CHARLOTTE, N.C. — Investments in promotions in the third quarter put pressure on the operating earnings of Harris Teeter, the chain's parent company said last week. Ruddick Corp. here said operating profit at Harris Teeter was down 3.8%, to $42.8 million, compared with the year-ago period.
Comparable-store sales fell 1.42% for the 13-week quarter (including a 32-basis-point bump from the later Easter this year), but total sales at the chain increased by 4.1%, to $964.2 million, buoyed by the addition of 14 new stores since the third quarter of a year ago. Harris Teeter accounted for about 94% of Ruddick's revenues in the period.
“We continue to experience changes in our customers' spending habits and shopping demands during this time of economic uncertainty,” said Thomas W. Dickson, chairman, president and chief executive officer, Ruddick, in a prepared statement. “Our customers continue to look for value, and we remain focused on enhancing the overall value we deliver to our customers while maintaining or increasing our customer base. We continue to make investments in promotional activity, as well as price, to drive customer shopping visits and loyalty.”
The company said private-label penetration increased significantly in the quarter — up 230 basis points, to 27.1%, compared with the year-ago period.
The company's investment in promotional activity was offset to a large degree by operational efficiencies and cost-cutting initiatives, Dickson said, noting that selling, general and administrative costs totaled 25.95% of sales in the most recent quarter, vs. 26.33% in the year-ago period.
“We remain focused on the customer and meeting their needs, while delivering the quality, value and customer service they have come to expect from us,” he said.
Through the first 39 weeks of fiscal 2009, Harris Teeter posted operating profit of $132.1 million, down 2.2% from year-ago levels. Comps fell 1.15%, while total sales at the chain grew 4.7%, to $2.84 billion.
Harris Teeter said it plans to open four stores, including one replacement location, in the fourth quarter. Capital expenditures are projected to total $212 million at Harris Teeter this fiscal year.
The chain is also still considering building a new, $100 million distribution center in Fredericksburg, Va., although it said it is also exploring other opportunities for the warehouse. If the center is built as planned, it will be delayed, the company said, “beyond the original contemplated timeframe of 2011 and 2012.”
Although Harris Teeter was reported to be considering the purchase of Ukrop's Super Markets, Richmond, Va., it did not comment on the possibility of acquisitions in last week's earnings report.
Ruddick Corp., which also operates the American & Efird thread-making business, said consolidated net income for the third quarter was $16.5 million, down about 32.7% from year-ago levels. Consolidated sales were up 1.1%, to $1.02 billion. Through three quarters, net income was off 13.4%, to $62.3 million, on a 2.2% gain in sales, to $3.03 billion. The results for the current year included $9.9 million in non-cash charges.
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