AMERICAN STORES CO /NEW/, S-3/A, 1997-03-10

AMERICAN STORES CO /NEW/
S-3/A, 1997-03-10
GROCERY STORES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 1997

REGISTRATION NO. 333-22701
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------
AMERICAN STORES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 87-0207226
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

709 EAST SOUTH TEMPLE, SALT LAKE CITY, UTAH 84102
801-539-0112
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

KATHLEEN E. MCDERMOTT, ESQ.
CHIEF LEGAL OFFICER
AND ASSISTANT SECRETARY
AMERICAN STORES COMPANY
709 EAST SOUTH TEMPLE
SALT LAKE CITY, UTAH 84102
TELEPHONE: 801-539-0112
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

---------------

COPIES TO:

ERIC S. ROBINSON PAUL H. WILSON, JR. WINTHROP B. CONRAD, JR.
WACHTELL, LIPTON, ROSEN DEBEVOISE & PLIMPTON DAVIS POLK & WARDWELL
& KATZ 875 THIRD AVENUE 450 LEXINGTON AVENUE
51 WEST 52ND STREET NEW YORK, NEW YORK NEW YORK, NEW YORK 10017
NEW YORK, NEW YORK 10022 TELEPHONE: 212-450-4000
10019 TELEPHONE: 212-909-6000
TELEPHONE: 212-403-1000

---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(2)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$1.00 per share(3)... 17,719,096 shares $44.9375 $796,251,876.50 $241,289(4)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) Includes 2,311,186 shares to cover over-allotments, if any.

(2) Estimated solely for the purpose of determining the amount of the
registration fee pursuant to Rule 457(c) on the basis of the average high
and low prices reported on the New York Stock Exchange Composite Tape on
March 3, 1997.

(3) Also being registered are the associated Preferred Share Purchase Rights.

(4) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: (i) one to be
used in connection with an offering in the United States (the "U.S.
Prospectus") and (ii) the other to be used in connection with a concurrent
offering outside of the United States (the "International Prospectus"). The
U.S. Prospectus and the International Prospectus are identical in all respects
except for the following pages of the International Prospectus which are
included herein after the final page of the U.S. Prospectus and are each
labeled "Alternate Page for International Prospectus": (i) the outside front
cover page, (ii) the inside front cover page, (iii) the outside back cover
page, (iv) pages 31 through 34 (replacing page 31 in the U.S. Prospectus) and
(v) pages U-1 through U-3. Final forms of each of the Prospectuses will be
filed with the Securities and Exchange Commission under Rule 424(b).

1
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED MARCH 7, 1997

15,407,910 SHARES
[LOGO] AMERICAN STORES COMPANY
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
----------

Of the 15,407,910 shares of Common Stock offered, 12,326,330 shares are being
offered hereby in the United States and 3,081,580 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and the aggregate underwriting discount per share will be
identical for both Offerings. See "Underwriting".

All of the shares of Common Stock offered are being sold by the Selling
Stockholders named herein, other than shares, if any, sold in connection with
the exercise by the Underwriters of the over-allotment options, which will be
sold by the Company. The Selling Stockholders consist of members of the family
of L.S. Skaggs, the former chairman and a current director of the Company,
certain charitable trusts and foundations and certain trusts created for the
benefit of members of the Skaggs family. The Offerings are conditioned upon the
Company's repurchase of 12,222,222 shares of Common Stock from the Selling
Stockholders at $45 per share, and all such transactions are expected to be
consummated simultaneously. After the Offerings and the Repurchase, the Selling
Stockholders will beneficially own an aggregate of less than one percent of the
outstanding shares of Common Stock. See "Selling Stockholders". The Company
will not receive any of the proceeds from the sale of the shares offered
hereby, other than proceeds from the sale of shares, if any, sold in connection
with the exercise by the Underwriters of the over-allotment options.

The last reported sale price of the Common Stock, which is listed under the
symbol "ASC" on the New York Stock Exchange, the Chicago Stock Exchange, the
Pacific Stock Exchange and the Philadelphia Stock Exchange, was $45 per share
on the New York Stock Exchange on March 6, 1997. See "Price Range of Common
Stock and Dividend Policy".

----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

----------

(2) Estimated expenses of $675,000 are payable by the Company. In addition, the
Company has agreed to pay part or all of the underwriting discount to the
extent the net proceeds to the Selling Stockholders would otherwise be less
than $45 per share. See "Selling Stockholders--Selling Stockholders'
Agreements".

(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 1,848,949 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Company has granted the
International Underwriters a similar option with respect to an additional
462,237 shares as part of the concurrent international offering. If such
options are exercised in full, the total initial public offering price,
underwriting discount, proceeds to Selling Stockholders and proceeds to
Company will be $ , $ , $ and $ , respectively. See
"Underwriting".

----------

Goldman, Sachs & Co. is acting as book running lead manager for the
Offerings. Goldman, Sachs & Co. and J.P. Morgan & Co. are acting as joint lead
managers. The shares offered hereby are offered severally by the U.S.
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that certificates for the shares will be ready for delivery in New
York, New York, on or about , 1997 against payment therefor in
immediately available funds.
GOLDMAN, SACHS & CO. J.P. MORGAN & CO.
Joint Lead Managers

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
----------

The date of this Prospectus is , 1997.
<PAGE>

[MAP DEPICTING STORE LOCATIONS, LOGOS OF STORE
OPERATING NAMES]

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661, Suite 1400; and 7 World Trade
Center, New York, New York 10048; or from the Commission's worldwide web site
at http://www.sec.gov. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy statements
and other information are also available for inspection and copying at the
offices of each of the following exchanges on which the Company's Common Stock
is listed: The New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005; the Chicago Stock Exchange, Inc., 440 South LaSalle Street,
Chicago, Illinois 60605; the Pacific Stock Exchange, Inc., 301 Pine Street,
San Francisco, California 94104; and the Philadelphia Stock Exchange, Inc.,
1900 Market Street, Philadelphia, Pennsylvania 19103.

The Company has filed with the Commission a Registration Statement (of which
this Prospectus is a part) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference and the exhibits and schedules thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
Registration Statement, including the exhibits filed as part thereof. The
Registration Statement and the exhibits thereto may be inspected without
charge at the office of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 and copies thereof may be obtained from the Commission at
prescribed rates.

CAUTIONARY NOTE: This Prospectus and certain of the documents incorporated
herein by reference contain certain forward-looking statements about the
future performance of the Company which are based on management's assumptions
and beliefs in light of the information currently available to it. These
forward-looking statements are subject to uncertainties and other factors that
could cause actual results to differ materially from such statements
including, but not limited to: competitive practices and pricing in the food
and drug industries generally and particularly in the Company's principal
markets; the ability of the Company to implement the Company's Delta
initiatives in accordance with the currently contemplated schedule and budget;
changes in the financial markets which may affect the Company's cost of
capital and the ability of the Company to access the public debt and equity
markets to refinance indebtedness and fund the Company's capital expenditure
program on satisfactory terms; supply or quality control problems with the
Company's vendors; and changes in economic conditions which affect the buying
patterns of the Company's customers.

3
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by the Company (File No. 1-5392)
with the Commission pursuant to the Exchange Act are incorporated herein by
reference:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
February 3, 1996, which incorporates by reference certain portions of (a)
the Company's 1995 Annual Report to Stockholders and (b) the Company's
proxy statement for the 1996 Annual Meeting of Stockholders;

2. The Company's Quarterly Reports on Form 10-Q for each of the thirteen
week periods ended May 4, 1996, August 3, 1996 and November 2, 1996;

3. The Company's Current Reports on Form 8-K dated July 2, 1996,
September 23, 1996 and February 21, 1997; and

4. Amendment No. 5 to the Company's Registration Statement on Form 8-A,
Commission File No. 1-5392, filed with the Commission on February 25, 1997,
in which there is described the terms, rights and provisions applicable to
the Company's Preferred Share Purchase Rights, and any similar report or
amendment filed subsequently for the purpose of updating such description.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement as modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any or all of the documents which have
been or may be incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to American
Stores Company, 709 East South Temple, Salt Lake City, Utah 84102, P.O. Box
27447, Salt Lake City, Utah 84127-0447, Attention: Investor Relations
(telephone: 801-539-0112).

4
<PAGE>

THE COMPANY

American Stores Company is one of the nation's leading food and drug
retailers with annual sales in its fiscal year ended February 1, 1997 of $18.7
billion. The Company is principally engaged in a single industry segment, the
retail sale of food and drug merchandise. The Company's principal food
operations are Acme Markets, Jewel Food Stores, Lucky Stores Northern
California Division, Lucky Stores Southern California Division and Jewel Osco
Southwest. The Company's drug stores operate under the Osco Drug and Sav-on
names. As of February 1, 1997, the Company operated 1,695 stores in 27 states,
including 166 combination stores which are jointly operated by the Company's
food and drug store operations and are each counted as two separate stores.
The Company's principal executive offices are located at 709 East South
Temple, Salt Lake City, Utah 84102 (telephone: 801-539-0112). References to
the "Company" in this Prospectus include American Stores Company and its
subsidiaries unless the context otherwise requires.

In 1993, the Company made a strategic decision to move from a holding
company orientation to an operating company approach to take advantage of the
size and strength of its operations. Key aspects of the Company's strategy and
business strengths are:

STRONG MARKET POSITIONS

The Company's food and drug store operations hold leading market positions,
generally number one or two, in each of their core market areas. The Company
works to maintain and expand its strong market positions by significantly
investing in core market areas.

MAINTAIN A MODERN STORE BASE

Over the last several years, the Company has significantly increased its
capital spending to improve and expand its store base. Capital spending grew
from $565 million in 1994 to $801 million in 1995, and to $1 billion in 1996.
New and replacement stores are an increasingly important focus of the capital
spending program, accounting for 34% of capital spending in 1994, 45% in 1995,
and 57% in 1996, and are expected to account for over 50% of capital spending
in 1997. The Company expects to continue to make significant investments in
its store base. In 1997, the Company plans to spend approximately $1 billion
for capital expenditures. The Company plans to open over 100 new and
replacement stores (including 20 jointly operated combination stores which are
each counted as two separate stores) and to remodel approximately 100 stores
in 1997.

EMPHASIZE COMPETITIVE FORMATS

The type and mix of store formats must keep pace with the constant changes
in customers' needs and tastes. The Company believes that the success of
individual food and drug stores is enhanced when they are paired together in a
combination store that maintains the identity and full selection of each. The
Company also believes that having both combination food and drug stores and
stand-alone drug stores in the same market better enables it to meet customer
needs. New stores currently being developed are combination food and drug
stores of approximately 65,000 square feet and stand-alone drug stores of
approximately 16,500 square feet. Currently, the Company operates 233
combination stores (including 166 combination stores jointly operated by the
Company's food and drug operations) and plans to open an additional 32
combination stores in 1997 (including 20 jointly operated combination stores).

DELTA INITIATIVES

Delta is a series of initiatives that is transforming the Company from seven
regional, autonomous business units to a single centrally focused operating
company. Delta seeks to build on the size of the Company and develop common
business processes and systems to best manage growth for the future. Following
completion of all of the Delta initiatives, the Company expects to be able to
buy products and move them through the supply chain more quickly, efficiently
and cost-effectively. The information gathered from the common systems and
processes will also assist the Company's marketing and merchandising programs
which are designed to enhance sales and margin growth.

5
<PAGE>

RECENT DEVELOPMENTS

1996 FOURTH QUARTER AND FISCAL YEAR RESULTS

On March 4, 1997, the Company announced 1996 fourth quarter earnings of $.85
per share before special charges compared to $.83 per share in the fourth
quarter of 1995. The 1996 fourth quarter was 13 weeks compared to 14 weeks in
the 1995 fourth quarter. On February 3, 1997, the Company announced special
charges aggregating approximately $100 million pre-tax, or $.41 per share
after-tax, taken in the fourth quarter of 1996. These charges related largely
to a write off of the book value of existing assets related to the
implementation of the Delta initiatives, including the consolidation of four
general merchandise warehouses as well as the Company's administrative
offices, which are currently in progress and are expected to be completed
within the 1997 fiscal year. Reported fourth quarter 1996 earnings after the
special charges were $.44 per share.

Before the special charges, earnings were $2.38 per share in 1996 compared
to $2.16 per share in 1995. Reported earnings after the special charges for
the 1996 fiscal year were $1.97 per share. Fiscal year 1996 had 52 weeks while
fiscal year 1995 had 53 weeks.

Total sales in the fourth quarter were $4.9 billion, compared with $5.1
billion in the prior year. Sales for the quarter without the impact of the
extra week in 1995 increased 3.6%. For the year, total sales were $18.7
billion, compared with $18.3 billion in the prior year. Comparable store sales
were up 2.3% for the quarter and up 3.3% for the entire fiscal year.

Operating profit in the fourth quarter of 1996 before special charges
increased 5.1% to $265.2 million (5.4% of sales) compared with $252.3 million
(5.0% of sales) in the prior year. Of the $100 million in special charges,
special charges affecting operating profit were $25.5 million and were not
reported as components of either food store operations or drug store
operations. An additional $74.5 million of special charges were classified as
other non-operating expense. For the year, operating profit before special
charges increased 11.4% to $787.2 million (4.2% of sales) in 1996 compared
with $706.8 million (3.9% of sales) in 1995. The LIFO charge for 1996 was
$11.4 million compared to $12.8 million in 1995.

Operating profit in the fourth quarter for the food store operations was
5.1% of sales compared with 4.6% of sales in the comparable period of the
prior year. The higher operating profit percentage was attributable primarily
to better product mix, lower product costs, benefits from centralized
procurement and lower advertising expenses.

Operating profit in the fourth quarter at the Company's drug store
operations increased to 6.4% of sales from 6.1% of sales in the comparable
period of the prior year. Lower operating expenses were achieved despite the
added expense associated with more store openings when compared to 1995. A
total of 45 drug stores were opened in the fourth quarter compared with 30 in
the prior year fourth quarter.

Interest expense increased to $46.1 million for the quarter from $42.1
million in the comparable period of the prior year due to increased debt
levels. Outstanding debt totaled $2.7 billion, and the ratio of total debt to
total capitalization was 51.4%, at the end of fiscal 1996, up from 48.8% at
the end of fiscal 1995. The increase in debt is primarily attributable to the
Company's capital expenditure program as well as stock repurchases made
earlier in the year.

Earnings before interest, income taxes, depreciation and amortization, LIFO
charges, and special charges ("FIFO EBITDA") as a percent of sales was 7.4% in
the fourth quarter compared with 6.7% in the comparable period of the prior
year. For the year, total FIFO EBITDA was $1.2 billion before special charges
or 6.6% of sales compared with $1.1 billion or 6.2% of sales in 1995.

6
<PAGE>

Capital expenditures totaled $324.6 million in the fourth quarter and $1.0
billion for the year. The Company anticipates total 1997 capital expenditures
will also be approximately $1.0 billion.

During the fourth quarter of 1996, the Company opened 58 new stores,
completed 14 remodels and closed 24 stores. For the year, the Company opened
or acquired 122 new stores, completed 94 remodels and closed 77 stores. Of the
122 total new stores for the year, 23 jointly operated food and drug
combination stores are each counted as two stores. Total retail square footage
increased by 3.8 percent for the year.

In anticipation of the expiration of the 1992 Key Executive Stock Purchase
Incentive Plan, the Board of Directors recently approved a new stock-based
management incentive program. The new program will continue to link executive
incentive compensation to stockholder return. The program involves the grant
of market-priced stock options that would ordinarily begin to vest on the
fifth anniversary of the grant date but which will vest on an accelerated
basis if stock ownership requirements are satisfied and the Company achieves
annual performance goals. A total of approximately 3.1 million options were
granted to 46 senior officers under the program on February 24, 1997 with an
exercise price of $45 per share. The Compensation and Stock Option Committee
intends to grant approximately 1.2 million additional options to the same 46
officers, and to grant approximately 2.2 million options to 113 other officers
of the Company, if a new stock plan incentive is approved by the Company's
stockholders at the 1997 annual stockholders' meeting.

----------------

The selected consolidated financial data set forth in the table below should
be read in conjunction with the Company's consolidated financial statements
and notes thereto incorporated by reference in this Prospectus. The selected
consolidated financial data for the 14 and 13 weeks ended February 3, 1996 and
February 1, 1997, respectively, have been derived from the Company's unaudited
financial statements and contain all adjustments that are of a normal and
recurring nature necessary to present fairly the financial position and
results of operations for such periods. The selected consolidated financial
data for the 53 weeks ended February 3, 1996 (other than the information under
"Income Statement" which is derived from the Company's consolidated financial
statements which have been audited by Ernst & Young LLP, independent auditors)
and the 52 weeks ended February 1, 1997 have been derived from the Company's
unaudited financial statements.

7
<PAGE>

<TABLE>
<CAPTION>
14 WEEKS 13 WEEKS 53 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
FEBRUARY 3, FEBRUARY 1, FEBRUARY 3, FEBRUARY 1,
1996 1997(1) 1996 1997(1)
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT:
Sales.................. $5,090,584 $4,909,673 $18,308,894 $18,678,129
Cost of merchandise
sold, including
warehousing and
transportation
expenses(2)........... (3,757,281) (3,583,165) (13,558,690) (13,713,151)
---------- ---------- ----------- -----------
Gross profit........... 1,333,303 1,326,508 4,750,204 4,964,978
Operating and
administrative
expenses(2)........... (1,080,965) (1,086,862) (4,043,381) (4,203,302)
---------- ---------- ----------- -----------
Operating profit....... 252,338 239,646 706,823 761,676
Other income
(expense):
Interest expense....... (42,065) (46,067) (159,545) (171,558)
Other income
(expense), net........ (133) (77,106) 3,638 (85,566)
---------- ---------- ----------- -----------
Total other income
(expense)............. (42,198) (123,173) (155,907) (257,124)
Earnings before income
taxes................. 210,140 116,473 550,916 504,552
Federal and state
income taxes.......... (88,596) (52,378) (234,107) (217,331)
---------- ---------- ----------- -----------
Net Earnings........... $ 121,544 $ 64,095 $ 316,809 $ 287,221
========== ========== =========== ===========
Earnings per share..... $ .83 $ .44 $ 2.16 $ 1.97
========== ========== =========== ===========
Average common
shares................ 146,390 145,829 146,943 145,888
========== ========== =========== ===========
COMPARABLE STORE SALES:
Eastern food
operations............ 3.9% (0.5)% 1.5% 2.2%
Western food
operations............ 0.1% 2.0% (0.8)% 2.4%(3)
Food store
operations............ 1.8% 0.9% 0.3% 2.3%(3)
Drug store
operations............ 4.2% 5.9% 4.8% 5.8%
---------- ---------- ----------- -----------
Total................ 2.5% 2.3% 1.4% 3.3%(3)
========== ========== =========== ===========
SALES:
Food store
operations............ $3,643,342 $3,442,868 $13,301,742 $13,420,395
Drug store
operations............ 1,443,570 1,457,902 4,995,389 5,227,308
Other.................. 3,672 8,903 11,763 30,426
---------- ---------- ----------- -----------
Total sales.......... $5,090,584 $4,909,673 $18,308,894 $18,678,129
========== ========== =========== ===========
OPERATING PROFIT:
Food store
operations............ $ 168,434 $ 177,250 $ 542,936 $ 608,286
Drug store
operations............ 87,666 93,201 245,440 259,924
LIFO................... 11,194 10,592 (12,806) (11,408)
Purchase accounting
amortization.......... (18,992) (19,758) (76,877) (78,654)
Other.................. 4,036 3,880 8,130 9,047
Special charges........ 0 (25,519) 0 (25,519)
---------- ---------- ----------- -----------
Total operating
profit.............. $ 252,338 $ 239,646 $ 706,823 $ 761,676
========== ========== =========== ===========
OTHER STATISTICS DURING
THE PERIOD:
Stores opened.......... 42 58 92 122
Stored closed.......... 17 24 39 77
OTHER STATISTICS AT YEAR
END:
Total stores........... 1,650 1,695
Total retail square
footage (in
millions)............. 32.5 33.8
Square footage
increase.............. 4.3% 3.8%
</TABLE>
- --------

(1) Includes special charges of $100.0 million, pre-tax ($.41 per share, after
tax) included in cost of merchandise sold ($10.0 million), operating and
administrative expenses ($15.5 million) and other income (expense) ($74.5
million). Earnings per share before the special charges were $.85 and
$2.38 for the quarter and fiscal year, respectively.
(2) Beginning with the first quarter of 1996, advertising expense is
classified as cost of merchandise sold, rather than operating expense.
Prior periods have been reclassified to conform to the new presentation.
(3) Excluding the estimated impact of the Lucky Stores Northern California
Division nine-day labor dispute in the first quarter of 1995, the increase
in western food operations, food store operations and total comparable
store sales for the 52 weeks ended February 1, 1997 would have been 1.9%,
2.0% and 3.0%, respectively.

8
<PAGE>

SELLING STOCKHOLDERS' AGREEMENTS

On February 20, 1997, the Company entered into agreements with the family of
L.S. Skaggs, a director and former Chairman of the Board of the Company,
certain charitable trusts and foundations and certain trusts created for the
benefit of members of the Skaggs family (collectively, the "Selling
Stockholders") for the repurchase (the "Repurchase") by the Company from the
Selling Stockholders of 12,222,222 shares of Common Stock for $45 per share,
the closing price of the Common Stock on the New York Stock Exchange on such
date. The Offerings are conditioned upon the Repurchase and all such
transactions are expected to be consummated simultaneously. See "Selling
Stockholders--Selling Stockholders' Agreements".

FINANCING PLANS

The Company is currently in negotiations with its lenders to increase the
capacity of its existing revolving credit facility (the "Credit Facility")
from $1 billion to $2 billion (the "Amended Credit Facilities"). The Amended
Credit Facilities are expected to be in place prior to the closing of the
Offerings. The Amended Credit Facilities are expected to include a $1.5
billion five-year revolving credit facility and a $500 million 364-day
revolving credit facility.

The Company intends to finance the $550 million Repurchase initially through
the Amended Credit Facilities. Subject to market conditions, the Company
intends to refinance the indebtedness incurred in connection with the
Repurchase through public equity and/or debt issuances over the next six to
twelve months. Sales of substantial amounts of Common Stock, or the perception
that such sales could occur, could adversely affect prevailing market prices
for the Common Stock. There can be no assurance that the Company will be able
to complete such refinancings successfully. If unable to do so, the Company
may be required to adopt one or more alternatives such as reducing or delaying
its capital expenditures or selling assets.

9
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the New York Stock Exchange, the Chicago Stock
Exchange, the Pacific Stock Exchange and the Philadelphia Stock Exchange under
the symbol "ASC". The following table sets forth the high and low reported
sales prices for the Common Stock for the fiscal periods indicated as reported
on the New York Stock Exchange Composite Tape.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1995
First Quarter............................................ $26 1/8 $23 1/4
Second Quarter........................................... 29 3/4 24 3/4
Third Quarter............................................ 30 3/4 28 1/8
Fourth Quarter........................................... 30 3/4 24 7/8
1996
First Quarter............................................ $34 1/4 $25 3/8
Second Quarter........................................... 41 1/4 32
Third Quarter............................................ 42 3/4 37 1/2
Fourth Quarter........................................... 45 3/8 38 3/8
1997
First Quarter (through March 6, 1997).................... $45 7/8 $41 5/8
</TABLE>

See the cover page of this Prospectus for a recent sales price for the
Common Stock on the New York Stock Exchange.

The Company currently pays regular quarterly cash dividends and, while
future dividends will be subject to the discretion of the Company's Board of
Directors, the Board of Directors currently intends to continue this policy.
Future dividends will depend upon the Company's results of operations,
financial condition, capital expenditure program and debt repayment
requirements and other factors, some of which are beyond the Company's
control. There can be no assurance as to whether or when the Company's Board
of Directors will change the current policy regarding dividends.

USE OF PROCEEDS

The Company will not receive any proceeds from the Offerings, other than
proceeds from the sale of shares, if any, sold in connection with the exercise
by the Underwriters of the over-allotment options. If the over-allotment
options are exercised, the Company intends to use the net proceeds from such
sale to repay short-term debt under the Company's bank credit lines or the
Amended Credit Facilities which it is currently negotiating. The amount of
outstanding debt borrowed directly under the Credit Facility, at a weighted
average interest rate of 5.6%, was $957 million at February 1, 1997, of which
$123 million was owed to Morgan Guaranty Trust Company of New York, the agent
bank under the Credit Facility. The Company intends to incur additional
indebtedness under the Amended Credit Facilities in connection with the
Repurchase. In addition, the Company had $100 million outstanding at February
1, 1997 under a 364-day credit line with Morgan Guaranty Trust Company of New
York, at an interest rate of 5.7%. Morgan Guaranty Trust Company of New York,
a wholly-owned subsidiary of J.P. Morgan & Co. Incorporated, is an affiliate
of each of J.P. Morgan Securities Inc., a manager of the U.S. Offering, and
J.P. Morgan Securities Ltd., a manager of the International Offering. See
"Underwriting".

10
<PAGE>

CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company
as of February 1, 1997, and pro forma to give effect to the Repurchase and the
borrowings under the Amended Credit Facilities to finance the Repurchase. The
Company will not receive any of the proceeds from the sale of the shares of
Common Stock in the Offerings (other than proceeds from the sale of shares, if
any, sold in connection with the exercise by the Underwriters of the over-
allotment options).

<TABLE>
<CAPTION>
FEBRUARY 1, 1997
--------------------
ACTUAL PRO FORMA(1)
------ ------------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Current maturities of long-term debt...................... $ 57 $ 57
Current obligations under capital leases.................. 9 9
Long-term debt, less current maturities:
Credit facilities and bank lines of credit(2)........... 1,140 1,690
Other unsecured senior debt............................. 1,346 1,346
Debt secured by real estate............................. 71 71
Capital leases.......................................... 56 56
------ ------
Total debt............................................ 2,679 3,229
Shareholders' equity:
Common Stock, par value $1.00; 325,000,000 shares
authorized; 149,889,236 shares issued.................. 150 150
Additional paid-in capital.............................. 362 362
Retained earnings....................................... 2,137 2,137
Less cost of treasury stock (3,974,595 shares as of
February 1, 1997; 16,196,817 shares as adjusted)....... (114) (664)
------ ------
Total shareholders' equity............................ 2,535 1,985
------ ------
Total capitalization................................ $5,214 $5,214
====== ======
Total debt to total capitalization(3)................. 51.4% 61.9%
====== ======
</TABLE>
- --------
(1) Assumes no exercise of the Underwriters' over-allotment options. Does not
give effect to the possible payment by the Company of the underwriting
discounts and commissions in connection with the Offerings. See "Selling
Stockholders--Selling Stockholders' Agreements".
(2) At February 1, 1997, $957 million was drawn under the Company's $1 billion
Credit Facility, which is available for direct borrowings and as backup
support for commercial paper. At February 1, 1997, the Company also had
available an additional $250 million and $320 million under committed and
uncommitted bank lines, respectively, of which $183 million was
outstanding under the committed bank lines and none was outstanding under
the uncommitted bank lines. The Company is currently in negotiations with
its lenders to increase the capacity of the Credit Facility from $1
billion to $2 billion through the Amended Credit Facilities. The Amended
Credit Facilities are expected to include a $1.5 billion five-year
revolving credit facility and a $500 million 364-day revolving credit
facility. The Company expects to have the Amended Credit Facilities in
place prior to the closing of the Offerings.

(3) Total debt consists of debt plus obligations under capital leases. Total
capitalization consists of total debt plus shareholders' equity.

11
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data in the following table (other than
the financial data for the 39-week periods ended October 28, 1995 and November
2, 1996 and the information under "Other Data," which are unaudited) for each
of the five years in the period ended February 3, 1996 have been derived from
the Company's consolidated financial statements which have been audited by
Ernst & Young LLP, independent auditors. The selected consolidated financial
data should be read in conjunction with the Company's consolidated financial
statements and notes thereto incorporated by reference in this Prospectus. The
selected consolidated financial data for the 39 weeks ended October 28, 1995
and November 2, 1996 have been derived from the Company's unaudited financial
statements and contain all adjustments that are of a normal and recurring
nature necessary to present fairly the financial position and results of
operations for such periods. The results of operations for the 39 weeks ended
November 2, 1996 are not necessarily indicative of the results expected for
the full fiscal year 1996. The Company's earnings are subject to seasonality,
which is common in the food and drug industry. The holiday season and
increased cold and flu occurrences in the fourth quarter benefit the food and
drug operations. In addition, the fourth quarter includes LIFO inventory
adjustments. See "Recent Developments".

12
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
----------------------------------------------------------------- ------------------------
FEBRUARY 1, JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 3, OCTOBER 28, NOVEMBER 2,
1992 1993 1994 1995 1996(1) 1995 1996
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT:
Sales.................. $20,822,956 $19,051,180 $18,763,439 $18,355,126 $18,308,894 $13,218,310 $13,768,456
Cost of merchandise
sold, including
warehousing and
transportation
expenses(2)........... 15,812,334 14,250,344 13,985,115 13,603,882 13,558,690 9,801,409 10,129,986
----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit........... 5,010,622 4,800,836 4,778,324 4,751,244 4,750,204 3,416,901 3,638,470
Operating and
administrative
expenses(2)........... 4,408,634 4,177,522 4,136,442 4,101,176 4,043,381 2,962,416 3,116,440
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating profit....... 601,988 623,314 641,882 650,068 706,823 454,485 522,030
Other income (expense):
Interest income........ 2,861 4,477 4,568 6,789 8,747 7,150 5,014
Interest expense....... (265,098) (214,394) (189,773) (170,703) (159,545) (117,480) (125,491)
Other.................. 98,717 (35,116) 24,128 120,109 (5,109) (3,379) (13,474)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total other income
(expense)............. (163,520) (245,033) (161,077) (43,805) (155,907) (113,709) (133,951)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings before income
taxes, extraordinary
item and before
cumulative effect of
changes in accounting
principle............. 438,468 378,281 480,805 606,263 550,916 340,776 388,079
Federal and state
income taxes.......... (198,452) (170,815) (218,715) (261,079) (234,107) (145,511) (164,953)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings before
extraordinary item and
cumulative effect of
changes in accounting
principle............. 240,016 207,466 262,090 345,184 316,809 195,265 223,126
Extraordinary item--
early retirement of
debt, net of taxes.... (15,000)
Cumulative effect of
changes in accounting
principle--
Postretirement health
care benefits......... (40,734)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net earnings........... $ 199,282 $ 207,466 $ 247,090 $ 345,184 $ 316,809 $ 195,265 $ 223,126
=========== =========== =========== =========== =========== =========== ===========
Average common shares
outstanding (in
thousands)(3)......... 138,364 140,314 142,202 142,767 146,943 147,142 145,907
Earnings per common
share before
extraordinary item and
cumulative effect of
changes in accounting
principle(3).......... $ 1.73 $ 1.48 $ 1.85 $ 2.42 $ 2.16 $ 1.33 $ 1.53
Extraordinary item(3).. (.11)
Cumulative effect of
changes in accounting
principles--
Postretirement health
care benefit(3)....... (.29)
=========== =========== =========== =========== =========== =========== ===========
Net earnings per common
share(3).............. $ 1.44 $ 1.48 $ 1.74 $ 2.42 $ 2.16 $ 1.33 $ 1.53
=========== =========== =========== =========== =========== =========== ===========
Fully diluted earnings
per share(3).......... $ 1.41 $ 1.44 $ 1.69 $ 2.33 $ 2.16 $ 1.33 $ 1.53
=========== =========== =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
Gross profit margin.... 24.1% 25.2% 25.5% 25.9% 25.9% 25.8% 26.4%
Operating profit
margin................ 2.9% 3.3% 3.4% 3.5% 3.9% 3.4% 3.8%
Capital
expenditures(4)....... $ 378,593 $ 476,617 $ 652,928 $ 565,313 $ 801,371 $ 557,560 $ 675,410
Depreciation and
amortization.......... 386,916 370,439 384,307 407,286 404,562 302,305 330,417
Total assets........... 7,198,050 6,763,793 6,927,434 7,031,566 7,362,964 7,174,573 7,840,217
Working capital........ 162,889 101,215 (58,290) 200,664 96,264 108,374 361,236
Total debt............. 2,798,578 2,248,316 2,167,999 2,205,291 2,240,168 2,190,405 2,558,247
Shareholders' equity... 1,366,430 1,544,014 1,742,285 2,050,921 2,354,496 2,246,731 2,491,550
FIFO EBITDA(5)......... 1,125,382 979,663 1,062,089 1,192,437 1,127,829 784,561 865,987
Cash dividends per
common share(3)....... $ .32 $ .36 $ .40 $ .48 $ .56 $ .42 $ .48
OTHER DATA:
Comparable store sales
increase (decrease)... 0.1% (0.5)% (0.7)% 0.5% 1.4% 0.9% 3.6%
Total stores(6)........ 1,631 1,672 1,695 1,597 1,650 1,625 1,661
Total retail square
footage (in
thousands)............ 34,428 32,320 32,727 31,179 32,523 31,855 33,060
Number of stores
opened/acquired(6).... 38 151 98 49 92 50 64
</TABLE>
- -------
(1) Fifty-three week fiscal year.

(2) Beginning with the first quarter of 1996, advertising expense is
classified as cost of merchandise sold, rather than operating expense.
Prior periods have been reclassified to conform to the new presentation.

(3) Restated as necessary to reflect the April 1994 two-for-one common stock
split.
(4) Amount includes capitalized leases and the net present value of property,
plant and equipment leased under operating leases.
(5) Earnings before LIFO inventory charges, interest expense, taxes,
depreciation and amortization. EBITDA is not derived pursuant to generally
accepted accounting principles ("GAAP") and therefore should not be
construed as an alternative to operating profit, as an alternative to cash
flows from operating activities (as determined in accordance with GAAP) or
as a measure of liquidity.
(6) Includes jointly operated combination stores which are each counted as two
separate stores.

13
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

39 WEEKS ENDED NOVEMBER 2, 1996 COMPARED TO 39 WEEKS ENDED OCTOBER 28, 1995

The percentage changes in comparable store sales and total sales for the
third quarter and first thirty-nine weeks of 1996 and 1995 are presented in
the tables below. The increases in sales during the third quarter and the
first thirty-nine weeks of 1996 are primarily a result of increased capital
spending and more effective marketing efforts, including preferred customer
cards, clipless coupons and targeted marketing promotions at the food store
operations. Drug store sales increased due primarily to increased targeted
marketing efforts, capital spending and increased pharmacy sales. Comparable
and total sales for the first thirty-nine weeks of 1996 also increased due to
the impact of a nine-day labor dispute in the first quarter of 1995 in the
western food operations.

<TABLE>
<CAPTION>
13 WEEKS ENDED 39 WEEKS ENDED
NOVEMBER 2, 1996 NOVEMBER 2, 1996
---------------- ----------------
<S> <C> <C>
Comparable Store Sales % Change (1):
Eastern food operations (2)................... 3.0% 3.1%
Western food operations (3)................... 2.5 2.6
Food store operations (4)..................... 2.7 2.8
Drug store operations (5)..................... 6.3 5.8
Total comparable store sales % change....... 3.7% 3.6%
</TABLE>

<TABLE>
<CAPTION>
13 WEEKS ENDED 39 WEEKS ENDED
----------------------- -----------------------
OCTOBER 28, NOVEMBER 2, OCTOBER 28, NOVEMBER 2,
1995 1996 % CHANGE 1995 1996 % CHANGE
----------- ----------- -------- ----------- ----------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Sales:
Food store operations... $3,207,272 $3,301,013 2.9% $ 9,658,400 $ 9,977,527 3.3%
Drug store operations... 1,150,858 1,254,618 9.0 3,551,819 3,769,406 6.1
Other................... 3,053 7,731 8,091 21,523
---------- ---------- ----------- -----------
Total sales............. $4,361,183 $4,563,362 4.6% $13,218,310 $13,768,456 4.2%
========== ========== =========== ===========
</TABLE>

- --------
(1) Comparable store sales include stores open one year or more and
replacement stores.
(2) Eastern food operations include Acme Markets (including the drug store
operations of its combination stores) and Jewel Food Stores.
(3) Western food operations include Lucky Northern California Division, Lucky
Southern California Division and Jewel Osco Southwest (including the drug
store operations of 21 combination stores).
(4) Food store operations include eastern and western food operations.
(5) Drug store operations include Osco Drug and Sav-on.

Beginning in the first quarter of 1996, the Company is classifying
advertising expense as a cost of merchandise sold. Previously these expenses
were classified as operating expenses. Prior years have been reclassified to
conform to the current year presentation.

Gross profit as a percent of sales increased to 26.7% in the third quarter
and 26.4% for the first thirty-nine weeks of 1996, compared to 26.3% and 25.8%
in the same periods of 1995, respectively. These increases were primarily a
result of increased margins from higher private label penetration, better
product mix, improved shrink control and decreased advertising costs.
Additionally, margins as a percent of sales in the first thirty-nine weeks of
1995 were negatively impacted by the nine-day labor dispute in the western
food operations in the first quarter of 1995.

Operating expense as a percent of sales increased slightly to 22.8% in the
third quarter of 1996, compared to 22.7% in the third quarter of 1995 and
22.6% in the first thirty-nine weeks of 1996 compared to 22.4% in the first
thirty-nine weeks of 1995. These increases were primarily a result of

14
<PAGE>

increased expenses related to the capital investment program and new store
openings. Comparisons with the prior year period in the food store operations
were also impacted by the 1995 renegotiation of a labor contract with the
United Food and Commercial Workers International in southern California in
which certain health and welfare savings, which were being recognized over the
life of the contract, were immediately recognized in the third quarter of
1995. These items were slightly offset by a decrease in operating expenses as
a percent of sales primarily due to better cost control and by reductions in
self-insurance costs.

Total operating profit for the third quarter and the first thirty-nine weeks
of 1995 and 1996 is presented in the table below. Operating profit was 3.9% of
sales in the third quarter of 1996 compared to 3.5% of sales in the third
quarter of 1995. Operating profit for the first thirty-nine weeks of 1996 was
3.8% of sales compared to 3.4% of sales for the same period in 1995. The
improvement in third quarter operating profit was due mainly to increased
sales and higher margins. The improvement in the first thirty-nine weeks of
1996 reflected higher operating profits in the food store operations due
primarily to the negative impact of the nine-day labor dispute in northern
California in 1995.

<TABLE>
<CAPTION>
13 WEEKS ENDED 39 WEEKS ENDED
----------------------- -----------------------
OCTOBER 28, NOVEMBER 2, OCTOBER 28, NOVEMBER 2,
1995 1996 1995 1996
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Operating Profit:
Food store operations......... $135,219 $151,467 $374,502 $431,036
Drug store operations......... 43,595 50,020 157,774 166,723
LIFO.......................... (6,000) (6,000) (24,000) (22,000)
Purchase accounting amortiza-
tion......................... (19,400) (19,752) (57,885) (58,896)
Other......................... 1,218 1,827 4,094 5,167
-------- -------- -------- --------
Total operating profit...... $154,632 $177,562 $454,485 $522,030
======== ======== ======== ========
</TABLE>

Interest expense increased in the third quarter and the first thirty-nine
weeks of 1996 over the same periods in 1995 due to an increase in average
outstanding debt and the issuance of $350 million, thirty-year 8% debentures
during the second quarter of 1996, which partially replaced short-term
variable rate debt.

The Company's effective income tax rate was 42.5% in the first thirty-nine
weeks of 1996 compared to 42.7% in the same period in 1995. The effective tax
rate was down due to higher earnings in the first thirty-nine weeks of 1996
and lower state tax rates.

Net earnings per share amounted to $.52 per share in the third quarter of
1996 compared to $.46 per share in the same quarter of the prior year. Net
earnings per share amounted to $1.53 per share in the first thirty-nine weeks
of 1996 compared to $1.33 per share for the same period of 1995.

1995 COMPARED TO 1994 AND 1993

Total sales and the percentage change in comparable store sales for the 1995
53-week fiscal year and the 1994 and 1993 52-week fiscal years are set forth
in the tables below. The decrease in total sales is primarily attributable to
the disposition of the 33-store Star Market food division in the third quarter
of 1994 and the 45 Acme Markets stores in the fourth quarter of 1994
("disposed of operations"). Sales from continuing operations increased 4.5% in
1995, and decreased 0.3% in 1994 and 0.2% in 1993. The increase in sales from
continuing operations in 1995 is primarily a result of improved performance at
all three operating divisions and the extra week of operations. Comparable
store sales (sales from stores that have been open at least one year,
including replacement stores) increased 1.4% in 1995, 0.5% in 1994 and
decreased 0.7% in 1993. The improvement in comparable store sales is primarily
the result of successful marketing of the combination stores in the eastern
food operations, increased pharmacy and third-party sales in the drug store
operations and aggressive

15
<PAGE>

pricing programs offset slightly by the impact of a nine-day labor dispute in
the first quarter of 1995 in the western food operations. The Super Saver
warehouse-type stores were reorganized under the Lucky divisions in 1996 in
order to leverage the Company's support functions.

TOTAL SALES

<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Eastern food operations................. $ 6,052 $ 5,957 $ 6,147
Western food operations................. 7,183 7,002 7,155
Drug store operations................... 4,322 4,544 4,995
Other................................... 12 12 12
------- ------- -------
Continuing operations................... 17,569 17,515 18,309
Disposed of operations.................. 1,194 840 --
------- ------- -------
Total sales........................... $18,763 $18,355 $18,309
======= ======= =======
</TABLE>

COMPARABLE STORE SALES

<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
(PERCENTAGE CHANGE)
<S> <C> <C> <C>
Eastern food operations................. (1.5)% 0.7 % 1.5 %
Western food operations................. (1.9) (1.8) (0.8)
Drug store operations................... 2.6 4.2 4.8
Total change.......................... (0.7)% 0.5 % 1.4 %
</TABLE>

Gross profit as a percent of sales increased to 26.9% in 1995, compared to
26.8% in 1994 and 26.4% in 1993. The increase in gross profit in 1995 over
1994 was primarily the result of the disposed of operations, which produced
lower margins than the continuing operations, and improvements in the eastern
food operations due to improved product mix and promotional strategies. These
increases were offset by decreases in competitive drug store pharmacy gross
margins and the impact of a nine-day labor dispute in the first quarter of
1995 in the western food operations. The 1994 gross profit percentage
increased from 1993 in the eastern food, western food and drug store
operations primarily due to improvements in the mix of products sold,
promotional strategies and shrink control. The annual pre-tax LIFO charge to
earnings amounted to $12.8 million in 1995, $8.2 million in 1994 and $7.2
million in 1993. Changes in the mix of inventory have influenced the LIFO
charge.

Operating expense as a percent of sales decreased to 23.0% in 1995, compared
to 23.3% in 1994 and 23.0% in 1993. Operating expense in the western food
operations benefited in 1995 from the renegotiation of a labor contract with
the United Food and Commercial Workers International. The new contract will
expire in 1999 and replaces a contract scheduled to expire in 1996. As a
result of the early termination of the contract, certain health and welfare
savings, which were being recognized over the life of the old contract, were
immediately recognized in the third quarter of 1995. Operating expense in the
western food operations also decreased due to lower self-insurance costs and
productivity improvements, which were partially offset by the impact of the
nine-day labor dispute. In addition, improved sales, lower insurance costs and
better overall cost control in the eastern food and drug store operations
helped lower operating expense as a percentage of sales. Operating expense in
1994 included charges of $23.9 million ($.10 per share) for centralization of
administrative functions, including information technology and accounting. As
of third quarter 1995, the entire reserve had been utilized without
significant adjustments to the original amount. Operating expense in 1994 also
included

16
<PAGE>

expenses for the consolidation of the computer data centers and a voluntary
severance program initiated at Acme Markets, totaling $11.2 million ($.05 per
share). Operating expense in 1993 included $7.6 million ($.04 per share) for
the settlement of meat products litigation in California and severance
programs stemming from the Company's expense reduction programs.

Total operating profit for the 1993, 1994 and 1995 fiscal years is set forth
in the following table. Operating profit from continuing operations increased
11.9% in 1995, 4.4% in 1994 and 0.8% in 1993. Total operating profit was 3.9%
of sales in 1995, 3.5% of sales in 1994 and 3.4% of sales in 1993. The
increase in operating profit and operating profit as a percentage of sales was
primarily due to strong performances from the Company's core operations and
the extra week of operations included in 1995. In addition, eastern food
operations improved due to successful joint marketing of the combination
stores, western food operations improved due to lower health and welfare costs
associated with the renegotiated labor contract and drug store operations
improved due to lower insurance costs and better cost control, slightly offset
by the start-up costs of 71 new stores, including 17 acquired Clark drug
stores.

OPERATING PROFIT

<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
JANUARY 29, JANUARY 28, FEBRUARY 3,
1994 1995 1996
----------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Eastern food operations.................. $231.2 $258.2 $271.7
Western food operations.................. 248.7 245.9 271.2
Drug store operations.................... 197.0 228.5 245.4
LIFO charge.............................. (7.2) (8.2) (12.8)
Purchase accounting amortization......... (79.2) (78.6) (76.8)
Other.................................... 14.7 (14.1) 8.1
------ ------ ------
Continuing operations.................... 605.2 631.7 706.8
Disposed of operations................... 36.7 18.4 --
------ ------ ------
Total operating profit................. $641.9 $650.1 $706.8
====== ====== ======
</TABLE>

Interest expense decreased in 1995, 1994 and 1993 due to lower average
interest rates resulting from the refinancing of high coupon borrowings at
lower rates. In addition, the Company experienced lower average debt levels
for each of the last three years. Interest expense also benefited from the
conversion of a portion of the convertible notes from debt to equity in the
first quarter of 1995. The caption "Other" in 1994 of $120.1 million included
non-recurring gains of $121.0 million on the sale of the Star Market food
division, $41.2 million on the sale of 45 Acme Markets stores and a charge of
$31.3 million for closed store costs (totaling $.54 per share). "Other" in
1993 of $24.1 million included $45.7 million ($.20 per share) of income from
the resolution of the "Rule of 80" litigation, which concerned the Company's
termination of the early retirement feature of an employee retirement plan.
This was offset by approximately $17.2 million ($.07 per share) of various
charges, including costs associated with store closings, integrating acquired
stores into existing operations and costs associated with the earthquake in
southern California.

The Company's effective income tax rates were 42.5% in 1995, 43.1% in 1994
and 45.5% in 1993. The disposition of assets during 1995 and 1994 in states
with higher tax rates resulted in lower effective income tax rates.

Earnings for 1993 were affected by charges incurred in the early retirement
of debt totaling $.11 per share, which were accounted for as an extraordinary
item. Net earnings per share amounted to $2.16 in 1995, $2.42 in 1994 and
$1.74 in 1993.

17
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities increased to $405.6 million from
$302.0 million in the first thirty-nine weeks of 1996 compared to the same
period of 1995. The increase in operating cash flows over the prior period was
due in part to increased net earnings before depreciation and amortization.
Other changes in operating assets and liabilities were due to changes in the
components of working capital and are not indicative of long-term trends.

On June 10, 1996, the Company issued $350 million principal amount of 8%
debentures due June 1, 2026 at 99.262% to yield 8.066%. The Company received
net proceeds of approximately $344 million which were used to refinance a
portion of the Company's long-term indebtedness and to refinance additional
short-term variable rate borrowings under the Credit Facility.

Cash capital expenditures for the first thirty-nine weeks of 1996 and 1995
amounted to $603.7 million and $519.3 million, respectively. Total capital
expenditures, including the net present value of leases, amounted to $675.4
million in 1996, compared to $557.6 million in 1995. During the first thirty-
nine weeks of 1996, 64 new stores were opened, 53 stores were closed and 80
stores were remodeled.

The Company's ratio of total debt (debt plus obligations under capital
leases) to total capitalization (total debt plus shareholders' equity) was
50.7% at November 2, 1996 and 48.8% at February 3, 1996.

In June 1996, the Company replaced its existing stock repurchase program
with a new repurchase program which authorizes the repurchase of up to two
million shares of Common Stock. During the first thirty-nine weeks of 1996,
the Company repurchased 1,090,000 shares of its Common Stock at an average
price of $34.67 per share in accordance with the Company's stock repurchase
programs. There were no shares repurchased during the third quarter. As of
November 2, 1996, an additional 1,945,000 shares remained authorized for
repurchase.

The Company believes that its cash flow from operations, supplemented by
credit available under the Company's existing credit facilities, as well as
its ability to refinance debt, will be adequate to meet its presently
identifiable cash requirements.

18
<PAGE>

BUSINESS

The Company is one of the nation's leading food and drug retailers with
annual sales in its fiscal year ended February 1, 1997 of $18.7 billion. The
Company is principally engaged in a single industry segment, the retail sale
of food and drug merchandise. The Company's principal food operations are Acme
Markets, Jewel Food Stores, Lucky Stores Northern California Division, Lucky
Stores Southern California Division and Jewel Osco Southwest. The Company's
drug stores operate under the Osco Drug and Sav-on names. As of February 1,
1997, the Company operated 1,695 stores in 27 states, including 166
combination stores which are jointly operated by the Company's food and drug
store operations and are each counted as two separate stores.

In 1993, the Company made a strategic decision to move from a holding
company orientation to an operating company approach to build on the size and
strength of its operations. Management developed a six-point plan that
outlined its critical success factors required for continued growth and
competitive positioning within the industry. The six factors are: (i) hold
leading market positions; (ii) maintain a modern store base; (iii) excel in
merchandising; (iv) attain state of the art technology; (v) maintain an
effective organizational structure; and (vi) be a low cost operator.

STRONG MARKET POSITIONS

MAINTAIN A MODERN STORE BASE

Over the last several years, the Company has significantly increased its
capital spending to improve and expand its store base. Capital spending grew
from $565 million in 1994 to $801 million in 1995, and to $1 billion in 1996.
New and replacement stores are an increasingly important focus of the capital
spending program, accounting for 34% of capital spending in 1994, 45% in 1995,
and 57% in 1996 and are expected to account for over 50% of capital spending
in 1997. The Company expects to continue to make significant investments in
its store base. In 1997, the Company plans to spend approximately $1 billion
for capital expenditures. The Company plans to open over 100 new and
replacement stores (including 20 jointly operated combination stores which are
each counted as two separate stores) and to remodel approximately 100 stores
in 1997.

EMPHASIZE COMPETITIVE FORMATS

DELTA INITIATIVES

Delta is a series of initiatives designed as a self-consolidation and re-
engineering program that is transforming the Company from a holding company to
an operating company. Prior to Delta, the Company operated as seven autonomous
companies with different systems and processes. The goal

19
<PAGE>

of Delta is to build on the size of the Company and to develop common business
processes and systems to best manage growth for the future. Delta is designed
to improve the Company's ability to purchase products and move them through
the supply chain more quickly, efficiently and cost-effectively, which also
results in more efficient store operations. It seeks to achieve these goals
through changes in the Company's purchasing, warehousing, inventory control
and distribution systems. The information gathered from the common systems and
processes assists the Company's marketing and merchandising programs. Each
Delta initiative has a different timeline, but the majority of the supply-
chain initiatives are targeted for completion by the end of 1997. Management
believes the benefits of Delta will begin to exceed costs for the second half
of 1997. To continue to meet customer needs the Company intends to maintain
store operations, marketing and merchandising on a local level. Some examples
of how Delta has been implemented into the business are: (i) centralization of
the procurement and logistics groups; (ii) execution of national contracts
with selected vendors for greeting cards, photo-finishing, spices, magazines
and, most recently, whole-bean coffee; (iii) installation of computerized
warehouse systems in over 90% of the Company's warehouses, reducing labor cost
and increasing the efficiency of replenishment; (iv) consolidation of four
general merchandise warehouses in southern California into a single facility;
and (v) consolidation of administrative, real estate, construction and
information technology functions.

STORE OPERATIONS

American Stores manages its 1,695 stores with two operating divisions--food
store operations and drug store operations. In 1996, the food store operations
accounted for 72% of sales and 70% of operating profit. The drug store
operations made up 28% of sales and 30% of operating profit.

Store formats for the Company's two operating divisions as of February 1,
1997 were as follows:

<TABLE>
<CAPTION>
COMBINATION
SUPERMARKETS STORES DRUG STORES TOTAL
------------ ----------- ----------- -----
<S> <C> <C> <C> <C>
Food Store Operations............ 577 233* 3** 813
Drug Store Operations............ -- 166* 716 882
-----
Total.......................... 1,695*
=====
</TABLE>
- --------

* Includes 166 jointly operated combination stores which are counted in both
food store operations and drug store operations. The remaining 67
combination stores are operated solely by the Company's food store
operations.

** Jewel Osco Southwest drug stores are operated by the food store operations.

FOOD STORE OPERATIONS

The food store operations consist of Acme Markets, Jewel Food Stores, Lucky
Stores Northern California Division, Lucky Stores Southern California Division
and Jewel Osco Southwest. As of February 1, 1997, the food store operations
operated a total of 813 stores with 20.9 million square feet of selling space.

ACME MARKETS. Acme has over one hundred years of retailing experience in
Philadelphia and the surrounding Delaware Valley. Acme operates 182 stores,
with 77 stores in Pennsylvania, 78 in New Jersey, 15 in Delaware and 12 in
Maryland. Acme commands the leading share of the Philadelphia metropolitan
market.

Acme's strategic plan involves an aggressive new store building program.
Over the past two years, Acme has added 17 combination stores including 10 new
stores and seven enlargements, and plans to increase the number of its
combination stores from 46 to 78 over the next three years.

20
<PAGE>

JEWEL FOOD STORES. At year-end 1996, Jewel Food Stores operated 185 stores,
with 176 stores in Illinois, two in Iowa, six in Indiana and one in Wisconsin.
Jewel holds the number one market share in the metropolitan Chicago market
area. Jewel operates combination food and drug stores under the Jewel Osco
banner. Of Jewel's 185 stores, 153 are in combination with an Osco Drug store,
located primarily in and around the Chicago area. This working partnership has
enabled both Jewel and Osco to strengthen their positions in the market. Jewel
is best known for superior perishables and innovative marketing. Jewel's store
base is particularly modern and well-maintained.

LUCKY STORES NORTHERN CALIFORNIA DIVISION. The Lucky Stores Northern
California Division operates 186 retail food stores in northern and central
California. Lucky North operates four combination stores with the Sav-on drug
division. Lucky North's six principal operating regions are the East Bay, San
Jose, the Peninsula, Marin/Sonoma, Sacramento and Central Valley. Lucky
operates an everyday low pricing format and is generally perceived by northern
California shoppers as the low price leader among full-service supermarkets in
its market areas, based upon independent surveys.

LUCKY STORES SOUTHERN CALIFORNIA DIVISION. The Lucky Stores Southern
California Division operates 247 retail food stores in southern California and
Las Vegas, Nevada. This number includes nine combination stores with the Lucky
Sav-on name. The Division's principal operating areas are greater Los Angeles
(including Orange County, Santa Barbara and the Central Coast), San Diego, the
Inland Empire (including Riverside, San Bernardino and Palm Springs) and Las
Vegas. Like its sister company in northern California, Lucky South operates an
everyday low pricing format and is generally perceived by southern California
and Las Vegas shoppers as the low price leader for full-service supermarkets in
its market areas, based upon independent surveys. Lucky South's strategy calls
for pursuing new urban locations to fill in its existing market locations, to
enlarge existing facilities where feasible and to identify relocation sites.

JEWEL OSCO SOUTHWEST. Jewel Osco Southwest operates nine combination food and
drug stores and three stand-alone drug stores in New Mexico. Over the past
three years, Jewel Osco Southwest has expanded or completed major remodels in
the majority of its stores.

DRUG STORE OPERATIONS

The Company operates its drug stores under the Osco Drug and Sav-on names.
The drug division operated a total of 882 stores as of February 1, 1997
(including the drug side of 166 jointly operated combination stores), with 12.9
million square feet of selling space.

OSCO DRUG. The Company operates a total of 576 Osco Drug stores in 21 states,
principally in the Midwest. The count includes 153 combination stores primarily
located in Chicago with the Jewel Osco name. Osco's largest markets include
Chicago, Boston, Phoenix, Indianapolis and Kansas City. In Chicago, Osco holds
the number two market position.

SAV-ON. The Company's 306 drug stores in southern California and Nevada
operate under the Sav-on and Sav-on Express store names. In addition, Sav-on
manages the pharmacy departments of 111 northern and southern California Lucky
stores. Sav-on has the leading market share among drug store retailers in its
market areas. It recently moved into northern California as part of the Lucky
Sav-on combination stores. Sav-on and Lucky jointly operate 13 combination
stores, nine in southern California and four in northern California.

PHARMACIES. Pharmacy sales represent approximately 39% of total drug store
sales. The drug store pharmacy strategy includes aggressive pursuit of third-
party business, which now represents over 78% of pharmacy sales. With the
consolidation of the drug store industry, third-party business is important to
maintaining and growing volume. However, a high proportion of third-party
business places pressure on margins due to the lower reimbursement rates from
third-party plans. To counter

21
<PAGE>

this situation, the Company has focused on several strategies including
building market share position, maximizing generic substitution, improving the
efficiency of pharmacy operations and utilizing technological advancements.

PHARMACY BENEFITS MANAGEMENT COMPANY. The Company, in equal partnership with
Geneva Pharmaceuticals, a subsidiary of Novartis, owns a pharmacy benefits
management (PBM) business called RxAmerica. Its purpose is to manage the
prescription drug benefits provided to individuals through health care plans
to fill prescriptions in the Company's 882 drug stores as well as through
approximately 41,000 drug store locations nationwide. RxAmerica also operates
mail-order services which offer customers prescriptions, vitamins and other
health care products at a significant discount.

STORE EXPANSION AND DEVELOPMENT PROGRAM

The Company believes an aggressive and well-managed capital expenditure
program is essential to maintaining and growing its store base. The Company's
strategic and financial guidelines are structured to focus on the Company's
core businesses and maintain the Company's investment grade credit rating. The
Company believes a capital expenditure rate of approximately five percent of
sales achieves this balance. The Company's capital guidelines call for
approximately 80% of total capital expenditures to be expended on new stores,
replacements, enlargements and remodels and approximately 20% on
infrastructure projects. The capital expenditure budget for 1997 is
approximately $1 billion.

The type and mix of store formats must keep pace with the constant changes
in customers' needs and tastes. The Company believes that having both
combination food and drug stores and stand-alone drug stores in the same
markets better enables it to meet customer needs. The combination store format
provides the opportunity for customers to fulfill their food shopping and drug
shopping needs in one trip. The stand-alone drug stores are built for customer
convenience, quick access and often include a drive-up window. New stores
currently being developed are combination food and drug stores of
approximately 65,000 square feet and stand-alone drug stores of approximately
16,500 square feet. Combination stores feature greater product selection in
every department. The food side of the store provides year-round fresh
produce, a wide array of meat and fresh seafood, a full-service floral
department, service bakeries and delis with attractively presented convenience
items. The drug side of the store offers customers a complete selection of
health and beauty aids, general merchandise and pharmaceuticals.

The Company has significantly reduced the number of its store prototypes.
The use of a consistent store prototype reduces development costs, increases
management and distribution efficiencies and improves customer familiarity
with the Company's stores.

22
<PAGE>

The following table illustrates changes in the Company's store base over the
last five years:

<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------
JANUARY 30, JANUARY 29, JANUARY 28, FEBRUARY 3, FEBRUARY 1,
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total New/Acquired
Stores (1):
Food Store
Operations........... 11 14 21 21 35
Drug Store
Operations........... 140 84 28 71 87
---- ---- ---- ---- ------
Total............... 151 98 49 92 122
==== ==== ==== ==== ======
Total Closed/Sold
Stores:
Food Store
Operations........... 96 37 113 19 40
Drug Store
Operations........... 25 38 34 20 37
---- ---- ---- ---- ------
Total............... 121 75 147 39 77
==== ==== ==== ==== ======
Total Remodeled Stores:
Food Store
Operations........... 81 96 80 69 41
Drug Store
Operations........... 32 137 86 154 53
---- ---- ---- ---- ------
Total............... 113 233 166 223 94
==== ==== ==== ==== ======
Total Retail Square
Footage At Year End (in
millions):
Food Store
Operations........... 21.4 21.3 19.8 20.3 20.9
Drug Store
Operations........... 10.9 11.4 11.4 12.2 12.9
---- ---- ---- ---- ------
Total............... 32.3 32.7 31.2 32.5 33.8
==== ==== ==== ==== ======
Capital Expenditures (in
millions):
New Stores............ $178 $203 $195 $362 $ 571
Remodels.............. 107 215 152 207 122
Technology............ 67 62 75 63 99
Other................. 125 173 143 169 208
---- ---- ---- ---- ------
Total............... $477 $653 $565 $801 $1,000
==== ==== ==== ==== ======
</TABLE>
- --------
(1) Includes jointly operated combination stores which are counted in both
food store and drug store totals as follows: two in fiscal 1992, five in
fiscal 1993, four in fiscal 1994, five in fiscal 1995 and 23 in fiscal
1996.

Where possible, the Company prefers to own its properties, thereby allowing
increased flexibility to remodel and expand the store operations as needed. Of
the 122 new and acquired stores in 1996, the Company owns approximately 60%.
The Company also owns, or controls through long-term leases, its distribution,
warehouse and maintenance support facilities. Overall, the Company owns
approximately 28% of its retail locations, with the remaining retail locations
leased pursuant to capitalized or operating leases.

In 1997, the Company's capital expenditure plan contemplates building over
100 new stores and replacement stores and completing approximately 100
remodels. The Company's real estate, design and construction are handled by a
wholly-owned subsidiary of the Company.

MARKETING AND MERCHANDISING

Customers in the food and drug industry are becoming more demanding,
selective and value-conscious. Competitive boundaries are not well defined in
the industry and the Company believes a broad and diverse offering of products
and services is essential to providing the customer with both

23
<PAGE>

convenience and value. In many stores, the Company provides in-store banking
and post-office services, quality- and value-oriented private label products,
and a consistent emphasis on perishable selection and quality through more
frequent warehouse deliveries.

One key marketing strategy that the Company has implemented in all major
food divisions is customer loyalty cards. These cards, which reward frequent
shoppers, have produced higher average sales per customer and provided
customer convenience through automatic coupon and discount offers. They have
also provided a means of targeted marketing by analyzing customer shopping
habits. As of the end of 1996, the Company had issued 8.5 million cards across
all of its operations. Other marketing efforts include the Lucky Stores "Big
Book of Savings" coupon book and neighborhood specific marketing.

Private label is an important part of the Company's merchandising strategy,
offering value conscious consumers quality products at prices below national
brands and providing higher margins to the Company. The Company's private
label programs include such brands as "Lady Lee" at Lucky stores, "Lancaster"
meats and "Acme" groceries at Acme, "Jewel" at Jewel stores and "Osco" and
"Sav-on" at Osco and Sav-on stores, respectively. "President's Choice" in food
operations and "American Premier" in drug operations are used as premium
brands while "Value Wise" is now the budget brand across all of the food and
drug operations.

COMPETITION AND SEASONALITY

In all areas in which the Company operates, the business is highly
competitive, with competition from local and national supermarket and drug
store chains, as well as independent stores. Competition also includes such
retailers as convenience stores, warehouse stores and membership or club
stores. Some of the Company's largest competitors in various regions are
Dominick's, Long's, Pathmark, Ralphs, Safeway, Thrifty PayLess, Vons and
Walgreens. Principal competitive factors in the industry include store
location, price and quality of products, variety of selection, quality of
service and store image, including cleanliness and promotions.

The Company's business is characterized by narrow profit margins and,
accordingly, its successful financial performance depends primarily upon its
ability to maintain relatively high sales volume and control operating costs.
The Company's geographic and business diversity allows it to reduce the
effects that competitive pressures in individual markets may have on its
overall operating results. The Company is subject to the effects of
seasonality. Food and drug store sales are higher in the Company's fourth
quarter than other quarters due to the holiday season. The Company's drug
store sales are also generally higher in the Company's fourth quarter in
connection with the increase in cold and flu occurrences.

EMPLOYEES AND LABOR RELATIONS

The Company has approximately 120,000 full- and part-time employees.
Approximately 75% of the Company's employees are covered by collective
bargaining agreements negotiated with local unions affiliated with one of
seven international unions. There are approximately 118 such agreements,
typically having three- to five-year terms. Accordingly, the Company
renegotiates a significant number of these agreements each year.

24
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 325,000,000 shares
of common stock, $1.00 par value per share (the "Common Stock"), and
10,000,000 shares of preferred stock, $1.00 par value per share (the
"Preferred Stock"). As of February 1, 1997, there were 145,914,641 shares of
Common Stock and no shares of Preferred Stock outstanding.

COMMON STOCK

The holders of Common Stock of the Company are entitled to receive dividends
from funds legally available therefor, when, as and if declared by the Board
of Directors of the Company, subject to the prior rights of any holders of
Preferred Stock. The holders of Common Stock are entitled upon liquidation,
dissolution or winding up of the Company to share ratably in the net assets of
the Company after satisfaction in full of the prior rights of creditors of the
Company and any holders of Preferred Stock.

The holders of Common Stock are entitled to one vote for each share held on
all matters as to which stockholders are entitled to vote. The holders of
Common Stock do not have cumulative voting rights, any preferential or
preemptive rights with respect to any securities of the Company, or any
conversion rights. The Common Stock is not subject to redemption and is not
entitled to the benefit of any sinking fund. The outstanding shares of Common
Stock are fully paid and nonassessable. First Chicago Trust Company of New
York is the Transfer Agent and Registrar and dividend paying agent for the
Common Stock.

Certain existing provisions of the Company's Restated Certificate of
Incorporation, as amended (the "Certificate"), and of the Company's By-Laws,
may have an anti-takeover effect. Under the Certificate, (a) any merger or
consolidation of the Company with any other person or entity, if such other
person or entity and its affiliates, individually or in the aggregate, are
directly or indirectly the beneficial owners of more than 10% of the
outstanding Common Stock (a "Related Person"), (b) any sale or exchange of all
or substantially all of the Company's assets or business to or with a Related
Person, or (c) any issuance or delivery of any of the Company's stock or other
securities in exchange or payment for any properties or assets of a Related
Person or any securities issued by a Related Person, or in any merger of any
affiliate of the Company with or into any Related Person or any of its
affiliates, requires, in addition to any approval otherwise required by law,
the approval of not less than two-thirds of the outstanding Common Stock not
owned by such Related Person, unless the Board of Directors approves the
transaction by a two-thirds vote of the then authorized number of directors or
by a vote taken prior to the acquisition of more than 10% of the Common Stock
by such Related Person, in which event the normal requirements with respect to
stockholder votes would apply.

Prior to June 27, 1995, the Certificate provided that the Board of Directors
of the Company be divided into three classes, as nearly equal in size as
possible, each of which was elected for a three-year term. On June 27, 1995,
the Company adopted an amendment to the Certificate that had the effect of
eliminating the classification of the Board of Directors. The Certificate
currently provides that each director who is elected after January 1, 1995
shall hold office until the next annual meeting of stockholders and until that
director's successor is elected and qualified or until that director's earlier
resignation or removal.

The Certificate provides that the number of directors will be not less than
five nor more than 20. The Board of Directors currently has 15 members. The
Company's By-Laws provide that vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and that the directors so chosen will
hold office until the event of their death, resignation or removal.

25
<PAGE>

Stockholders can only take action at meetings of the stockholders. Special
meetings of the stockholders may only be called by the Board of Directors or
by any person authorized by the Board. The Company's By-Laws provide that only
such business may be conducted at a special meeting as is specified in the
notice of meeting. The Certificate provides that the Board of Directors, when
evaluating proposals regarding a tender offer, a merger, a consolidation or
the purchase or acquisition of substantially all of the properties and assets
of the Company, shall, in connection with the exercise of its judgment in
determining what is in the best interests of the Company and its stockholders,
give due consideration to all relevant factors, including, without limitation,
the social and economic effects of the transaction on employees, suppliers,
customers and other constituents of the Company and its subsidiaries and on
the communities in which they operate or are located.

The provisions referred to above and in this paragraph and all of the By-
Laws of the Company can be amended or repealed by the stockholders only if
stockholders holding not less than 80% of the outstanding Common Stock and
stockholders holding a majority of the total outstanding Common Stock,
excluding Common Stock owned by a Related Person, vote for such amendment or
repeal.

The Company's By-Laws establish an advance notice procedure for stockholders
to nominate candidates for election as directors or to bring other business
before meetings of stockholders of the Company (the "Stockholder Notice
Procedure"). Only those stockholder nominees who are nominated in accordance
with the Stockholder Notice Procedure will be eligible for election as
directors of the Company. Under the Stockholder Notice Procedure, notice of
stockholder nominations or proposals of other business to be made at an annual
meeting (or of any other business to be brought before such meeting) generally
must be received by the Company not less than 60 days nor more than 90 days
prior to the first anniversary of the previous year's annual meeting (or, if
the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, not earlier than the 90th day prior to such
meeting and not later than the later of (i) the 60th day prior to such meeting
or (ii) the 10th day after public announcement of the date of such meeting is
first made). The By-Laws specify information required to be provided to the
Company by stockholders to comply with the Stockholder Notice Procedure.

By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure will afford the Company's Board an opportunity to consider
the qualifications of the proposed nominees and, to the extent deemed
necessary or desirable by the Company's Board, to inform stockholders about
such qualifications. Although the Company's By-Laws do not give the Company's
Board any power to approve or disapprove stockholder nominations for the
election of directors or proposals for action, they may have the effect of
precluding a contest for the election of directors or the consideration of
stockholder proposals if the proper procedures are not followed, and of
discouraging or deterring a third party from conducting a solicitation of
proxies to elect its own slate of directors or to approve its own proposal,
without regard to whether consideration of such nominees or proposals might be
harmful or beneficial to the Company and its stockholders.

Section 203 of the Delaware General Corporation Law ("Section 203")
prohibits certain persons ("interested stockholders") from engaging in a
"business combination" with a Delaware corporation for three years following
the date such persons become interested stockholders. Interested stockholders
generally include (i) persons who are the beneficial owners of 15% or more of
the outstanding voting stock of the corporation and (ii) persons who are
affiliates or associates of the corporation and who hold 15% or more of the
corporation's outstanding voting stock at any time within three years before
the date on which such a person's status as an interested stockholder is
determined. Subject to certain exceptions, a "business combination" includes,
among other things (i) mergers or consolidations, (ii) the sale, lease,
exchange, mortgage, pledge, transfer or other disposition of assets having an
aggregate market value equal to 10% or more of either the aggregate market
value of all assets of the corporation determined on a consolidated basis or
the aggregate market value of all the outstanding

26
<PAGE>

stock of the corporation, (iii) transactions that result in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder, except pursuant to a transaction that effects a pro rata
distribution to all stockholders of the corporation, (iv) any transaction
involving the corporation that has the effect of increasing the proportionate
share of the stock of any class or series, or securities convertible into the
stock of any class or series, of the corporation that is owned directly or
indirectly by the interested stockholder or (v) any receipt by the interested
stockholder of the benefit (except proportionately as a stockholder) of any
loans, advances, guarantees, pledges or other financial benefits provided by
or through the corporation.

Section 203 does not apply to a business combination if (i) before a person
becomes an interested stockholder, the board of directors of the corporation
approves the transaction in which the interested stockholder became an
interested stockholder or approves the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (other than certain excluded shares) or (iii) following
a transaction in which the person became an interested stockholder, the
business combination is (a) approved by the board of directors of the
corporation and (b) authorized at a regular or special meeting of stockholders
(and not by written consent) by the affirmative vote of the holders of at
least two-thirds of the outstanding voting stock of the corporation not owned
by the interested stockholder.

Certain provisions of the Stock Purchase Agreement require the Company to
make additional payments to the Selling Stockholders in the event of a "change
of control" during a specified period following the consummation of the
Offerings which may make more difficult the acquisition of control of the
Company. See "Selling Stockholders--Selling Stockholders' Agreements".

For a discussion of the preferred share purchase rights associated with the
outstanding shares of Common Stock, which also have certain anti-takeover
effects, reference is made to the description of the Company's Rights
Agreement contained in Amendment No. 5 to the Company's Registration Statement
on Form 8-A, dated February 25, 1997, which is incorporated by reference
herein. See "Available Information".

PREFERRED STOCK

The Company currently has no shares of Preferred Stock outstanding. The
Company is authorized to issue 10,000,000 shares of Preferred Stock, which may
be issued from time to time in one or more series with such voting rights,
dividend rates, rights, preferences and limitations as may be determined by
the Company's Board of Directors. Satisfaction of any dividend preferences of
any outstanding shares of Preferred Stock would reduce the amount of funds
available for the payment of dividends to holders of the Common Stock. Holders
of any Preferred Stock may be entitled to vote with the holders of the Common
Stock on some or all matters submitted to stockholders. Holders of Preferred
Stock would normally be entitled to receive a preference payment before any
payment is made to holders of Common Stock in the event of any liquidation,
dissolution or winding up of the Company. The Company has authorized a series
of Preferred Stock in connection with its Preferred Share Purchase Rights
Plan, a description of which is contained in Amendment No. 5 to the Company's
Registration Statement on Form 8-A, dated February 25, 1997, which is
incorporated by reference herein. See "Available Information".

27
<PAGE>

SELLING STOCKHOLDERS

The following table sets forth the name of each Selling Stockholder and, for
each, the number of shares of Common Stock owned beneficially at the
commencement of the Offerings, the maximum number of shares which may be
offered for sale and the number of shares of Common Stock to be repurchased by
the Company. After giving effect to the Offerings and the Repurchase, the
number of shares beneficially owned by the Selling Stockholders in the
aggregate will be less than one percent of the outstanding shares of Common
Stock. See "--Selling Stockholders' Agreements".

<TABLE>
<CAPTION>
NUMBER OF SHARES TOTAL TOTAL
OF COMMON STOCK SHARES TO SHARES TO BE
BENEFICIALLY OWNED BE SOLD IN THE
NAME BEFORE THE OFFERINGS REPURCHASED OFFERINGS
- ---- -------------------- ----------- ------------
<S> <C> <C> <C>
ALSAM Trust(1), for the benefit
of:
L.S. Skaggs ................... 10,274,195 4,544,802 5,729,393
Aline W. Skaggs ............... 185,452 82,035 103,417
Six S. Ranch, Inc.(2)........... 20,000 8,847 11,153
ALSAM Foundation(3)............. 2,046,930 905,462 1,141,468
Skaggs Family Foundation for
Roman Catholic and Community
Charities(4)................... 675,000 298,587 376,413
Skaggs Institute for
Research(5).................... 1,950,000 862,585 1,087,415
Lynda Sue Skaggs Balukoff....... 402,545 178,066 224,479
Claudia Skaggs Luttrell......... 437,472 193,516 243,956
The Northern Trust Company, as
trustee under the L.S. Skaggs &
Aline W. Skaggs Charitable
Remainder Unitrust #1 and the
L.S. Skaggs & Aline W. Skaggs
Charitable Remainder Unitrust
#2............................. 7,314,400 3,235,534 4,078,866
The Northern Trust Company, as
trustee under the Lynda Sue
Balukoff Charitable Remainder
Unitrust #1 and the Lynda Sue
Balukoff Charitable Remainder
Trust #2....................... 355,000 157,035 197,965
The Northern Trust Company, as
trustee under the Claudia
Skaggs Luttrell Charitable
Remainder Unitrust #1, the
Claudia Skaggs Luttrell
Charitable Remainder Unitrust
#2 and certain trusts for the
benefit of Claudia Skaggs
Luttrell....................... 1,695,730 750,108 945,622
The Northern Trust Company, as
trustee under the Don L. Skaggs
Charitable Remainder Unitrust
#1, the Don L. Skaggs
Charitable Remainder Unitrust
#2 and certain trusts for the
benefit of Don L. Skaggs....... 1,452,665 642,588 810,077
The Northern Trust Company, as
trustee under a trust for the
benefit of Mark S. Skaggs(6)... 49,200 21,764 27,436
The Northern Trust Company, as
trustee under certain trusts
for the benefit of
grandchildren of L.S. Skaggs
and Aline W. Skaggs............ 70,980 31,398 39,582
U.S. Bank, as trustee under The
Lynda Sue Skaggs (Balukoff)
Personal Trust................. 317,084 140,262 176,822
U.S. Bank, as trustee under
certain trusts for the benefit
of grandchildren of L.S. Skaggs
and Aline W. Skaggs............ 163,479 72,315 91,164
U.S. Bank, as trustee under the
Balukoff Charitable Remainder
Trust.......................... 220,000 97,318 122,682
</TABLE>

28
<PAGE>

- --------
(1) A Utah Trust, of which Claudia Skaggs Luttrell, Don L. Skaggs, Michael T.
Miller and George L. Moosman are trustees.

(2) A Utah corporation, wholly owned by the ALSAM Trust, principally engaged
in the activity of ranching.
(3) A charitable foundation, of which L.S. Skaggs, Aline W. Skaggs and Don L.
Skaggs are members of the managing committee.
(4) A charitable foundation, of which Aline W. Skaggs, Claudia Skaggs Luttrell
and Don L. Skaggs are members of the board of trustees.
(5) A charitable foundation, of which L.S. Skaggs and Aline W. Skaggs are
members of the board of directors.
(6) Mark Stanley Skaggs is also the beneficiary of The Mark Stanley Skaggs
Personal Trust, under which Wells Fargo Bank is trustee and which owns
3,459 shares of Common Stock not subject to the Stock Purchase Agreement or
the Registration Rights Agreement, and which are not included in the
Offerings or the Repurchase.

L.S. Skaggs has been a director of the Company since 1950, served as
Chairman of the Board of the Company from 1962 to July 1995, and has been a
consultant to the Company since July 1995. Aline W. Skaggs was a director of
the Company from 1981 to 1994. L.S. Skaggs and Aline W. Skaggs are married,
and are the parents of Don L. Skaggs, Lynda Sue Skaggs Balukoff, Claudia
Skaggs Luttrell and Mark S. Skaggs, all of whom are Selling Stockholders
and/or beneficiaries of certain trusts which are Selling Stockholders. Don L.
Skaggs, Executive Vice President of the Company since March 1993 and a
director of the Company since 1994, is a trustee or officer of certain of the
Selling Stockholders. The above table does not include Don L. Skaggs' shares
held under employee benefit plans. Michael T. Miller, a director of the
Company since 1992, is a trustee or officer of certain of the Selling
Stockholders. Pursuant to the Stock Purchase Agreement described below,
Messrs. L.S. Skaggs, Don L. Skaggs and Michael T. Miller have agreed to resign
as directors of the Company after the Selling Stockholders shall in the
aggregate beneficially own less than 5% of the outstanding shares of Common
Stock of the Company.

SELLING STOCKHOLDERS' AGREEMENTS

The following is a description of certain terms of the Stock Purchase
Agreement and the Registration Rights Agreement, copies of which have been
filed as exhibits to the Registration Statement. The following description
does not purport to be complete and is qualified in its entirety by reference
to such exhibits.

Pursuant to the Stock Purchase Agreement, the Company has agreed to
repurchase 12,222,222 shares of Common Stock from the Selling Stockholders for
$45 per share. The Offerings are conditioned upon the Repurchase and all such
transactions are expected to be consummated simultaneously. Selling
Stockholders holding a majority of the shares held by the Selling Stockholders
but not subject to the Repurchase (such shares, the "Retained Shares") have
the right to terminate the Offerings prior to pricing hereof if the Selling
Stockholders are advised by Goldman, Sachs & Co. and J.P. Morgan Securities
Inc. that the initial public offering price for the shares offered hereby
would be below $45 per share. The obligation of the Selling Stockholders to
consummate the Repurchase is subject to, among other things, the consummation
of the Offerings, unless such condition is waived by Selling Stockholders
holding two-thirds of the shares subject to the Repurchase. The obligation of
the parties to consummate the Repurchase is also subject to, among other
things, there not having elapsed more than 60 days following the date of
filing of the registration statement relating to the Offerings (the
"Registration Statement"), subject to certain exceptions.

Pursuant to the Stock Purchase Agreement, the Selling Stockholders have
agreed to certain "standstill" provisions with respect to the Company,
including, among other things, and subject to

29
<PAGE>

certain exceptions, that such persons will not take certain actions, or assist
or encourage others to take certain actions, with respect to an acquisition of
any shares of the Company, a solicitation of proxies or the making of a
stockholder proposal or a transfer, sale or pledge of such persons' shares of
Common Stock (and providing for, in the case of certain permitted transfers or
sales, a right of first refusal, subject to certain exceptions, in favor of
the Company to acquire such shares). Such "standstill" provisions will remain
in effect until February 20, 2007, provided that if neither the Repurchase nor
the Offerings are consummated, such "standstill" provisions shall remain in
effect until August 20, 1999. If neither the Repurchase nor the Offerings are
consummated as a result of a breach by or a failure of representations of the
Company under the Stock Purchase Agreement, the Registration Rights Agreement
or the Underwriting Agreement, the "standstill" provisions will terminate upon
termination of the Stock Purchase Agreement.

Pursuant to the Stock Purchase Agreement, if, during the six-month period
following consummation of the Repurchase, (i) a "change of control" (as
defined in the Stock Purchase Agreement) of the Company occurs or the Company
enters into an agreement with a third party resulting in a "change of control"
at a price above $45 per share or (ii) the Company enters into an agreement
for an asset sale that is not a "change of control" in which the Company
receives consideration of over $1 billion or (iii) the Company effects, by
spin-off or other distribution, the transfer of ownership of one or more
businesses or operating units having alone or in the aggregate an equity
market capitalization (plus indebtedness for borrowed money) in excess of $1
billion, then the Company will pay certain additional consideration to the
Selling Stockholders following the consummation of such transactions. The
Company has also agreed to pay certain financial advisory fees and expenses of
Goldman, Sachs & Co., in its capacity as financial advisor to certain of the
Selling Stockholders, and the reasonable fees and expenses of counsel to the
Selling Stockholders.

Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement"), the Company has agreed to file the Registration Statement and to
use all reasonable efforts to cause the Registration Statement to be declared
effective as soon as possible and in any event not more than 60 days after
filing. Under the Registration Rights Agreement, the Selling Stockholders will
be required to sell the Retained Shares in the Offerings promptly following
the Registration Statement being declared effective, provided that the
Offerings may be terminated (at the option of Selling Stockholders holding a
majority of the Retained Shares) if the Selling Stockholders are advised by
Goldman, Sachs & Co. and J.P. Morgan Securities Inc. that the price for the
shares in the Offerings would be below $45 per share. In the event the
Offerings are so terminated, the Selling Stockholders have the right to two
demand registrations if the "standstill" period is 30 months, or three demand
registrations if the "standstill" period is ten years, and unlimited piggyback
registrations during the standstill period or until there are fewer than 2
million Retained Shares. In connection with an exercise of such registration
rights, subject to certain conditions and exceptions, the Company and each
Selling Stockholder has agreed not to effect any public sale or distribution
of securities of the Company similar to those proposed to be registered during
the 10-day period prior to the effective date of the applicable registration
statement or during the period beginning on such effective date and ending on
the later of the completion of the distribution of such securities pursuant to
such offering and 90 days after such effective date. In the Registration
Rights Agreement, the Company has agreed to pay the expenses, other than
underwriting discounts or commissions, incident to an offering thereunder,
provided that if the proceeds to the Selling Stockholders in the Offerings,
net of underwriting discounts and commissions, would be less than $45 per
share, then the Company shall bear such proportion of such underwriting
discounts and commissions such that the net proceeds to the Selling
Stockholders shall equal the lesser of $45 per share and the initial public
offering price.

30
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the Offerings will be passed upon
for the Company by Wachtell, Lipton, Rosen & Katz, New York, New York, and for
the U.S. Underwriters and the International Underwriters by Davis Polk &
Wardwell, New York, New York.

EXPERTS

The consolidated financial statements of American Stores Company
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended February 3, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are, and
audited financial statements to be included in subsequently filed documents
will be, incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such financial statements (to the extent covered by consents
filed with the Commission) given upon the authority of such firm as experts in
accounting and auditing.

31
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Stockholders have severally agreed to sell to each of the U.S.
Underwriters named below, and each of such U.S. Underwriters, for whom
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated and Smith
Barney Inc. are acting as representatives, has severally agreed to purchase
from the Selling Stockholders, the respective number of shares of Common Stock
set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
UNDERWRITER STOCK
----------- ----------
<S> <C>
Goldman, Sachs & Co.............................................
J.P. Morgan Securities Inc......................................
Donaldson, Lufkin & Jenrette Securities Corporation.............
Morgan Stanley & Co. Incorporated...............................
Smith Barney Inc................................................
----------
Total................................................... 12,326,330
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the U.S. Underwriters.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters
of the International Offering (the "International Underwriters") providing for
the concurrent offer and sale of 3,081,580 shares of Common Stock in an
international offering outside of the United States. The initial public
offering price and aggregate underwriting discount per share for the Offerings
are identical. The closing of the International Offering is a condition to the
closing of the U.S. Offering, and vice versa. The representatives of the
International Underwriters are Goldman Sachs International, J.P. Morgan
Securities Ltd., Donaldson, Lufkin & Jenrette Securities Corporation, Morgan
Stanley & Co. International Limited and Smith Barney Inc.

Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of
the U.S. Underwriters named herein has agreed or will agree pursuant to the
Agreement Between that, as a part of the distribution of the shares offered
hereby and subject to certain exceptions, it will offer, sell or deliver
shares of Common Stock, directly or indirectly, only in the United States of
America (including the 50 States and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction (the
"United States") and to U.S. persons, which term shall mean, for purposes of
this paragraph: (a) any individual who is a resident of the United States or
(b) any corporation, partnership or other entity organized in or under the
laws of the United States or any political subdivision thereof and whose
office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree
pursuant to the Agreement Between that, as a part of the distribution of the
shares offered as part of the International Offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b)
to any person who it believes intends to reoffer, resell or deliver the shares
in the United States

U-1
<PAGE>

or to any U.S. persons and (ii) cause any dealer to whom it may sell such
shares at any concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall
be the initial public offering price, less an amount not greater than the
selling concession.

The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
1,848,949 additional shares of Common Stock, solely to cover over-allotments,
if any. If the U.S. Underwriters exercise such over-allotment option, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
12,326,330 shares offered hereby. The Company has granted the International
Underwriters a similar option to purchase up to an aggregate of 462,237
additional shares of Common Stock.

The Selling Stockholders have agreed not to offer, sell or otherwise dispose
of any shares of Common Stock, securities substantially similar to the Common
Stock, or securities exchangeable for or convertible into shares of Common
Stock, or any substantially similar security for a period of 90 days after the
date of this Prospectus without the prior written consent of the
representatives, except for the shares of Common Stock offered in connection
with the concurrent U.S. and international offerings. The Company has agreed,
with certain limited exceptions, not to offer, sell or otherwise dispose of
any shares of Common Stock, securities substantially similar to the Common
Stock, or securities exchangeable for or convertible into shares of Common
Stock or any substantially similar security (other than pursuant to employee
stock option or purchase plans or director incentive plans, or upon the
conversion or exchange of convertible or exchangeable securities outstanding
on the date of this Prospectus) for a period of 90 days after the date of this
Prospectus without the prior written consent of the representatives, except
for the shares of Common Stock offered in connection with the concurrent U.S.
and international offerings.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.

During and after the Offerings, the Underwriters may purchase and sell
Common Stock in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the Offerings. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Common Stock sold in the Offerings for their
account may be reclaimed by the syndicate if such securities are repurchased
by the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock
which may be higher than the price that might otherwise prevail in the open
market. These transactions may be effected on the New York Stock Exchange, the
Chicago Stock Exchange, the Pacific Stock Exchange or the Philadelphia Stock
Exchange, in the over-the-counter market or otherwise, and these activities,
if commenced, may be discontinued at any time.

Certain of the U.S. Underwriters and International Underwriters have
provided from time to time, and expect to provide in the future, investment
banking services to the Company and its affiliates (including certain of the
Selling Stockholders) for which such U.S. Underwriters and International
Underwriters have received and will receive customary fees and commissions.
The amount of outstanding debt borrowed directly under the Credit Facility, at
a weighted average interest rate of 5.6%, was $957 million at February 1,
1997, of which $123 million was owed to Morgan Guaranty Trust Company of New
York, the agent bank under the Credit Facility. The Company will incur
additional

U-2
<PAGE>

indebtedness under the Amended Credit Facilities in connection with the
Repurchase. The Amended Credit Facilities are expected to include a $1.5
billion five-year revolving credit facility and a $500 million 364-day
revolving credit facility. In addition, the Company had $100 million
outstanding at February 1, 1997 under a 364-day credit line with Morgan
Guaranty Trust Company of New York, at an interest rate of 5.7%. Morgan
Guaranty Trust Company of New York, a wholly-owned subsidiary of J.P. Morgan &
Co. Incorporated, is an affiliate of each of J.P. Morgan Securities Inc., a
manager of the U.S. Offering, and J.P. Morgan Securities Ltd., a manager of
the International Offering.

U-3
<PAGE>

[pictures of exteriors and interiors of certain stores]
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
The Company.............................................................. 5
Recent Developments...................................................... 6
Price Range of Common Stock and Dividend Policy.......................... 10
Use of Proceeds.......................................................... 10
Capitalization........................................................... 11
Selected Consolidated Financial Data..................................... 12
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 14
Business................................................................. 19
Description of Capital Stock............................................. 25
Selling Stockholders..................................................... 28
Legal Matters............................................................ 31
Experts.................................................................. 31
Underwriting............................................................. U-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

15,407,910 SHARES

AMERICAN STORES COMPANY

COMMON STOCK
(PAR VALUE $1.00 PER SHARE)

--------------------------

[LOGO]

--------------------------

GOLDMAN, SACHS & CO.

J.P. MORGAN & CO.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY & CO.
INCORPORATED

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED MARCH 7, 1997

15,407,910 SHARES
[LOGO]
AMERICAN STORES COMPANY
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
----------

Of the 15,407,910 shares of Common Stock offered, 3,081,580 shares are being
offered hereby in an international offering outside the United States and
12,326,330 shares are being offered in a concurrent offering in the United
States. The initial public offering price and the aggregate underwriting
discount per share will be identical for both Offerings. See "Underwriting".

----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT (1) STOCKHOLDERS (2)
-------------- ------------ -------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
Total (3)...................... $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Estimated expenses of $675,000 are payable by the Company. In addition, the
Company has agreed to pay part or all of the underwriting discount to the
extent the net proceeds to the Selling Stockholders would otherwise be less
than $45 per share. See "Selling Stockholders--Selling Stockholders'
Agreements".

(3) The Company has granted the International Underwriters an option for 30
days to purchase up to an additional 462,237 shares of Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Company has granted the
U.S. Underwriters a similar option with respect to an additional 1,848,949
shares as part of the concurrent U.S. offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount, proceeds to Selling Stockholders and proceeds to Company will be
$ , $ , $ and $ , respectively. See "Underwriting".
----------

Goldman, Sachs & Co. is acting as book running lead manager for the
Offerings. Goldman Sachs International and J.P. Morgan Securities Ltd. are
acting as joint lead managers. The shares offered hereby are offered severally
by the International Underwriters, as specified herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or
in part. It is expected that certificates for the shares will be ready for
delivery in New York, New York, on or about , 1997 against payment
therefor in immediately available funds.
GOLDMAN SACHS INTERNATIONAL J.P. MORGAN SECURITIES LTD.
Joint Lead Managers
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INTERNATIONAL
SMITH BARNEY INC.
----------

The date of this Prospectus is , 1997.
<PAGE>

[MAP DEPICTING STORE LOCATIONS AND LOGOS OF STORE OPERATING NAMES]

IN THIS PROSPECTUS, REFERENCE TO "DOLLARS" AND "$" ARE UNITED STATES
DOLLARS.
----------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
<PAGE>

ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS

CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

GENERAL

The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a holder who is not a United States person (a "Non-U.S. Holder"). For
this purpose, the term Non-U.S. Holder is defined as any person who is, for
U.S. federal income tax purposes, a foreign corporation, a non-resident alien
individual, a foreign estate or trust, or a foreign partnership. This
discussion does not address all aspects of United States federal income and
estate taxes and does not deal with foreign, state and local consequences that
may be relevant to such Non-U.S. Holders in light of their personal
circumstances. Furthermore, this discussion is based on current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and, in
some cases, proposed regulations promulgated thereunder and administrative and
judicial interpretations thereof, all of which are subject to change including
changes with retroactive effect. EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS
ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE
TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK AS WELL
AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY UNITED STATES
STATE, LOCAL OR OTHER TAXING JURISDICTION.

An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States on at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three-year period ending in the current calendar
year (counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year and one-sixth
of the days present in the second preceding year). Resident aliens are subject
to United States federal tax as if they were United States citizens and
residents.

DIVIDENDS

The Company intends to continue its current policy of paying quarterly cash
dividends on shares of Common Stock. See "Price Range of Common Stock and
Dividend Policy". In the event that dividends are paid on shares of Common
Stock, except as described below, such dividends paid to a Non-U.S. Holder of
Common Stock will be subject to withholding of United States federal income
tax at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty, unless the dividends are effectively connected with the
conduct of a trade or business of the Non-U.S. Holder within the United
States. If the dividend is effectively connected with the conduct of a trade
or business of the Non-U.S. Holder within the United States, the dividend
would be subject to United States federal income tax on a net income basis at
applicable graduated individual or corporate rates, provided that form 4224 is
filed with the paying agent, and would be exempt from the 30% withholding tax
described above. Any such effectively connected dividends received by a
foreign corporation may, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.

Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of
such country (unless the payor has knowledge to the contrary) for purposes of
the withholding discussed above, and, under the current interpretation of
United States Treasury regulations, for purposes of determining the
applicability of a tax treaty rate. Under proposed United States Treasury
regulations, not currently in effect, however, a Non-U.S. Holder of Common
Stock who wishes to claim the benefit of an applicable treaty rate would be
required to satisfy applicable certification and other requirements. Also,
under such proposed regulations, tax would not be withheld on dividends paid
to a foreign partnership to the extent allocable to persons who certify that
they are not Non-U.S. Holders; under current regulations, tax would be
withheld in such

31
<PAGE>

cases but such persons could claim a refund or credit of such withheld tax on
their tax returns. Certain certification and disclosure requirements must also
be complied with in order to be exempt from withholding under the effectively
connected income exemption discussed above.

A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service (the "Service").

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to United States federal
income tax on any gain recognized on a disposition of a share of Common Stock
unless (i) subject to the exception discussed below, the Company is or has been
a "United States real property holding corporation" (a "USRPHC") within the
meaning of Section 897(c)(2) of the Code at any time within the shorter of the
five-year period preceding such disposition or such Non-U.S. Holder's holding
period (the "Required Holding Period"), (ii) the gain is effectively connected
with the conduct of a trade or business within the United States of the Non-
U.S. Holder and, if a tax treaty applies, attributable to a permanent
establishment maintained by the Non-U.S. Holder, (iii) the Non-U.S. Holder is
an individual who holds the share of Common Stock as a capital asset and is
present in the United States for 183 days or more in the taxable year of the
disposition and either (a) such individual has a "tax home" (as defined for
United States federal income tax purposes) in the United States or (b) the gain
is attributable to an office or other fixed place of business maintained in the
United States by such individual, or (iv) the Non-U.S. Holder is subject to tax
pursuant to the Code provisions applicable to certain United States
expatriates. If an individual Non-U.S. Holder falls under clauses (ii) or (iv)
above, he or she will be taxed on his or her net gain derived from the sale
under regular United States federal income tax rates. If the individual Non-
U.S. Holder falls under clause (iii) above, he or she will be subject to a flat
30% tax on the gain derived from the sale which may be offset by United States
capital losses (notwithstanding the fact that he or she is not considered a
resident of the United States). If a Non-U.S. Holder that is a foreign
corporation falls under clause (ii) above, it will be taxed on its gain under
regular graduated United States federal income tax rates and, in addition, will
under certain circumstances be subject to the branch profits tax equal to 30%
of its "effectively connected earnings and profits" within the meaning of the
Code for the taxable year, as adjusted for certain items, unless it qualifies
for a lower rate under an applicable income tax treaty.

A corporation is generally a USRPHC if the fair market value of its United
States real property interests equals or exceeds 50% of the sum of the fair
market value of its worldwide real property interests plus its other assets
used or held for use in a trade or business. While not free from doubt, the
Company believes that it is not currently, and does not currently anticipate
becoming, a USRPHC. Even if the Company were a USRPHC, however, a Non-U.S.
Holder would generally not be subject to tax or withholding in respect of such
tax on gain from a sale or other disposition of Common Stock by reason of the
Company's USRPHC status so long as the Common Stock is regularly traded on an
established securities market during the calendar year in which such sale or
disposition occurs, provided that such holder does not own, actually or
constructively, Common Stock with a fair market value in excess of 5% of the
fair market value of all Common Stock outstanding at any time during the
Required Holding Period.

If the Company is or has been a USRPHC within the Required Holding Period,
and if a Non-U.S. Holder owns in excess of 5% of the fair market value of
Common Stock (as described in the preceding paragraph), such Non-U.S. Holder of
Common Stock will be subject to United States federal income tax at regular
graduated rates under certain rules ("FIRPTA tax") on gain recognized on a sale
or other disposition of such Common Stock, but will not be subject to
withholding in respect of such tax provided that the Common Stock is regularly
traded during the year of sale or disposition. Non-U.S. Holders are urged to
consult their tax advisors concerning the potential applicability of these
provisions.

32
<PAGE>

FEDERAL ESTATE TAXES

Common Stock owned, or treated as owned, by a non-resident alien individual
(as specifically determined for United States federal estate tax purposes) at
the time of death will be included in such holder's gross estate for United
States federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise.

UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The Company must report annually to the Service and to each Non-U.S. Holder
the amount of dividends paid to such holder and the tax withheld with respect
to such dividends. These information reporting requirements apply regardless of
whether withholding is required. Copies of the information returns reporting
such dividends and withholding may also be made available to the tax
authorities in the country in which the Non-U.S. Holder resides under the
provisions of an applicable income tax treaty.

United States backup withholding tax (which generally is a withholding tax
imposed at the rate of 31% on certain payments to persons that fail to furnish
certain information under the United States information reporting requirements)
generally will not apply to (a) the payment of dividends paid on Common Stock
to a Non-U.S. Holder at an address outside the United States (unless the payor
has knowledge that the payee is a U.S. person) or (b) the payment of the
proceeds of the sale of Common Stock to or through the foreign office of a
foreign broker. In the case of the payment of proceeds from such a sale of
Common Stock through a foreign office of a broker that is a United States
person or a "U.S. related person," however, information reporting (but not
backup withholding) is required with respect to the payment unless the broker
has documentary evidence in its files that the owner is a Non-U.S. Holder and
certain other requirements are met or the holder otherwise establishes an
exemption. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation for United States federal income tax purposes, or (ii) a
foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
United States trade or business. The payment of the proceeds of a sale of
shares of Common Stock to or through a United States office of a broker is
subject to information reporting and possible backup withholding unless the
owner certifies its non-United States status under penalties of perjury or
otherwise establishes an exemption. Any amounts withheld under the backup
withholding rules from a payment to a Non-U.S. Holder will be allowed as a
refund or a credit against such Non-U.S. Holder's United States federal income
tax liability, provided that the required information is furnished to the
Service.

The United States Treasury has recently issued proposed regulations regarding
the withholding and information reporting rules discussed above. In general,
the proposed regulations do not alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify and modify reliance standards. If finalized in their
current form, the proposed regulations would generally be effective for
payments made after December 31, 1997, subject to certain transition rules.

LEGAL MATTERS

33
<PAGE>

EXPERTS

The consolidated financial statements of American Stores Company incorporated
by reference in the Company's Annual Report on Form 10-K for the year ended
February 3, 1996 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein
by reference. Such financial statements are, and audited financial statements
to be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements (to the extent covered by consents filed with the Commission) given
upon the authority of such firm as experts in accounting and auditing.

34
<PAGE>

ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Selling Stockholders have severally agreed to sell to each of the
International Underwriters named below, and each of such International
Underwriters, for whom Goldman Sachs International, J.P. Morgan Securities
Ltd., Donaldson, Lufkin & Jenrette Securities Corporation, Morgan Stanley &
Co. International Limited and Smith Barney Inc. are acting as representatives,
has severally agreed to purchase from the Selling Stockholders, the respective
number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
UNDERWRITER STOCK
----------- ---------
<S> <C>
Goldman Sachs International......................................
J.P. Morgan Securities Ltd. .....................................
Donaldson, Lufkin & Jenrette Securities Corporation..............
Morgan Stanley & Co. International Limited.......................
Smith Barney Inc.................................................
---------
Total.................................................... 3,081,580
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
International Underwriters are committed to take and pay for all of the shares
offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Common Stock
in part directly to the public at the initial public offering price set forth
on the cover page of this Prospectus, and in part to certain securities
dealers at such price less a concession of $ per share. The International
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain brokers and dealers. After the shares of
Common Stock are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the International
Underwriters.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the
U.S. offering (the "U.S. Underwriters") providing for the concurrent offer and
sale of 12,326,330 shares of Common Stock in a U.S. offering. The initial
public offering price and aggregate underwriting discount per share for the
Offerings are identical. The closing of the U.S. Offering is a condition to
the closing of the International Offering, and vice versa. The representatives
of the U.S. Underwriters are Goldman, Sachs & Co., J.P. Morgan Securities
Inc., Donaldson, Lufkin & Jenrette Securities Corporation, Morgan Stanley &
Co. Incorporated and Smith Barney Inc.

Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of
the U.S. Underwriters has agreed or will agree pursuant to the Agreement
Between that, as a part of the distribution of the shares offered hereby and
subject to certain exceptions, it will offer, sell or deliver shares of Common
Stock, directly or indirectly, only in the United States of America (including
the 50 States and the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction (the "United States") and to U.S.
persons, which term shall mean, for purposes of this paragraph: (a) any
individual who is a

U-1
<PAGE>

resident of the United States or (b) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase
is located in the United States. Each of the International Underwriters named
herein has agreed or will agree pursuant to the Agreement Between that, as a
part of the distribution of the shares offered as part of the International
Offering, and subject to certain exceptions, it will (i) not, directly or
indirectly, offer, sell or deliver shares of Common Stock (a) in the United
States or to any U.S. persons or (b) to any person who it believes intends to
reoffer, resell or deliver the shares in the United States or to any U.S.
persons and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the
International Underwriters and the U.S. Underwriters of such number of shares
of Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater than the
selling concession.

The Company has granted the International Underwriters an option exercisable
for 30 days after the date of this Prospectus to purchase up to an aggregate of
462,237 additional shares of Common Stock, solely to cover over-allotments, if
any. If the International Underwriters exercise such over-allotment option, the
International Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the 3,081,580 shares offered hereby. The Company has granted
the U.S. Underwriters a similar option to purchase up to an aggregate of
1,848,949 additional shares of Common Stock.

The Selling Stockholders have agreed not to offer, sell or otherwise dispose
of any shares of Common Stock, securities substantially similar to the Common
Stock, or securities exchangeable for or convertible into shares of Common
Stock, or any substantially similar security for a period of 90 days after the
date of this Prospectus without the prior written consent of the
representatives, except for the shares of Common Stock offered in connection
with the concurrent international and U.S. offerings. The Company has agreed,
with certain limited exceptions, not to offer, sell or otherwise dispose of any
shares of Common Stock, securities substantially similar to the Common Stock,
or securities exchangeable for or convertible into shares of Common Stock or
any substantially similar security (other than pursuant to employee stock
option or purchase plans or director incentive plans, or upon the conversion or
exchange of convertible or exchangeable securities outstanding on the date of
this Prospectus) for a period of 90 days after the date of this Prospectus
without the prior written consent of the representatives, except for the shares
of Common Stock offered in connection with the concurrent international and
U.S. offerings.

Each International Underwriter has also agreed or will agree that (a) it has
not offered or sold and prior to the date six months after the date of issue of
the shares of Common Stock will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (b) it has complied, and will comply, with all
applicable provisions of the Financial Services Act of 1986 of Great Britain
with respect to anything done by it in relation to the shares of Common Stock
in, from or otherwise involving the United Kingdom, and (c) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the shares of Common Stock to
a person who is of a kind described in Article 11(3) of the Financial Services
Act of 1986 (Investment Advertisements) (Exemptions) Order 1996 of Great
Britain or is a person to whom the document may otherwise lawfully be issued or
passed on.

U-2
<PAGE>

Buyers of shares of Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the
country of purchase in addition to the initial public offering price.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.

During and after the Offerings, the Underwriters may purchase and sell Common
Stock in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover syndicate short positions
created in connection with the Offerings. The Underwriters also may impose a
penalty bid whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Common Stock sold in the Offerings for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock
which may be higher than the price that might otherwise prevail in the open
market. These transactions may be effected on the New York Stock Exchange, the
Chicago Stock Exchange, the Pacific Stock Exchange or the Philadelphia Stock
Exchange, in the over-the-counter market or otherwise, and these activities, if
commenced, may be discontinued at any time.

Certain of the International Underwriters and U.S. Underwriters have provided
from time to time, and expect to provide in the future, investment banking
services to the Company and its affiliates (including certain of the Selling
Stockholders) for which such International Underwriters and U.S. Underwriters
have received and will receive customary fees and commissions. The amount of
outstanding debt borrowed directly under the Credit Facility, at a weighted
average interest rate of 5.6%, was $957 million at February 1, 1997, of which
$123 million was owed to Morgan Guaranty Trust Company of New York, the agent
bank under the Credit Facility. The Company will incur additional indebtedness
under the Amended Credit Facilities in connection with the Repurchase. The
Amended Credit Facilities are expected to include a $1.5 billion five-year
revolving credit facility and a $500 million 364-day revolving credit facility.
In addition, the Company had $100 million outstanding at February 1, 1997 under
a 364-day credit line with Morgan Guaranty Trust Company of New York, at an
interest rate of 5.7%. Morgan Guaranty Trust Company of New York, a wholly-
owned subsidiary of each of J.P. Morgan & Co. Incorporated, is an affiliate of
each of J.P. Morgan Securities Inc., a manager of the U.S. Offering, and J.P.
Morgan Securities Ltd., a manager of the International Offering.

U-3
<PAGE>

ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
The Company.............................................................. 5
Recent Developments...................................................... 6
Price Range of Common Stock and Dividend Policy.......................... 10
Use of Proceeds.......................................................... 10
Capitalization........................................................... 11
Selected Consolidated Financial Data..................................... 12
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 14
Business................................................................. 19
Description of Capital Stock............................................. 25
Selling Stockholders..................................................... 28
Certain United States Tax Consequences to Non-United States Holders...... 31
Legal Matters............................................................ 33
Experts.................................................................. 34
Underwriting............................................................. U-1
</TABLE>

15,407,910 SHARES

AMERICAN STORES COMPANY

COMMON STOCK
(PAR VALUE $1.00 PER SHARE)

--------------

[LOGO]

--------------

GOLDMAN SACHS INTERNATIONAL

J.P. MORGAN SECURITIES LTD.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY & CO.
INTERNATIONAL

SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all fees and expenses payable in connection
with the issuance and distribution of the shares of Common Stock, other than
underwriting discounts and commissions. All such fees and expenses will be
paid by the Company. All the amounts shown are estimates, except for the
Securities and Exchange Commission registration fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $241,289
"Blue Sky" fees and expenses..................................... 15,000
Legal fees and expenses.......................................... 200,000
Accounting fees and expenses..................................... 30,000
Printing expenses................................................ 125,000
Miscellaneous.................................................... 63,711
--------
Total.......................................................... $675,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Reference is made to Section 145 of the Delaware General Corporation Law
which provides for indemnification of directors and officers in certain
circumstances. Article Nine of the Restated Certificate of Incorporation of
the Company provides the following:

9.01 Elimination of Certain Liability of Directors. A Director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the Director derived an improper personal benefit.
If the Delaware General Corporation Law is amended after approval by the
stockholders of this Article to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of
the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or
modification.

9.02 Indemnification and Insurance.

(a) Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a Director or
officer of the Corporation or while serving as a Director or officer of the
Corporation is or was also serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and

II-1
<PAGE>

amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a Director or officer, and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section shall be a contract
right (which may not be reduced or limited by any repeal or modification of
this Section 9.02) and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a Director or officer in
his or her capacity as a Director or officer (and not in any other capacity in
which service was or is rendered by such person while a Director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such Director or
officer, to repay all amounts so advanced if it shall ultimately be determined
that such Director or officer is not entitled to be indemnified under this
Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of Directors
and officers.

(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this
Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law nor an actual determination
by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.

(c) Non-Exclusivity of Rights. The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.

(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss whether or not the Corporation
would have the power to indemnify such person against such expense, liability
to or loss under the Delaware General Corporation Law.

In addition, the Company maintains a directors' and officers' liability
insurance policy.

II-2
<PAGE>

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.*
1.2 Form of International Underwriting Agreement.*
4.1 The Restated Certificate of Incorporation of American Stores Company,
as amended, is incorporated herein by reference to Exhibit 3.1 of the
Company's Form 10-K for the fiscal year ended February 3, 1996, as
filed with the Commission on April 19, 1996.
4.2 The By-Laws of American Stores Company, as amended, are incorporated
herein by reference to Form 8-K filed with the Commission on September
23, 1996.
4.3 Rights Agreement, dated as of March 8, 1988, between the Company and
First Chicago Trust Company of New York, formerly Morgan Stockholder
Services Trust Company, as Rights Agent, and the amendments thereto
(the "Rights Agreement"), are incorporated by reference to the
Company's Registration Statement on Form 8-A, as filed with the
Commission on March 16, 1988, and Amendments No. 1, 2, 3, 4 and 5 to
such Registration Statement, as filed with the Commission on March 28,
1990, July 17, 1991, May 17, 1994, July 3, 1996 and February 25, 1997,
respectively.
4.4 Stock Purchase Agreement, dated as of February 20, 1997, by and among
the Company, L.S. Skaggs, Aline W. Skaggs, and certain stockholders
named therein and related letter agreements executed by certain
stockholders identified on Schedule 2 of the Stock Purchase Agreement
incorporated by reference to Exhibit 1 to the Company's Report on Form
8-K, as filed with the Commission on February 21, 1997.
4.4.1 Letter executed by U.S. Bank of Idaho related to the Stock Purchase
Agreement.
4.5 Registration Rights Agreement, dated as of February 20, 1997, by and
among the Company, L.S. Skaggs, Aline Skaggs and certain stockholders
named therein, incorporated by reference to Exhibit 3 to the Company's
Report on Form 8-K, filed with the Commission on February 21, 1997.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz as to legality.*
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (contained in the opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney.
</TABLE>
- --------

* To be filed by amendment or as an exhibit to a current report on Form 8-K
and incorporated herein by reference.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.

(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

II-3
<PAGE>

(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3, AND HAS DULY CAUSED THIS AMENDMENT NO. 1
TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN SALT LAKE CITY, UTAH ON THE 7TH DAY OF MARCH,
1997.

American Stores Company

Teresa Beck
By: _________________________________

TERESA BECK CHIEF FINANCIAL
OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

Chairman of the
* Board, Chief March 7, 1997
- ------------------------------------- Executive Officer
VICTOR L. LUND and Director
(Principal
Executive Officer)

Teresa Beck Chief Financial
- ------------------------------------- Officer (Principal March 7, 1997
TERESA BECK Financial and
Accounting Officer)

* Director
- ------------------------------------- March 7, 1997
HENRY I. BRYANT

* Director
- ------------------------------------- March 7, 1997
LOUIS H. CALLISTER

* Director
- ------------------------------------- March 7, 1997
ARDEN B. ENGEBRETSEN

* Director
- ------------------------------------- March 7, 1997
JAMES B. FISHER

* Director
- ------------------------------------- March 7, 1997
FERNANDO R. GUMUCIO

II-5
<PAGE>

SIGNATURE TITLE DATE

* Director
- ------------------------------------- March 7, 1997
LEON G. HARMON

* Director
- ------------------------------------- March 7, 1997
DONALD B. HOLBROOK

* Director
- ------------------------------------- March 7, 1997
JOHN E. MASLINE

* Director
- ------------------------------------- March 7, 1997
MICHAEL T. MILLER

* Director
- ------------------------------------- March 7, 1997
BARBARA S. PREISKEL

* Director
- ------------------------------------- March 7, 1997
J. L. SCOTT

* Director
- ------------------------------------- March 7, 1997
L.S. SKAGGS

* Director
- ------------------------------------- March 7, 1997
DON L. SKAGGS

* Director
- ------------------------------------- March 7, 1997
ARTHUR K. SMITH

Teresa Beck
*By: ________________________________

TERESA BECK, AS ATTORNEY-IN-FACT

II-6
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.*
1.2 Form of International Underwriting Agreement.*
4.1 The Restated Certificate of Incorporation of American Stores Company,
as amended, is incorporated herein by reference to Exhibit 3.1 of the
Company's Form 10-K for the fiscal year ended February 3, 1996, as
filed with the Commission on April 19, 1996.
4.2 The By-Laws of American Stores Company, as amended, are incorporated
herein by reference to Form 8-K filed with the Commission on September
23, 1996.
4.3 Rights Agreement, dated as of March 8, 1988, between the Company and
First Chicago Trust Company of New York, formerly Morgan Stockholder
Services Trust Company, as Rights Agent, and the amendments thereto
(the "Rights Agreement"), are incorporated by reference to the
Company's Registration Statement on Form 8-A, as filed with the
Commission on March 16, 1988, and Amendments No. 1, 2, 3, 4 and 5 to
such Registration Statement, as filed with the Commission on March 28,
1990, July 17, 1991, May 17, 1994, July 3, 1996 and February 25, 1997,
respectively.
4.4 Stock Purchase Agreement, dated as of February 20, 1997, by and among
the Company, L.S. Skaggs, Aline W. Skaggs, and certain stockholders
named therein, and related letter agreement executed by certain
stockholders identified on Schedule 2 of the Stock Purchase Agreement
incorporated by reference to Exhibit 1 to the Company's Report on Form
8-K, as filed with the Commission on February 21, 1997.
4.4.1 Letter executed by U.S. Bank of Idaho related to the Stock Purchase
Agreement.
4.5 Registration Rights Agreement, dated as of February 20, 1997, by and
among the Company, L.S. Skaggs, Aline Skaggs and certain stockholders
named therein, incorporated by reference to Exhibit 3 to the Company's
Report on Form 8-K, as filed with the Commission on February 21, 1997.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz as to legality.*
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (contained in the opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney.
</TABLE>
- --------

* To be filed by amendment or as an exhibit to a current report on Form 8-K and
incorporated herein by reference.

<PAGE>
EXHIBIT 4.4.1

Post Office Box 7928
Boise, Idaho 83707-7928
208-383-7281

March 3, 1997

American Stores Company
709 East South Temple
Salt Lake City, UT 84102
Attn: Kathleen McDermott and Teresa Beck

Dear Ms. McDermott and Ms. Beck:

Reference is made to the certain Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated February 20, 1997, by and among American Stores Company, a
Delaware corporation (the "Company") and the persons listed on the signature
pages thereto. Capitalized terms used but not defined herein have the meanings
assigned to such terms in the Stock Purchase Agreement. The undersigned is
listed on Schedule 2 to the Stock Purchase Agreement, together with the number
of Shares owned by the undersigned.

The undersigned hereby agrees to become an Additional Seller and to (i) thereby
sell the number of Shares computed in accordance with Section I of the Stock
Purchase Agreement and (ii) be bound by each of the terms, representations,
covenants and obligations applicable to Sellers under the Stock Purchase
Agreement and the Registration Rights Agreement.

The undersigned further agrees that any notices required to be sent to the
undersigned pursuant to the Stock Purchase Agreement and the Registration Rights
Agreement shall be deemed to be validly sent for all purposes of such Agreements
if sent to the attention of the undersigned at the address set forth on the
revised copy of Schedule 2 to the Stock Purchase Agreement enclosed herewith.

This letter agreement is being delivered by the undersigned to the Company and
the Initial Sellers within 10 business days after the date of the Stock Purchase
Agreement.

Please acknowledge your receipt of this letter agreement by executing the
enclosed copy of this letter and returning it to the undersigned. Also please
return to the undersigned an updated and final copy of Schedule 1 to the Stock
Purchase Agreement reflecting the Shares Owned, Repurchased Shares and Payment
Amount applicable to the undersigned.

Very truly yours,

U.S. Bank of Idaho
as Trustee of each of the Trusts listed on the
initialed pages of Schedule 2 attached hereto.

By: /s/ Michael W. Sullivan
______________________________________________
Vice President

Acknowledged and Agreed:

AMERICAN STORES COMPANY

By: /s/ Teresa Beck
-----------------------------
Name: Teresa Beck
Title: CFO

<PAGE>

REVISED SCHEDULE 2

U.S. Bank, As Trustee

U.S. Bank, Successor Trustee, UA dtd 9/13/68 267,884
with Lynda Sue Skaggs (Balukoff)
The Lynda Sue Skaggs (Balukoff) Personal Trust

U.S. Bank, Successor Trustee UA dtd 2/2/66 49,200
with Vivian Skaggs Armstrong for the
benefit of Lynda Sue Skaggs (Balukoff)

U.S. Bank, Successor Trustee, UA dtd 11/23/83 with 10,352
Vivian Skaggs Armstrong for the benefit of David
P. Langton Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of
David Paul Langton, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 With 10,352
Vivian Skaggs Armstrong for the benefit of Melissa
Rae Langton Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 With 10,140
Vivian Skaggs Armstrong for the benefit of
Melissa Rae Langton, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 With 10,352
Vivian Skaggs Armstrong for the benefit of Sherri
Lyn Balukoff Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of
Sherri Lyn Balukoff, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 With 10,352
Vivian Skaggs Armstrong for the benefit of Jenifer
Balukoff Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 9,680
Vivian Skaggs Armstrong for the benefit of Jenifer
Balukoff, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 With 10,353
Vivian Skaggs Armstrong for the benefit of Anthony
Joseph Balukoff, Jr. Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of Anthony
Joseph Balukoff, Jr., Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 With 10,353
Vivian Skaggs Armstrong for the benefit of Stephen
R. Balukoff Lifetime Trust

<PAGE>

REVISED SCHEDULE 2

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of Stephen
Robert Balukoff, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 with 10,352
Vivian Skaggs Armstrong for the benefit of Karen
Marie Balukoff Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of Karen
Marie Balukoff, Age 30 Trust

U.S. Bank, Successor Trustee, UA dtd 11/23/83 with 10,353
Vivian Skaggs Armstrong for the benefit of Sam
Balukoff Lifetime Trust

U.S. Bank, As Successor Trustee, UA dtd 11/23/83 with 10,140
Vivian Skaggs Armstrong for the benefit of Sam
Balukoff, Age 30 Trust

U.S. Bank, As Trustee, UA dtd 2/13/97 with Linda 220,000
Sue Skaggs Balukoff, the Balukoff Charitable
Remainder Trust

Total: 700,563
-------

Address for Notices to U.S. Bank:

101 South Capitol Boulevard
Boise, Idaho 83702
Attn: Michael W. Sullivan
Fax (208) 383-3870

P.O. Box 7928
Boise, Idaho 83707
Attn: Michael W. Sullivan
Fax (208) 383-3870

<PAGE>

EXHIBIT 23.1

Consent of Ernst & Young LLP, Independent Auditors

We consent to the reference to our firm under the captions "Experts"
and "Selected Financial Data" in Amendment No. 1 to the Registration
Statement (Form S-3, No. 333-22701) and related Prospectus of American
Stores Company for the registration of 17,719,096 shares of its common
stock and to the incorporation by reference therein of our report dated
March 15, 1996, with respect to the consolidated financial statements
of American Stores Company included in its Annual Report (Form 10-K)
for the three years ended February 3, 1996, filed with the Securities
and Exchange Commission.

Ernst & Young LLP

Salt Lake City, Utah
March 7, 1997

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY
-----------------

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned officers and directors of American Stores Company,
a Delaware corporation, do hereby constitute and appoint Victor L. Lund and
Teresa Beck, and each one of them, the lawful attorneys and agents, with full
power and authority to do any and all things and to execute any and all
instruments which said attorneys and agents, and any one of them, determine may
be necessary or advisable or required to enable said corporation to comply with
the 1933 Act, and any rules or regulations or requirements of the Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof. This Power of Attorney may be signed in several counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.

Pursuant to the requirements of the 1933 Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Victor L. Lund
- ----------------------------- Chairman of the Board, February 25, 1997
Victor L. Lund Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Teresa Beck
- ----------------------------- Chief Financial Officer (Principal February 25, 1997
Teresa Beck Financial and Accounting Officer)

/s/ Henry I. Bryant
- ----------------------------- Director February 25, 1997
Henry I. Bryant

/s/ Louis H. Callister Director February 25, 1997
- -----------------------------
Louis H. Callister

/s/ Arden B. Engebretsen Director February 25, 1997
- -----------------------------
Arden B. Engebretsen
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>

/s/ James B. Fisher Director February 25, 1997
- -----------------------------
James B. Fisher

/s/ F. R. Gumucio Director February 25, 1997
- -----------------------------
F. R. Gumucio

/s/ Leon G. Harmon Director February 25, 1997
- -----------------------------
Leon G. Harmon

/s/ Donald B. Holbrook Director February 25, 1997
- -----------------------------
Donald B. Holbrook

/s/ Victor L. Lund Director February 25, 1997
- -----------------------------
Victor L. Lund

/s/ John E. Masline Director February 25, 1997
- -----------------------------
John E. Masline

/s/ Michael T. Miller Director March 4, 1997
- -----------------------------
Michael T. Miller

/s/ Barbara S. Preiskel Director February 25, 1997
- -----------------------------
Barbara S. Preiskel

/s/ J. L. Scott Director February 25, 1997
- -----------------------------
J. L. Scott

/s/ Don L. Skaggs Director February 25, 1997
- -----------------------------
Don L. Skaggs

/s/ L. S. Skaggs Director March 4, 1997
- -----------------------------
L. S. Skaggs

/s/ Arthur K. Smith Director February 25, 1997
- -----------------------------
Arthur K. Smith
</TABLE>

-2-