Harris Teeter Parent Posts Higher Q1 Sales at Chain

Ruddick Corp. reported that sales at its grocer chain, Harris Teeter, increased by 8.5 percent to $1.12 billion for the first quarter of fiscal 2012 ended Jan. 1, from $1.03 billion in the year-ago period. According to Charlotte, N.C.-based Ruddick, the sales rise was driven by 5.33 percent rise in comparable-store sales, as well as sales from new stores, partially offset by store closings.

During the first quarter of fiscal 2012, Matthews, N.C.-based Harris Teeter opened three new stores and closed one store. Since the end of the first quarter of fiscal 2011, the chain has opened seven new stores and one replacement store, and closed three stores, for a net addition of five stores. Harris Teeter operated 206 stores as of the end of the first quarter of fiscal 2012.

As previously reported, Ruddick sold all of its ownership interest in its wholly owned industrial thread manufacturing company, American & Efird, Inc. last November, so it could focus on its core business of Harris Teeter.

Operating profit for the grocer grew 8.8 percent to $48.8 million (4.36 percent of sales) in the first quarter of fiscal 2012 from $44.9 million (4.35 percent of sales) last year. Gross profit at Harris Teeter rose 6.7 percent to $326.8 million (29.19 percent of sales) in the first quarter of fiscal 2012 from $306.4 million (29.68 percent of sales) in the year-ago period. The 49-basis-point reduction on a percentage of sales basis was due to an increase in the LIFO charge and Harris Teeter’s investment in pricing and promotional activity to spur unit sales and customer visits, according to Ruddick.

Harris Teeter's operating profit was affected by new store pre-opening costs of $1.4 million (0.13 percent of sales) and $1.9 million (0.18 percent of sales) in the first quarters of fiscal 2012 and fiscal 2011, respectively.

“Our pricing and promotional strategies were effective in driving unit sales, customer visits and increasing market share,” noted Ruddick Chairman, President and CEO Thomas W. Dickson. “Although these strategies did put some downward pressure on gross margin, the majority of the decline in the gross profit margin was due to the LIFO charge. The leverage created through the additional sales and our emphasis on cost controls has resulted in a reduction in our selling, general and administrative expense margin that effectively offset the decrease in the gross profit margin. We believe these positive results are the product of our continuing commitment to our customers to deliver outstanding values and excellent customer service.”

Harris Teeter’s capital expenditures for fiscal 2012 are planned to come to about $215 million. During the remainder of fiscal 2012, the four new stores will open and 10 major remodels, including six expansions, will take place. The remaining store openings for fiscal 2012 are expected to include three in the third quarter -- one a replacement store -- and one in the fourth quarter. The new store development program for fiscal 2012 is expected to result in a 3.8 percent increase in retail square footage, compared with a 3.2 percent increase in fiscal 2011.

Cap ex plans involve the continued expansion of Harris Teeter’s existing markets, including the Washington, D.C. metro market area incorporating northern Virginia, the District of Columbia, southern Maryland and coastal Delaware.

Ruddick remained cautious in its expectations for the rest of fiscal 2012, because of the still-shaky economy and its impact on Harris Teeter’s customers.