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Ruddick Corp., the Charlotte, N.C.-based parent company of grocer Harris Teeter, reported an increase in consolidated sales for fiscal 2009 of 2.1 percent to $4.08 billion, from $3.99 billion in fiscal 2008, and a rise in consolidated sales for the fourth quarter ended Sept. 27, 2009, of 2.1 percent to $1.05 billion, from $1.03 billion last year. The company attributed the increases to sales growth at Harris Teeter that were partially offset by sales declines at American & Efird (A&E), Ruddick’s sewing thread and technical textiles subsidiary.
Harris Teeter’s sales for fiscal 2009 went up 4.4 percent to $3.83 billion, from $3.66 billion in fiscal 2008, while fourth-quarter sales were $984.5 million, a rise of 3.8 percent from the $948.8 million posted in the year-ago period. These increases were due to incremental new stores and were partially offset by comparable-store sales decreases of 1.49 percent for the year and 2.44 percent for the fourth quarter, according to Ruddick. The company noted that comps were adversely affected by retail price deflation and, to some extent, the cannibalization created by strategically opening stores in key major markets close to existing stores. Additionally, in the present economy, Harris Teeter shoppers are buying lower-priced store-branded items and cutting back on such discretionary purchases as floral, tobacco, and certain general merchandise, Ruddick observed.
During fiscal 2009, Harris Teeter opened 15 new stores, including two replacements; closed two older stores and finished major remodels on three stores. Retail square footage grew by 8.7 percent in fiscal 2009, vs. growth of 8.5 percent in fiscal 2008.
Operating profit at Harris Teeter for fiscal 2009 declined to $175.6 million, or 4.59 percent of sales, from $177.8 million, or 4.85 percent of sales, in fiscal 2008, but operating profit for the fourth quarter rose to $43.5 million, or 4.41 percent of sales, from $42.6 million, or 4.49 percent of sales, in the year-ago period. Ruddick said that operating profit for the fiscal year was negatively affected by retail price deflation and promotional price investments, along with new store pre-opening costs.
“A significant portion of our promotional activity investment was offset by operational efficiencies and cost-saving initiatives throughout the organization,” said Ruddick chairman, president and CEO Thomas W. Dickson. “As a result, selling, general and administrative costs as a percent of sales decreased to 25.97 percent for fiscal 2009, as compared to 26.22 percent in fiscal 2008. We remain focused on the customer and meeting their needs, while delivering the quality, value and customer service they have come to expect from us.”
In fiscal 2010, Harris Teeter plans to open 13 new stores, two of them replacements, and complete two major remodels. Additionally, the chain will continue to expand its existing markets, including the Washington, D.C., metropolitan area encompassing northern Virginia, the District of Columbia, southern Maryland and coastal Delaware. The current economic landscape has prompted Harris Teeter to reduce or delay the number of new store openings it had originally planned for fiscal 2010 and beyond.
With the recession still preventing consumers from spending, Ruddick is being cautious in its expectations for fiscal 2010, noting, “The company will continue to refine its merchandising strategies to respond to the changing shopping demands as a result of the challenging economic environment.”