Aided by the acquisition of the Haag Drug Co. in Indiana, Peoples Drug Stores posted a 26 percent increase in earnings for the first quarter of its fiscal year.

Peoples' profits climbed to $3.5 million (95 cents a share) from 2.8 million (77 cents) in the same period a year ago, the Washington-based drug store chain reported yesterday.

Sales for the 16 weeks ended Jan. 19 were up 18 percent, to $169.4 million from $143.5 million.

Peoples' executives said earnings increased by 19 percent as a result of internal operating improvements, including the chain's "total health care" marketing strategy. The remainder of the gains came from acquisition of Haag. Because Peoples completed purchase of 68 percent of Haag at the end of December, it was able to include in its earnings that share of Haag's earnings for January.

People's fiscal calender begins with a quarter of 16 weeks -- including the Christmas season, most profitable in retailing -- and finishes with three 12-week quarters, the company noted. Therefore first-quarter sales and profits don't necessarily predict results for the year.

Easco Corp. of Balitmore reported its profits declined last year for the first time in a decade and blamed the downturn on lower-than-expected sales to its bigger customer, Sears, Orebuck and Co.

Easco makes mechanics' tools for Sears and also manufactures aluminum products, a business that turned in record sales and profits for the year ended Dec. 31.

But because Sears' orders of Easco tools were down, the company's earnings fell to $8.18 million ($2.30 a share) from $10.4 million ($3.18). Total sales for the year increased to $351 million from $317 million.

Easco said its tool-making profits fell from $10.6 million to$5.6 million but increases in earnings from other operations made up about half of the decline.