CHARLOTTE, N.C. — Harris Teeter drove increases in market share, shopping visits and volume amid a challenging sales environment, quarterly financial results showed.
The retailer, a division of Ruddick Corp. here, said same-store sales declined by 0.7% in the fiscal third quarter that ended June 27 despite a 5.7% overall sales increase to $1 billion. Retail price deflation driven by increased promotional activity and changing consumer spending contributed to the negative comps, Ruddick officials said.
“We continued to draw customer shopping visits and loyalty through the investments we have made in our in-store promotional activity and lower everyday prices,” Thomas W. Dickson, president and chief executive officer of Ruddick, said in a statement. “This has resulted in a greater number of customers, increased number of items sold and greater number of customer shopping visits in fiscal 2010.”
Dickson said that Harris Teeter's loyalty data showed that “active households” per comparable store increased by 1.7% in the quarter, indicating the chain was gaining market share.
Consolidated net earnings in the quarter increased 75.1% to $28.9 million, boosted by operating profit improvements at Harris Teeter and at American & Efird, an industrial thread company also owned by Ruddick. The company also realized tax benefits compared with the same period a year ago.
Earnings per share of 59 cents exceeded consensus analyst estimates by 5 cents. Analysts said the results indicate that food retailers may have entered a period of sales stabilization and gradual improvement of negative trends.
“Trends at Harris Teeter have improved modestly, but consistent with the message seen at all food retailers recently, the environment remains challenging, albeit no more so,” Karen Short, a New York-based analyst at BMO Capital Markets, said in a research note.
Separately, Harris Teeter has decided against building a new distribution center in Virginia, the retailer said last week.
The company announced in January 2009 that it would build a 500,000-square-foot distribution center in King George County, but subsequently delayed the project due to concerns about the economy.
Last week, Harris Teeter told a local news outlet that it had decided not to pursue the project.
“Prompted by a drop in fuel costs and the availability of affordable warehouse space in closer proximity to its existing distribution centers, Harris Teeter decided to earmark its capital toward other projects and not pursue the new distribution center,” the company said in a statement published in the Fredericksburg Star newspaper.
Harris Teeter officials declined to comment to SN.