Giant Food Inc., losing money for the first time in more than a decade, disclosed yesterday that it has begun raising prices on some supermarket items that were cut when it started the "warehouse price" war with other food chain stores last April.
Safeway Stores Inc. quickly acknowledged after Giant's disclosure that it is increasing prices in its markets as well, signaling at least a truce, if not peace, in the multimillion-dollar grocery store pricing battle here.
Neither chain would say last night when the price rises began, how great they are or precisely what items are affected, and spokesmen for both insisted their much-heralded, though ill-defined, "warehouse prices" are still in effect.
"We're not abandoning warehouse prices," said Giant's Barry Scheer. "What we are doing is adjusting some of our prices to assure a fair return to our stockholders."
"We are raising some, too," said Ernest G. Moore, spokesman for the Baltimore-Washington regional office of Safeway Stores, Inc.
Profits for the Landover-based Giant company plunged 94.7 percent in its first quarter this year, largely because of the price war, and the company says that for the second quarter it will report its first loss in more than 10 years.
How much Giant lost in the three months ending Aug. 14 won't be made public for a few more days, but Giant executives must have a pretty good idea already. A month ago, Giant made an unexpected advance disclosure that it "anticipated a loss" for the quarter.
Safeway's Moore said "profits have been depressed" for local stores of the California chain. "We just can't keep going on and on with a bad profit picture," he added.
The new price increases by the area's two biggest supermarket chains showed up in the latest Cost of Living Index figures released yesterday by the Department of Labor.
After dropping by almost 6 percent over the last three months, Washington area supermarket prices started to edge back upward last month, the figures showed. The latest local consumer price index showed that grocery store prices increased 0.4 percent in July over the previous month.
When Giant announced its lower "warehouse" prices on 1,500 items on April 5, the company said it could afford the cuts because it would save money by no longer marking prices on individual pieces of merchandise.
Safeway cut its prices two days after Giant did and also stopped marking prices on items in stores equipped with computer checkout registers.
Consumer groups complained that the warehouse pricing program was an attempt by Giant to divert attention from the fact that it had stopped marking prices on individual items, a move consumer activists charged makes it difficult for shoppers to compare prices between brands.
When the program was started, Giant officials said they expected to make a smaller profit on each sale, but to increase business to such an extent that total profits would rise.
Yesterday Scheer said Giant had "made a decision to attempt to return to our normal profit margin of 1 to 1.5 percent" of sales. He insisted, however, that "our prices are lower now than they were before we began warehouse pricing."
Both Giant and Safeway have acknowledged that the "warehouse pricing" slogan was meant to help the chains compete with low-cost, no-frills food outlets such as the Basics stores run by Grand Union Co.
During the five-month price war, both Giant and Safeway have lured millions of dollars of business away from their competitors. Giant's share of the local supermarket business has jumped from 33 percent to 37 percent, and Safeway's share increased from 27.8 percent to more than 28 percent, according to industry estimates.
Both Giant and Safeway said their recent prices increases largely reflected higher wholesale costs and bigger operating expenses. The Department of Agriculture predicted last month that food prices would increase significantly this fall.
Neither chain would say what foods are going up the most, but Safeway's Moore gave one example: "Our private label ice cream. We were losing money at the price we were selling it at. We can't keep doing that," he said.