"In southern California, we still have a lot of work to do,"said David B. Dillon, Kroger chairman and CEO at Tuesday's earningsconference call. "Identical sales for the third quarter whencompared to the third quarter of 2002 are down a little less than1%, considering Ralphs and Food 4 Less together. We're comparingresults to 2002 because of the disruption caused by the strike lastyear. Ralphs continues to be down, offset by increases at Food 4Less."

Regarding the outlook for recovery for these brands in southernCalifornia, Dillon said, "Kroger doesn't have any recent experiencein dealing with a strike of this magnitude or the challenges posedby the subsequent recovery. Thus recovery predictions are lessmeaningful at this point. We continue to make progress,however."

The strike, involving about 59,000 grocery workers atAlbertson's-, Safeway- and Kroger-owned stores, lasted four and ahalf months, ending early in the spring of this year. Ultimately,the employers were able to wrest concessions out of the employees,mainly in the form of higher employee contributions toward healthinsurance. Since then, the company reports, major labor contractscovering about 20,000 workers in Seattle, Cincinnati, and at Food 4Less in southern California have been ratified without a workstoppage, "as Kroger continued to make progress toward its goal oflabor cost competitiveness," said Rodney McMullen, vice chairman ofthe retailer's board.