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CHARLOTTE, N.C. -- Regional supermarket chain Harris Teeter here plans to open 19 new stores in fiscal 2006, representing a 12 percent increase in square footage. The chain said late last week that it owes its growth ambitions to its current financial position and improvements in operating performance over the last several years.
Harris Teeter's parent company Ruddick Corp. also said last week that it logged 3 percent comparable store sales increases in fiscal 2005, and 2.06 percent comps gains for the fourth quarter, its said late last week.
Harris Teeter's sales for its fiscal 2005, ended Oct. 2, were $2.64 billion, or 2.8 percent above the 53 weeks of fiscal 2004. Sales for the 13-week fourth quarter were $671.0 million, as compared to $689.9 million. On a comparable week basis, sales increased 4.7 percent for the year and 5.2 percent for the quarter, over the prior year periods. Ruddick attributed the sales growth to new store activity as well as the chain's favorable comps.
"We are very pleased with our results for fiscal 2005 when viewed on a comparable week basis," said Thomas W. Dickson, president and c.e.o. of Ruddick, in a statement. "During fiscal 2005 we improved our results and accelerated our growth in core markets with the opening of a significant number of stores during the fourth quarter of fiscal 2005. Our enhanced customer value proposition is paramount to our continued success. We are committed to providing an exceptional shopping experience for all of our customers. Our customers demand and expect to receive value, quality and superior customer service with each and every visit. Our goal is to exceed expectations."
During 2005, Harris Teeter opened 10 new stores, seven of which were opened in the fourth quarter. It completed major remodelings of 14 stores, five of which were expanded in size, and closed three older stores. Harris Teeter also completed the purchase of six units from Winn-Dixie in the quarter. Harris Teeter said it is remodeling the units and expects to reopen them as Harris-Teeter stores in fiscal 2006. It will close three existing Harris Teeter units once the former Winn-Dixie stores are reopened, the company said.
There's more to Harris Teeter's plans to expand its store development program in 2006. Inclusive of the six acquired Winn-Dixie stores that are being remodeled, the company plans to open 19 new stores (including five replacement stores) in fiscal 2006 for a net store addition of 14 stores representing an approximate 12 percent increase in retail square footage.
All of this store development won't come without a price. Because of incremental pre-opening costs, remodeling expenses, and required reserves associated with the closing of the three existing stores, the company said it expects to see a negative impact on fiscal 2006 operating results of approximately $2.9 million.
As of now, the chain operates 145 stores.
For fiscal 2005, operating profit at Harris Teeter was up 8.8 percent to $113.6 million. During that period, operating profit as a percentage of sales improved by 23 basis points to 4.29 percent from 4.06 percent. For the latest 13 weeks, operating profit was $26.9 million (4.01 percent of sales) as compared to $28.3 million for the 14-week period in 2004. Operating profit for the fourth quarter of fiscal 2005 was negatively impacted by $1.6 million of expense associated with the Winn-Dixie store acquisitions.
Harris Teeter achieved its operating profit and margin improvements for the year by growing total sales through increased comps, new store sales growth, and effective retail pricing and targeted promotional spending programs, Ruddick said. Meanwhile, the company's continued emphasis on operational efficiencies and cost controls have helped offset increased fringe benefit costs, a lease adjustment, increased pre-opening store costs, Winn-Dixie acquisition expenses, and higher bank card fees.
Ruddick Corp. added that its expectations for fiscal 2006 are being tempered by the challenges of the intensely competitive retail grocery market.