Upscale grocery operator Arden Group Inc. on Wednesday reported a 26 percent drop in third quarter profit, hurt by lower revenue and higher contributions to employee benefits programs.

The Compton parent of the Gelson’s supermarket chain reported net income of $3.45 million ($1.09 per share) compared with $4.67 million ($1.48) a year earlier.

Revenue fell 3 percent to $100 million, with same-store sales down 3.3 percent. The company, which operates 18 supermarkets in Southern California, said that sales continue to be affected by economic conditions and price competition from other groceries.

Arden said its operating income was hurt by an increase of about $75,000 a week in the health and welfare contributions for its union employees.

Shares were up $5.56, or 5 percent, to $93 in midday trading on the Nasdaq.