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Harris Teeter Comps Up 3.7%

“Real ID sales at Harris Teeter are similar to those at Kroger, the only other conventional chain in our coverage that is running positive." — Andrew Wolf, analyst, BB&T Capital Markets

MATTHEWS, N.C. — Harris Teeter Supermarkets here said third-quarter comparable-store sales were up 3.7% — reflecting volume gains that were among the best in the industry, analysts said — although profits slid in the wake of the company’s asset swap with Lowes Food.

Andrew Wolf, a Richmond, Va.-based analyst with BB&T Capital Markets, said he believes “real” same-store sales growth in the third quarter — factoring out inflation — was up about 1% at Harris Teeter, making the company one of the few supermarket chains experiencing volume growth.

“Real ID sales at Harris Teeter are similar to those at Kroger, the only other conventional chain in our coverage that is running positive,” he said in a research note.

Net income totaled $15.8 million for the 13-week period, which ended July 1, down about 51% vs. year-ago levels. Profits were hit by expenses related to the acquisition of 10 stores from Lowes Foods.

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Operating profit in the third quarter was $32.5 million, vs. $48.2 million a year ago. Without the Lowes Food transaction costs — in which Harris Teeter traded six stores and paid Lowes $26.5 million — operating profits would have been $54 million the most recent period, the company said.

Third-quarter sales were up 4.6%, to $1.15 billion.

Through three quarters, Harris Teeter said net income totaled $59.7 million, down about 40% vs. the year-ago, 39-week span. Sales for the year-to-date span rose 6.5% to $3.39 billion, and comps were up 4.3%.

'Industry-Leading' Comps

Karen Short, a New York-based analyst with BMO Capital Markets, also described Harris Teeter’s comps as “industry-leading” and noted that the quality of the gains were strong, with both units and traffic increasing during the period relative to a year ago, and with unit volume rising during the quarter.

“Additionally, the increase in active households for VIC [loyalty] card users was close to 2%, indicating the company continues to gain share,” she said in a research note.

Separately, one of the former Lowes Foods locations that Harris Teeter planned on converting to a specialty grocery format is being marketed to other users, published reports said. The 49,000-square-foot store in Cornelius, N.C., which Harris Teeter obtained earlier this year through the store swap, was initially slated to be converted to a new format.

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