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Harris Teeter has been weathering the stormy economy quite well, both in its latest quarter and for the full fiscal 2008, with double-digit sales and profit performance for both periods, the chain said yesterday.
The Matthews, N.C.-based chain showed a healthy sales hike of 11.1 percent to $3.66 billion for fiscal 2008, up from $3.30 billion in fiscal 2007.
Sales for the fourth quarter were $948.8 million, an increase of 10.2 percent over the $861.1 million in the fourth quarter of fiscal 2007. The grocer reported its sales in the context of financial performance for its parent company, Ruddick Corporation, on Thursday.
It attributed sales gains in part to new stores, and also comparable store sales increases of 2.86 percent for the year, and 2.16 percent for the fourth quarter. During fiscal 2008, Harris Teeter opened 15 new stores, closed three older units (two of which it replaced with new stores) and completed the major remodeling of seven stores, four of which were expanded in size. The company operated 176 stores on Sept. 28, 2008.
Operating profit at Harris Teeter for fiscal 2008 was $177.8 million (4.85 percent of sales), an increase of 15.4 percent from $154.1 million (4.67 percent of sales) in fiscal 2007. For the fourth quarter of fiscal 2008, operating profit was $42.6 million (4.49 percent of sales), an increase of 5.2 percent from $40.5 million (4.71 percent of sales) in the prior year period.
The grocer’s profit was affected by new store pre-opening costs of $15.4 million (0.42 percent of sales) and $17.9 million (0.54 percent of sales) in fiscal 2008 and 2007, respectively. Pre-opening costs for the fiscal fourth quarter of 2008 and 2007 were $3.8 million (0.40 percent of sales) and $4.4 million (0.51 percent of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule and market location, the company said.
Harris Teeter said its operating profit improved primarily because of increased sales. The sales increases, along with a continued emphasis on operational efficiencies and overhead cost containment during this time of expansion, have provided leverage to offset the incremental costs associated with Harris Teeter's new store program (pre-opening costs and incremental start-up costs), increased LIFO expense, fuel and cost of petroleum-based supplies, associate benefit costs, credit and debit card fees, and store occupancy costs.
During fiscal 2009, Harris Teeter plans to open 17 new stores (two of which will be replacements for existing stores) and complete four major remodels (one of which will be expanded in size).
Harris Teeter's new store program for fiscal 2009 calls for the continued expansion of its existing markets, including the Washington, D.C. metro market area, which incorporates northern Virginia, the District of Columbia, southern Maryland, and coastal Delaware. Capital expenditure for Harris Teeter in fiscal 2009 are planned to be $241 million.