CHARLOTTE, N.C. -- Ruddick Corp. here said aggressive promotional spending helped boost sales of its supermarket subsidiary, Harris Teeter, for the third quarter and nine months ended July 2.
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The company said the sales growth was due to expanded and refocused promotional activities designed to reverse a sales slowdown that occurred during the first half of the year as a result of the competitive supermarket environment in the Southeast.
According to Thomas W. Dickson, Ruddick president, "Management at Harris Teeter is committed to an enhanced investment in promotional activities to boost comparable store sales for the second half of the fiscal year and for future quarters."
He also said two competitors -- Hannaford Bros. Co., Scarborough, Maine, and Winn-Dixie, Jacksonville, Fla. -- have implemented store closing programs impacting the market here and, to a lesser extent, other markets, "which should benefit Harris Teeter as it continues promotional activities designed to attract these potential customers."
The company said the negative impact of the promotional investments on margins is expected to moderate in the long term "as the company experiences the rewards of an expanded customer base and greater efficiency in targeting and designing these programs."
Despite increase in promotional spending, the company said Harris Teeter's operating profits rose 9.8% for the quarter to $13.7 million and 7.4% for the year to date to $45.2 million. The company noted that Harris Teeter operating profit had fallen in the third and fourth quarters of fiscal 1999 due to reduced revenues and increased costs related to the sale of 11 stores in western Virginia and the opening of five of 10 stores it purchased in the Winston-Salem and Greensboro, N.C., markets.
Harris Teeter accounted for approximately 87% of Ruddick's third-quarter sales; the balance came from American & Efird, a manufacturer and distributor of industrial sewing thread.
Overall, Ruddick's sales rose 7% for the quarter to $682.9 million and 4% for the year-to-date to $2.01 billion, while net income increased 0.2% for the quarter to $12.3 million and increased 3.7% for the nine months to $39 million.
