CHARLOTTE, N.C. — Aggressive spending and a focus on upscale shoppers led Harris Teeter to prosperity in fiscal 2007, and the retailer here plans more of the same in 2008.
The company said it would spend about $202 million on expansion in the new fiscal year, which began Oct. 1. Its plan calls for 15 new stores and eight major remodels, with a focus on the Washington, D.C., market, including forays into Southern Maryland and coastal Delaware. Harris Teeter in 2007 spent $205.5 million on 19 new stores and nine remodels as sales climbed 12.9% to $3.3 billion.
Harris Teeter's expansion highlighted yearly results for Ruddick Corp., Harris Teeter's parent, which posted total sales of $943.6 million for the 12-week fourth quarter ended Sept. 30 and $3.6 billion for the fiscal year. Ruddick also operates the American & Efird industrial thread business. Quarterly earnings of $21.2 million, or 44 cents per share, beat analyst estimates by 3 cents, due mainly to robust sales momentum at Harris Teeter.
The supermarket chain posted comps of 5.9% in the quarter, which management credited to continuous attention to customer service and to promotional spending and retail pricing programs. Harris Teeter's sales of $861.1 million increased by 14.7%.
Andrew Wolf, an analyst at BB&T Capital Markets, Richmond, Va., in a written report said Harris Teeter's market positioning is helping it brave product cost inflation better than competitors. “We believe Harris Teeter's upscale positioning affords it greater pricing power vis-à-vis its customer base than its mid-market conventional rivals,” Wolf said.
Harris Teeter, Wolf noted, was the only supermarket chain he followed that demonstrated sequential comparable-store improvements — the chain had posted 5.3% comps in its third quarter.