New Stores Drive Harris Teeter's Gains in FY '07

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New Stores Drive Harris Teeter's Gains in FY '07

CHARLOTTE, N.C. -- New store openings, a focus on customer service, and a continued emphasis on operational efficiencies and cost controls are the key factors that helped regional supermarket chain Harris Teeter turn in a positive performance in fiscal 2007, the retailer's parent company, Ruddick Corp., said yesterday.

Harris Teeter's sales for fiscal 2007 increased by 12.9 percent to $3.30 billion, Ruddick Corp. said. Sales for the fourth quarter were $861.1 million, an increase of 14.7 percent from the fourth quarter of fiscal 2006. Ruddick attributed the increase to new store opening activity, partially offset by store closings and divestitures. The chain saw comparable store sales increase 4.87 percent for the year and 5.91 percent for the fourth quarter.

During fiscal 2007, Harris Teeter opened 19 new stores (seven of which were opened in the fourth quarter), closed seven older stores (two of which were closed in the fourth quarter), and completed the major remodeling of nine stores (six of which were expanded in size). The company operated 164 stores as of Sept. 30.

Operating profit at Harris Teeter was $154.1 million in fiscal 2007, as compared to $127.6 million in fiscal 2006, a 20.7 percent increase. Operating profit as a percent of sales was 4.67 percent in fiscal 2007, an improvement of 30 basis points from the prior year. For the fourth quarter, operating profit increased 34.3 percent, to $40.5 million.

New store pre-opening costs affected operating profit, Ruddick said.

Harris Teeter said it plans to open 15 new stores (two of which will be replacements for existing stores) and complete eight major remodels (five of which will be expanded in size) during fiscal 2008. The new store development program for fiscal 2008 is expected to result in a 9.1 percent increase in retail square footage, as compared to an 11.9 percent increase in fiscal 2007.

Its new store program calls for the continued expansion of its existing markets, including the Washington, D.C. metro market area.

Still, Ruddick said the company's management remains cautious in its expectations for fiscal 2008 due to the intensely competitive retail grocery market, the number of new store openings for Harris Teeter, and the challenging textile and apparel environment. (Ruddick also owns American & Efird, a sewing thread and technical textiles subsidiary.)