Giant Food Inc. is making money again but has lowered its profit target in the wake of the supermarket price war, company executives told their stockholders yesterday.

"We are confident the second half of the year will see improvement" over the loss Giant suffered this summer, Chairman Isadore Cohen promised at the company's annual meeting.

Financial Vice President David B. Sykes said Giant "will be profitable in the third quarter now under way , and we will also be profitable in the fourth quarter."

Sykes declined to predict how much money Washington's biggest supermarket chain will earn, but said Giant has set a new goal of earning a profit of 1 1/4 percent of sales, a 6 percent return on its assets and a 15 to 16 percent profit on stockholders' equity in the company.

The 1 1/4 percent profit-margin target, Sykes conceded, is "lower than the five-year average" profit for the company, which historically has ranked in the upper half of the food industry in profitability.

Giant's lower target "reflects the reality of our industry" because competition is getting tougher and increasing efficiency "is getting increasingly difficult," Sykes added.

If Giant can meet the targets set by Sykes, the supermarket chain will earn between $18 million and $20 million profit on annual sales of $1.5 billion to $1.7 billion.

Sykes and Cohen said Giant does not expect to recapture the money it lost during the four-month food-price war that Giant started by announcing massive price cuts last spring.

"We could not without a miracle -- and miracles do not happen in our business -- make up what was lost in the last quarter, Sykes said.

He said that if the company can hit its profit target, the earnings "will permit Giant to expand and return an adequate amount to our shareholders in dividends and stock appreciation and will allow us to remain the price leader in our markets in Washington and Baltimore."

Interviewed after the meeting, Cohen said he has no regrets about starting the price war, which he called "the most intense competitive battle our industry has ever seen.

"We were only responding to the competition," Cohen added. "I can assure you Giant will maintain a highly competitive position in our marketplace."

Cohen contended the company has accomplished its goal of sharply increasing sales. Giant's volume is up 15.6 percent since before the price war started, Cohen said, and customer counts, sales per customer and tonnage of food sold have all increased.

Cohen said Giant's earnings will begin to benefit later this year from the decision made at the time the price war started to stop marking prices on individual items. Despite some complaints about the end of item prices, he added, "consumers have accepted it."

When the employes who formerly marked prices are shifted to new jobs as required by union contracts, Giant's labor costs could drop by 0.5 percent or 1 percent of sales, Cohen said.