CHARLOTTE — Harris Teeter here said new-store growth and aggressive pricing helped drive sales and profit gains in the second quarter, although comp-store sales were off by 1.33%.
Operating income at the chain, a subsidiary of Ruddick Corp., grew 4.6% to $47.1 million for the quarter, which ended March 28. Sales were up 5.4%, to $1 billion, largely due to the addition of 16 net new stores since the second quarter of a year ago.
Through the 26-week first half, operating income was flat at $89.4 million, while sales were up 5%, to $1.97 billion. Year-to-date comps were down 1.85%.
“Comparable-store sales for the quarter and 26-week period were negatively impacted by retail price deflation driven by increased promotional activity and changes in consumer purchasing habits, reflective of the current economic environment,” the company said.
Thomas W. Dickson, chairman, president and chief executive officer of Ruddick Corp., said the company is “starting to see the national brands offer additional vendor funding for promotional activities.”
He also said the company saw increases in number of items sold and an increase in customer visits in the first half, noting that the number of “active households,” as indicated by customer-loyalty data, increased by 1.29%.
“Harris Teeter's performance has been exceptional as it relates to containing costs, preserving margins and growing share — all within an extremely challenging environment,” said Karen Short, a New York-based analyst with BMO Capital Markets, Toronto.
Andrew Wolf, a Richmond, Va.-based analyst with BB&T Capital Markets, cited the company's reduction in capital spending — down 38%, to a projected $130 million this fiscal year — as helping boost cash flow. He raised his projection for operating profit at Harris Teeter for the year and boosted his share-price outlook to $38.
Ruddick Corp., which also operates the American & Efird industrial-thread business, said consolidated net income for the quarter was up 19.8%, to $27.5 million, on a 6.1% increase in consolidated sales, to $1.07 billion. For the 26-week period, consolidated net income was up 11.8%, to $51.2 million, on a 5.3% gain in sales, to $2.11 billion, compared with year-ago results.