Harris Teeter’s Q3 Comps Remain Positive

Harris Teeter Supermarkets Inc. has reported that sales for the third quarter of its fiscal 2013 ended July 2 increased 2.9 percent to $1.19 billion, from $1.15 billion in the year-ago period. For the 39 weeks ended July 2, sales rose 3.6 percent to $3.52 billion from $3.39 billion last year. The Matthews, N.C.-based grocer attributed this growth to an increase in comparable-store sales and sales from new stores, partially offset by store closings.

Comps rose 1.29 percent for the quarter and 2.48 percent for the 39-week period ended July 2, from the respective comparable periods of fiscal 2012.

Thomas W. Dickson, the company’s chairman and CEO, said the company was “pleased” by the third-quarter results, adding, “Our comparable-store sales increase, which was negatively impacted by the shift of both the Easter and Fourth of July holidays, remained positive despite the fact that we still do not see any meaningful inflation for the current year. In addition, after adjusting for the shift in the holidays, we continue to realize an increase in the number of items sold year-over-year. We believe that our pricing and promotional strategies are effective in driving unit sales while increasing the quarterly gross margin by 32 basis points over the prior year. We remain committed to our customers to deliver outstanding values and excellent customer service.”

Despite Dickson’s optimism, company management remained cautious in its expectations for fiscal 2013, citing the current economic environment and its impact on shoppers.

Gross profit in the third quarter of fiscal 2013 went up 4 percent to $362.2 million (30.54 percent of sales), from $348.3 million (30.22 percent of sales) in the year-ago period. For the 39-week period, gross profit rose 3.7 percent to $1.06 billion (30.05 percent of sales), versus $1.02 billion (30.03 percent of sales) last year.

Operating profit in the third quarter of fiscal 2013 grew 69.1 percent to $55 million (4.64 percent of sales), compared with $32.6 million (2.82 percent of sales) in the third quarter of fiscal 2012. For the 39-week period, operating profit increased 15.6 percent to $151.8 million (4.32 percent of sales) from $131.3 million (3.87 percent of sales) in the year-ago period.

Harris Teeter posted net earnings of $31.1 million for the third quarter of fiscal 2013, versus $15.8 million last year. Net earnings for the 39-week period came to $86.7 million, compared with $59.7 million in the comparable period of fiscal 2012.

The company noted that a loss from discontinued operations in fiscal 2013 resulted from adjustments needed to true up the tax benefits realized from the loss on the sale of its wholly owned industrial thread manufacturing company, American & Efird.

The grocer’s capital expenditure plans involve the continued expansion of its existing markets, including the Washington, D.C., metro area, which incorporates northern Virginia, the District of Columbia, southern Maryland and coastal Delaware. Harris Teeter said it would spend around $200 million on capital expenditures for fiscal 2013; during the fourth quarter, four new stores are scheduled to open, while major remodels on two stores, both of which will be enlarged, are slated to take place. Cap ex for fiscal 2014 is currently estimated at about $205 million.

Last month, Harris Teeter and The Kroger Co., based in Cincinnati, entered into a definitive merger agreement. The merger is expected to close following the satisfaction of customary closing conditions.