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    Harris Teeter Parent Posts Higher Fiscal ’11 Sales

    Uncertain economy causes Ruddick to remain cautious on ’12 outlook

    Ruddick Corp., the parent company of Southeast grocer Harris Teeter, reported a sales increase for the 52 weeks of fiscal 2011 ended Oct. 2 of 4.5 percent to $4.29 billion, from $4.10 billion last year. Sales for its 13-week fiscal fourth quarter ended Oct. 2 fell slightly to $1.10 billion from $1.11 billion in the year-ago period. On a comparable-week basis, sales grew 6.40 percent for the year and 7.77 percent for the quarter during the respective periods. Charlotte, N.C.-based Ruddick attributed the sales increase to new store activity and comparable-store sales lifts. Comps rose 3.27 percent for the year and 5 percent for the fourth quarter.

    As previously reported, the company revealed late last month that it was selling all of its ownership interest in its wholly owned subsidiary, American & Efird Inc. (A&E), one of the world’s largest manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles

    During fiscal 2011, Harris Teeter opened seven new stores (one a replacement store) and closed two stores, for a net addition of five stores. The chain operated 204 stores at the end of fiscal 2011. Retail square footage increased by 3.2 percent in that time, versus an increase of 6.4 percent last year.

    Operating profit at Harris Teeter for fiscal 2011 grew 5.2 percent to $191.1 million (4.46 percent of sales) from $181.6 million (4.43 percent of sales) in fiscal 2010. Operating profit for the 13 weeks ended Oct. 2 declined to $45.0 million (4.09 percent of sales) from $49.1 million (4.43 percent of sales) last year. This decrease was mainly due to a 14-week quarter last year versus a normal 13-week quarter in fiscal 2011, according to Ruddick. The company invested in additional promotional activities during fiscal 2011, the cost of which was offset by a higher sales and greater vendor participation, although they also resulted in a decline in gross margin for the quarter the year.

    Operating profit at Harris Teeter for both the fourth quarter and fiscal year of 2011 benefited from reductions in selling, general and administrative expenses as a percentage of sale. The chain has successfully offset the impact of pressures on gross profit margins through an ongoing emphasis on cost controls, Ruddick noted.

    Operating profit was affected by new store pre-opening costs of $7.0 million (0.16 percent of sales) and $8.4 million (0.20 percent of sales) in fiscal 2011 and 2010, respectively. Pre-opening costs for the fiscal fourth quarter of 2011 and 2010 came to $1.7 million (0.15 percent of sales) and $1.8 million (0.16 percent of sales), respectively. New store pre-opening costs vary between reporting periods according to the new-store opening schedule and market location, Ruddick explained.

    “When viewed on a comparable-week basis, we experienced positive comparable-store sales as well as an increase in transactions, basket size and households in the quarter and for the year,” said Ruddick Chairman, President and CEO Thomas W. Dickson. “We believe these positive results are the product of our continuing investment in price and promotion while, at the same time, offering outstanding customer service, thereby delivering superior value to our customers.” Dickson added that store brands experienced “a higher growth rate in sales for these items than our growth rate in total sales for the quarter.”

    Capital expenditures during fiscal 2011 came to $153.9, with Harris Teeter accounting for $147.9 million of the year’s total capital ex. Fiscal 2012 capital ex is planned to total about $215 million. The grocer anticipates opening seven new stores (one a replacement store) and completing major remodels on 12 locations. Construction will occur in the chain’s existing markets including the Washington, D.C. metro area.

    Ruddick said it remained cautious in its expectations for fiscal 2012, because of the current economic environment and its impact on supermarket customers.
     

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