Harris Teeter Eyes Expansion in '07

CHARLOTTE, N.C. - Ruddick Corp., the parent company of Southeastern supermarket chain Harris Teeter, said last week it plans to open 22 new stores during fiscal 2007, resulting in an expected 15.6 percent increase in retail square footage as compared to a 8.4 percent increase in fiscal 2006.

The new store program for fiscal '07 calls for expanding Harris Teeter's Northern Virginia market, including the addition of two stores in the District of Columbia and one in each of Delaware and Maryland.
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The news came as Ruddick Corp. said higher fourth-quarter sales and operating profit at Harris Teeter helped boost the company's overall performance. Sales at Harris Teeter were $750.9 million, an increase of 11.9 percent from the fourth quarter of fiscal 2005. The increase in sales was attributable to new store activity and a comparable store sales increase of 2.35 percent.

For the fourth quarter ended Oct. 1, 2006, Harris Teeter's operating profit was $30.2 million (4.02 percent of sales), an increase of 12.2 percent from the prior year period.

Ruddick Corp. also reported successful fiscal 2006 performance.

"We are pleased to report that fiscal 2006 was another record year for sales and operating profit at Harris Teeter," said Thomas W. Dickson, chairman of the board, president, and c.e.o. of Ruddick Corp., in a statement. "These results were achieved at the same time we accelerated our new store opening program. We remain committed to delivering excellent customer service and providing significant value to our customers through targeted promotional programs and effective retail pricing."

Harris Teeter's sales for the fiscal year increased by 10.5 percent to $2.92 billion, from $2.64 billion in fiscal 2005. Comparable store sales increased 3.2 percent for the year. During the year, Harris Teeter opened 16 new stores (five of which were opened in the fourth quarter), closed or divested nine older stores, and completed the major remodeling of six stores (two of which were expanded in size). The company currently operates 152 stores in seven Southeastern states.

Operating profit at Harris Teeter increased by 12.4 percent to $127.6 million in fiscal 2006 as compared to $113.6 million in fiscal 2005. Operating profit as a percent of sales improved by 8 basis points to 4.37 percent in fiscal 2006 from 4.29 percent in fiscal 2005.

Ruddick said Harris Teeter's operating profit and margin improvements were achieved primarily through the continued growth in total and comparable store sales as a result of net new store growth and effective retail pricing, product differentiation, and targeted promotional spending programs. The sales gains along with continued emphasis on operational efficiencies have provided the leverage to offset incremental costs associated with Harris Teeter's new store development program and increased utilities, store supply costs (driven by petroleum-based cost increases), bank card fees, and fuel costs.

Despite its optimistic outlook for growth, however, the company said its management remains cautious in its expectations for fiscal 2007 due to the intensely competitive retail grocery market and challenging textile and apparel environment. (Ruddick's other subsidiary, American & Efird, Inc., is a leading manufacturer and distributor of thread and technical textiles with global operations.)
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