Harris Teeter Posts Higher Q2 Sales, Earnings
Harris Teeter Supermarkets Inc. has reported sales for the second quarter of fiscal 2012 ended April 1 of $1.12 billion, a 6.7 percent increase from the $1.05 billion posted in the year-ago period. For the 26 weeks ended April 1, sales grew 7.6 percent to $2.24 billion, from $2.08 billion last year. The Matthews, N.C.-based company attributed the sales increases to a rise in comparable-store sales and sales from new stores, partially offset by store closings. Comps grew 3.91 percent for the quarter, and 4.62 percent for the 26-week period, 2012, from the respective year-ago periods.
As the company sold all of its ownership interest in its wholly owned industrial thread manufacturing company, American & Efird Inc., in November 2011, A&E’s results of operations and financial position were reported as discontinued operations.
Harris Teeter’s net earnings were $30.3 million for the second quarter of fiscal 2012, compared with $29.9 million for the second quarter of fiscal 2011. Net earnings for the second quarter of fiscal 2012 comprised earnings from continuing operations of $30.5 million, or 62 cents per diluted share, and a loss from discontinued operations of $0.2 million. Net earnings for the second quarter of fiscal 2011 comprised earnings from continuing operations of $26.2 million, or 54 cents per diluted share, and earnings from discontinued operations of $3.7 million.
Net earnings for the 26 weeks ended April 1 came to $43.9 million and comprised earnings from continuing operations of $56.3 million, or $1.15 per diluted share, and a loss from discontinued operations of $12.4 million, while net earnings for the year-ago period totaled $68.0 million and comprised earnings from continuing operations of $60.6 million, or $1.24 per diluted share, and earnings from discontinued operations of $7.4 million.
Operating profit in the second quarter of fiscal 2012 increased 10.1 percent to $52.5 million (4.68 percent of sales), from $47.7 million (4.54 percent of sales) last year. For the 26 weeks ended April 1, operating profit grew 10.4 percent to $98.7 million (4.41 percent of sales), from $89.5 million (4.30 percent of sales) in the year-ago period. According to Harris Teeter, the reason for this increase was higher gross profit that was partly offset by increases in selling, general and administrative (SG&A) expenses.
Gross profit in the second quarter of fiscal 2012 rose 8.4 percent to $343.6 million (30.66 percent of sales), from $317.1 million (30.19 percent of sales) in the year-ago period. For the 26 weeks ended April 1, gross profit increased 7.5 percent to $670.4 million (29.93 percent of sales), from $623.5 million (29.94 percent of sales) last year.
“Our pricing and promotional strategies continue to be effective in driving unit sales, customer visits and increasing market share,” noted Thomas W. Dickson, chairman and CEO of Harris Teeter, which operates 206 stores in eight primarily southeastern and mid-Atlantic states, as well as the District of Columbia. “Our operating profit margin improvement for the year was driven by the reduction in our selling, general and administrative expense margin realized through the leverage created from the additional sales and our emphasis on cost controls. We believe these positive results are a result of our continuing commitment to our customers to deliver outstanding values and excellent customer service.”
In line with its positive operating performance and strong financial position, the company intends to continue its store development program for new and replacement stores, along with the remodeling and expansion of existing stores. Capital expenditures for fiscal 2012 are planned to total about $215 million. During the rest of fiscal 2012, Harris Teeter plans to open four new stores and complete major remodels on 10 stores, five of which will be expanded in size. Plans call for the expansion of the grocer’s existing market, including the Washington, D.C., metro area incorporating northern Virginia, the District of Columbia, southern Maryland and coastal Delaware.
Citing the current economic environment and its impact on the Company’s customers, Harris Teeter management remains cautious in its expectations for the remainder of the fiscal year.