Harris Teeter Q1 Sales Up
Ruddick Corp. reported that consolidated sales for the first quarter of fiscal 2011 ended Jan. 2, increased 6.2 percent to $1.11 billion from $1.04 billion in the year-ago period, which the Charlotte, N.C.-based company partly attributed to a 6.2 percent sales increase at its Harris Teeter supermarket subsidiary.
Harris Teeter first-quarter sales were $1.03 billion, up from $972.3 million last year. Ruddick attributed the increase to incremental new-store sales, comparable-store sales growth of 2.21 percent and the shifting of the New Year’s holiday because of the 53-week year in fiscal 2010. During the first quarter of fiscal 2011, Harris Teeter opened two new stores. Since the end of the first quarter of fiscal 2010, the chain has opened nine new stores (one of them a replacement location) and closed two stores, for a net addition of seven stores. Harris Teeter operated 201 stores as of the end of the first quarter of fiscal 2011.
Operating profit at the chain in the quarter rose 6.2 percent to $44.9 million (4.35 percent of sales), vs. $42.3 million (4.35 percent of sales) in year-ago period. According to Ruddick, operating profit was affected by new store pre-opening costs in the first quarter of fiscal 2011 and fiscal 2010.
The increase in Harris Teeter’s operating profit for the first quarter of fiscal 2011 over last year year resulted mainly from the chain’s higher sales and an ongoing emphasis on operational efficiencies and cost controls, Ruddick said, adding that savings achieved through these efforts have gone to fund more promotional activity to provide extra value to customers and offset higher occupancy costs, pension expense and increased debit and credit card fees.
Thomas W. Dickson, Ruddick’s chairman, president and CEO, said that Harris Teeter’s higher comps in the quarter were “accomplished by driving customer shopping visits and loyalty through our investments in our lower everyday prices, coupled with weekly promotional activity. During the first quarter of fiscal 2011, we realized increased customer visits and an increase in the number of items sold. In addition, our customer loyalty data indicates that the number of active households increased by 2.22 percent per comparable store. We were encouraged by the indication of a more positive change in our customers’ purchasing habits. During the quarter, we realized higher growth in sales of items such as organic milk, premium beef, imported cheese and bakery products. We also continue to benefit from operational efficiencies and cost saving initiatives across all areas of the business.”
Harris Teeter’s total capital expenditures for the quarter were $31.9 million. The grocer plans to open six more new stores and complete extensive remodeling on seven additional locations during the remainder of fiscal 2011. The new-store development program for fiscal 2011 is expected to consist of a total of eight new stores and result in a 4.1 percent increase in retail square footage, vs. a 6.4 percent increase in fiscal 2010. The drop in planned new-store openings from fiscal 2010 to fiscal 2011 reflects Ruddick’s decision to delay new-store openings during a still-sluggish economy.
Harris Teeter’s cap ex plans are to keep expanding within its existing markets, including the Washington, D.C. metro area. Additionally, during the first quarter of fiscal 2011, the chain acquired another 350,000 square feet of distribution capacity adjacent to its existing DC in Greensboro, N.C., representing a square footage increase of about 22 percent in Harris Teeter’s existing distribution facilities.
Consolidated cap ex for Harris Teeter during fiscal 2011 is budgeted at about $165 million, Ruddick said, while warning that it would remain cautious in its expectations for the rest of the fiscal year in light of the economy.
“Harris Teeter will continue to refine its merchandising strategies to respond to the changing shopping demands and to maintain or increase its customer base,” the company noted. “The retail grocery market remains intensely competitive.”