Harris Teeter Q2 Shows Improvement

Harris Teeter Supermarkets Inc. has reported that sales for its second quarter of fiscal 2013 ended April 2 grew 4.3 percent to $1.17 billion, from $1.12 billion in the year-ago period. For the 26 weeks ended April 2, sales rose 4 percent to $2.33 billion, from $2.24 billion last year. The Matthews, N.C.-based grocery chain attributed the sales increases to higher comparable-store sales and sales from new stores, partially offset by store closings.

Comps grew 3.66 percent for the quarter, and 3.10 percent for the 26-week period, from the respective comparable periods of fiscal 2012. According to Harris Teeter, second-quarter comps were positively affected by the shift of the Easter holiday, which is reported in the second quarter of fiscal 2013, but fell in the third quarter of fiscal 2012.

During the first half of fiscal 2013, the grocer opened three new stores, two of which were the locations acquired from Lowe’s Food Stores Inc. in 2012 that reopened under the new 201central banner and format. Since the end of the second quarter of fiscal 2012, Harris Teeter has opened 12 new stores, opened one store to replace a location closed in the first quarter of fiscal 2012, closed two stores and sold six stores to Lowes Foods, for a net addition of five stores. The company operated 211 stores as of the end of the second quarter of fiscal 2013.

Gross profit in the second quarter of fiscal 2013 went up 4.7 percent to $359.6 million (30.76 percent of sales), from $343.6 million (30.66 percent of sales) in the year-ago period. For the 26-week period, gross profit increased 3.6 percent to $694.3 million (29.80 percent of sales), from $670.4 million (29.93 percent of sales) last year. Operating profit in the second quarter of fiscal 2013 rose 7.3 percent to $56.3 million (4.82 percent of sales), from $52.5 million (4.68% of sales) in year-ago period, while for the 26 weeks ended April 2, operating profit fell 2 percent to $96.8 million (4.15 percent of sales), from $98.7 million (4.41 percent of sales) last year. Harris Teeter attributed the decline to startup costs relating to the 10 stores acquired from Lowes Foods.

Net earnings were $32.9 million for the second quarter of fiscal 2013, the grocer said. Net earnings for the year-ago period came to $30.3 million and comprised earnings from continuing operations of $30.5 million and a loss from discontinued operations of $0.2 million. Net earnings for the 26 week-period totaled $55.7 million. Net earnings last year were $43.9 million and consisted of earnings from continuing operations of $56.3 million and a loss from discontinued operations of $12.4 million.

“Our comparable-store sales increase … remained strong despite the fact that we did not see any meaningful inflation during this period,” noted Harris Teeter chairman and CEO Thomas W. Dickson. “In addition, we continue to realize increased number of active households and customer visits year-over-year. Our pricing and promotional strategies were effective in driving unit sales and increasing market share while increasing the quarterly gross margin by 10 basis points over the prior year. We remain committed to our customers to deliver outstanding values and excellent customer service.”

Capital expenditures for fiscal 2013 are planned to total about $200 million, according to the company. During the remainder of fiscal 2013, Harris Teeter intends to open seven new stores, including one replacement, and complete major remodels on seven stores, three of which will be expanded in size. The remaining store openings for fiscal 2013 are expected to include two in the third quarter, one of which is a replacement for a store closed in fiscal 2012, and five in the fourth quarter. Harris Teeter’s cap ex plans entail the ongoing expansion of its existing market area, which includes the Washington, D.C., metro market area incorporating northern Virginia, the District of Columbia, southern Maryland and coastal Delaware.

Company management remained cautious as to expectations for fiscal 2013, citing the current economic environment and its impact on customers, and said it would “continue to refine its merchandising strategies to respond to the changing shopping demands.”

Harris Teeter operates grocery stores in eight states, mainly in the southeastern and mid-Atlantic United States, and the District of Columbia.