Vons Records a Profit for Third Consecutive Quarter

The Vons Cos. supermarket chain, continuing its financial recovery, said Thursday that it earned $15.9 million in its second quarter on sales that inched up 2.1% to $1.22 billion.

Vons, which has posted profits for three quarters in a row, lost $8.8 million in the second quarter last year. The company suffered losses totaling $54 million after acquiring 162 former Safeway stores in Southern California in August, 1988.

Vons’ stock was up $1 a share on the news, closing at $22.875 on the New York Stock Exchange.

By supermarket industry standards, Vons’ profit remains below average. Its operating income was 3.35% of sales during the second quarter, compared to an industry average of roughly 3.5%.

But analyst Sarah A. Stack of the investment firm Bateman Eichler, Hill Richards predicted that Vons will quickly boost its profit margin now that it has meshed the former Safeway stores with the rest of its organization. The company is also working on cutting its borrowing costs by paying off debt from the Safeway deal.

Vons said its net income for the 12 weeks ended June 17 was boosted by $5.5 million in tax benefits from its previous operating losses.

Profit margin was increased by, among other things, improved product buying and the addition of new departments in remodeled stores. The company also said that it held down the costs of its workers’ compensation and general liability insurance, and that it saved money through better labor scheduling.

Sales gains were held back partly by store closings. Vons, the biggest supermarket chain in Southern California, with a 25% market share, now operates 326 stores, down from 340 a year ago. Sales at stores open over the past year climbed 3.2%.

Vons, based in Arcadia, operates Pavilions, Pavilions Place, Tianguis and Vons stores. It also operates the Jerseymaid dairies and ice cream plant.