Increased competition, a slowing economy, and increases in fuel and food prices drove a drop in same-store sales for the Arden Group, Inc., parent company of Gelson's Markets.

Same-store sales decreased 2.7 percent for its second quarter and 2 percent during the 26 weeks ended June 28, 2008, compared with the same periods last year.

The grocer's operating income increased 4 percent for the quarter and 6.1 year to date over 2007. The company experienced a decrease in expense related to union pension and health care plans, stock appreciation rights, and workers' compensation in the second quarter and first half of 2008, vs. the same periods of 2007. These cost reductions were partially offset by increased direct labor costs.

Los Angeles-based Gelson's operates 18 full-service supermarkets in Southern California.