOS ANGELES - Smart & Final Inc., operators of warehouse-style stores and two foodservice distribution companies, on Monday reported earnings of $0.18 per diluted share for the 16-week third quarter ended Oct. 7, 2001, compared to earnings of $0.14 per diluted share in the third quarter of the prior year, an increase of 29% in per share results. The results represent the tenth consecutive quarter of increased earnings since the company launched a restructuring program in early 1999.

Net income was $5.3 million in the current-year quarter, an improvement of 28% from the $4.1 million in the prior-year quarter. Year-to-year, store operating earnings continued the strong performance of the first two quarters, offsetting slightly weaker results in foodservice operations following the September 11 events.

Earnings from store operations increased due to strong sales growth and improved gross margins resulting from the company's successful marketing and national purchasing program, partially offset by increased electricity costs, store labor expense and marketing programs.

The foodservice segment reflected the effects of lower sales trends in the weeks following the September 11 events. These trends offset improvement in both sales and expense rates which had been achieved earlier in the third quarter.

In the third quarter, total company sales increased 3.7% from the prior-year quarter to $609 million. Store sales increased 4.9%, with comparable store sales up 3.2% for the quarter. Foodservice distribution sales decreased overall by 1.0% to $117 million in the quarter.

Ross Roeder, chairman and CEO, stated: "We're pleased to again report improved earnings despite increasingly challenging times. In the company's core store operations, sales increases were strong, particularly in light of the company's exceptional sales growth in the prior-year quarter.

"Gross margins in the third quarter continue to reflect the success of our national purchasing efforts and improving distribution efficiencies. In the stores segment, although our sales were initially affected by the events of September 11, in the succeeding weeks we've seen a slow recovery to more normal sales trends."

Roeder also noted: "In our foodservice segment, like all broadline distributors, we've been impacted by the decreased travel patterns and generally slowing economy. The effect has been more pronounced in our Florida operating unit, although year-to-year sales growth in Florida has been strong. In our Northern California operations, our restructuring activities are largely complete and sales trends have been positively impacted by the addition of a major customer."

Smart & Final operates 228 stores in California, Oregon, Washington, Florida, Arizona, Nevada, Idaho and northern Mexico, as well as two foodservice distribution companies in Northern California and Florida.
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