Harris Teeter Parent Posts Q2 Sales Gain

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Harris Teeter Parent Posts Q2 Sales Gain

Thanks in no small part to its supermarket subsidiary, Harris Teeter, Ruddick Corp. posted a consolidated sales increase of 6.1 percent to $1.07 billion, from $1.01 billion in the year-ago period, for the second quarter of fiscal 2010 ended March 28, 2010. For the 26 weeks ended March 28, 2010, consolidated sales grew 5.3 percent to $2.11 billion, from $2 billion last year.

Ruddick’s consolidated net income in the second quarter increased 19.8 percent to $27.5 million, or 57 cents per diluted share, from the $22.9 million, or 48 cents per diluted share logged in the year-ago period. For the 26-week period, consolidated net income rose 11.8 percent to $51.2 million, or $1.06 per diluted share, from the $45.8 million, or 95 cents per diluted share reported last year.

At Harris Teeter, sales grew 5.4 percent to $1 billion in the second quarter, from $949 million in the second quarter of fiscal 2009. For the 26-week period, sales grew 5 percent to $1.97 billion, from $1.88 billion in the year-ago period. Riddick attributed the sales increases to incremental new store sales that were partially offset by comparable-store sales declines during the respective periods. Comps declined 1.33 percent for the second quarter and 1.85 percent for the 26-week period, which the company said was because of retail price deflation driven by higher promotional activity and changes in consumer buying habits during the recession. On the other hand, adverse weather conditions in some of Harris Teeter’s markets had a positive effect on second-quarter comps.

The chain’s operating profit for the quarter increased 4.6 percent to $47.1 million (4.71 percent of sales) from the $45.0 million (4.74 percent of sales) reported last year. For the 26-weeks period, operating profit was $89.4 million (4.53 period of sales), vs. $89.4 million (4.76 percent of sales) in the prior-year period. Operating profit was affected by new store pre-opening costs, according to Ruddick, which attributed the increase primarily to sales increases that provided leverage against fixed costs, and an ongoing emphasis on operational efficiencies and cost controls. The increase was partly offset by continued promotional retail price investments made to enhance the overall value to customers, as well as higher occupancy costs and pension expense.

“We have continued to drive customer shopping visits and loyalty through the investments we have made in our in-store promotional activity and lower everyday prices,” noted Ruddick chairman, president and CEO Thomas W. Dickson. “While our store-brand business remains strong, we are starting to see the national brands offer additional vendor funding for promotional activities. During the first half of fiscal 2010, we realized a greater number of items sold and increased customer-shopping visits in our comparable stores. Additionally, our customer loyalty data indicates that the number of active households increased by 1.29 percent per comparable store .… In addition, we are well positioned to provide our customers with the more discretionary items like seafood and floral where we are beginning to see more customer activity.”

During the first half of fiscal 2010, Harris Teeter opened nine new stores and closed three existing stores, two of which were replaced by new stores. The chain plans to open a further four new stores and complete major remodeling of one additional store, which will be enlarged, during the rest of the fiscal year. Harris Teeter’s capital expenditure plans include the continued expansion of its existing markets, including the Washington, D.C., metropolitan market area encompassing northern Virginia, the District of Columbia, southern Maryland and coastal Delaware. The grocer operates 195 stores in eight states, primarily in the southeastern and mid-Atlantic United States.

According to Ruddick, the chain will continue to refine its merchandising strategies in response to shifting shopping demands, and will maintain or grow its customer base.

Charlotte, N.C.-based Ruddick Corp. other main operating subsidiary is American & Efird, Inc., one of the world’s largest global manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles.