Harris Teeter Q2 Profits Up

MARK HAMSTRA

MATTHEWS, N.C. — Ruddick Corp. here said operating profits at its Harris Teeter chain increased 7.1% in the fiscal second quarter to $50.5 million, driven by sales gains and efficiencies.

Comparable-store sales were up 1.42% for the 13-week quarter, which ended April 3, and total sales were up 4.9%, to $1.05 billion, compared with year-ago results. The company said comps for the quarter, adjusted for the later Easter holiday this year, would have been up 2.1%.

Through 26 weeks, operating profits at Harris Teeter rose 6.7% to $95.4 million, on a 5.5% increase in sales, to $2.08 billion. Comps for the year to date rose 1.81%, year over year, or 2.16% adjusted for Easter.

Profits at Ruddick Corp.'s American & Efird thread subsidiary doubled in the quarter, to $6.3 million.

“Sales and profit growth were solid at Harris Teeter and A&E as both businesses continued to benefit from cyclical upswings in their industries,” said Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, Va.

Harris Teeter opened four new stores and closed one during the first half. It plans to open four new stores and complete major remodels on six additional stores during the remainder of fiscal 2011.

Karen Short, a New York-based analyst with BMO Capital Markets, said the company is managing the environment well.

“Inflation is being passed through, but the company continues to focus on maintaining tonnage growth, even if it moderates with inflation, as well as continuing to meet the needs of the bifurcated consumer,” she wrote in a research report.

Overall Ruddick said consolidated net income for the quarter rose 8.8%, to $29.9 million, on a 5.7% increase in sales, to $1.13 billion.