The Virginian-Pilot
                            THE VIRGINIAN-PILOT  
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Saturday, April 13, 1996               TAG: 9604130340
SECTION: BUSINESS                 PAGE: D1   EDITION: FINAL 
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 
DATELINE: NORFOLK                            LENGTH: Short :   40 lines

FARM FRESH CUTS LOSSES; BUT SALES ARE DOWN

Farm Fresh Inc., the Norfolk-based supermarket chain, said Friday it cut its losses in the first quarter of 1996. But sales declined as the company spun off most of its Richmond-area grocery stores.

Farm Fresh is gearing up for fights with Hannaford Brothers Co., which recently opened two local supermarkets, and Harris Teeter Inc., which soon plans to open several stores in Hampton Roads.

``The first quarter was an extremely busy time for us, as we had three major remodeling projects underway in preparation for new competitors in the Hampton Roads market,'' said Michael E. Julian, Farm Fresh's chairman and chief executive officer.

The company will soon finish renovations at five stores, Julian said.

Farm Fresh operates 41 supermarkets and 11 warehouse-style grocery stores in Virginia and northeastern North Carolina.

For the first quarter ended March 23, Farm Fresh lost $3.2 million. That compares to a $3.7 million loss in the same three-month period a year ago.

Sales, meantime, dropped 14.1 percent to $179 million in the first quarter from $208.2 million in the year-earlier period. Julian attributed the decline to the spinoff of its regular grocery stores in the Richmond area.

Farm Fresh sold 10 Richmond-area properties, including supermarkets under The Grocery Store name, and several sites, to Scarborough, Maine-based Hannaford. The company kept its Rack & Sack warehouse stores in Richmond.

The quarter's same-store sales, which represent revenues at stores open at least a year, climbed 3.4 percent. Cash flow - earnings before interest, taxes, depreciation and other expenses - fell 10 percent to $9 million. But cash flow as a percentage of sales increased to 5.04 percent from 4.81 percent. by CNB