Regional Supermarket chain Marsh supermarkets has announced a second quarter loss and said that it is exploring its strategic alternatives, including looking at a possible sale of the company.

The company reported a net loss of US$3.4m for the second quarter ended 15 October, compared to net income of US$1.3m for the same period last year.  It attributed the losses to lower contribution from comparable stores (stores open during both quarters), startup and operating losses of new stores, and higher general and administrative expenses.

Total revenues for the quarter increased to US$549.6m from US$524.9m for the prior year quarter.  Sales in comparable supermarkets and convenience stores increased 3.6% in the second quarter of 2006 from the same period in 2005, but comparable store merchandise sales, which exclude gasoline sales, declined 0.7%.

“We are clearly disappointed with the loss reported for the quarter,” said Don E Marsh, chairman and chief executive officer.  “The positive developments of recording our sixth consecutive quarter of increases in sales from comparable stores and the new credit facility were outweighed by a number of negative factors.”

The company also announced that it had retained Merrill Lynch & Co to explore strategic alternatives for the enhancement of shareholder value, including a possible sale of the company.  The company has authorized Merrill Lynch to contact a limited number of prospective strategic and financial purchasers and provide such information as determined to be necessary and/or appropriate.  However, there can be no assurance that the company will consummate a sale or other strategic alternative. 

The company said that it does not expect to update its progress or disclose developments with respect to the exploration of strategic alternatives unless and until the board of directors has approved a definitive transaction.

“During the past several months, management has been working diligently to reduce costs during a time of increasing competition, and while we believe our initiatives will improve profitability, our responsibility is to consider the best interests of our employees, the communities we serve and, above all, our shareholders,” Marsh said.  “One of the strategic alternatives that we believe should be considered would be the possible sale of the company to the right party.  For this reason, we have authorized Merrill Lynch to investigate the potential of such a transaction as an integral part of our considerations.”