You are here
Harris Teeter is proving that an upscale chain can open stores and still take rising food and fuel costs head on, as long as promotional spending and retail pricing stay sharp.
In financial results posted by its owner Ruddick Corporation yesterday, the chain's sales increased 10.8 percent to $926.3 million in the third quarter of fiscal 2008, compared to sales of $836.4 million in the year ago period. For the 39 weeks ended June 29, sales rose 11.4 percent to $2.72 billion, from $2.44 billion.
Harris Teeter attributed the sales increases to performance at incremental new stores, and comparable store sales increases of 1.73 percent for the quarter and 3.11 percent for the 39 weeks. The comps gain for the third quarter was negatively impacted by the timing of the Easter holiday and Fourth of July holiday, the company said; both holidays had been included in the third quarter of fiscal 2007, but not in 2008.
During the first nine months of fiscal 2008, Harris Teeter opened 12 new stores, closed 2 older stores (both of which were replaced by new stores) and completed the major remodeling of 6 stores (4 of which were expanded in size).
Since the third quarter of fiscal 2007, Harris Teeter opened 19 new stores and closed 4 stores for a net gain of 15 stores. The company was operating 174 units as of June 29, 2008.
Operating profit at the Charlotte, N.C.-based chain increased by 11.7 percent to $44.5 million for the quarter, and improvement of four basis points, the company said.
For the 39 weeks, operating profit was $135.1 million, an increase of 19.0 percent over the year ago.
The chain said operating profits improved primarily because it is driving comps via improved customer counts per location, in turn driven by excellent customer service, targeted promotional spending, and innovative retail pricing programs.
The sales increases, along with a continued emphasis on operational efficiencies and overhead cost containment during this time of expansion, have provided the leverage to offset the incremental costs associated with Harris Teeter's new store program (pre-opening costs and incremental start-up costs), increased LIFO charge, fuel and cost of petroleum-based supplies, associate benefit costs, credit and debit card fees, and new store occupancy costs.
"Our improved operating profit was achieved while expanding in our key markets by opening 19 new stores in the past 12 months," said Thomas W. Dickson, chairman, president and c.e.o. of Ruddick Corp. "We have continued to adjust and refine our merchandising activities in response to the current economic environment, and see positive responses from our customers."
Harris Teeter said it plans to open an additional three new stores and complete the major remodeling on one store during the remainder of fiscal 2008. The new store development program for fiscal 2008 is expected to result in an 8.9 percent increase in retail square footage, as compared to an 11.9 percent gain in fiscal 2007.
Still, Ruddick Corp.'s management said it would stay cautious with expectations for the remainder of fiscal 2008, due to the intensely competitive retail grocery market, unprecedented rise in commodity price indexes; and a challenging textile and apparel environment in which its other subsidiary, American & Efird, Inc. operates.