HARRIS TEETER BUDGETS FOR EXPANSION

TAWN NHAN

CHARLOTTE, N.C. -- Harris Teeter has significantly increased its capital expenditure budget for fiscal 1996 as it prepares to enter a new market and build up its fresh foods presence in remodeled units.

The company's plans were outlined at Ruddick Corp.'s annual meeting here. Ruddick is the parent company of Harris Teeter, the 139-store supermarket chain also based here.

The retailer's strong performance lately has been tied partly to its commitment to an aggressive remodeling and replacement program, according to analysts.

At the meeting, executives said Ruddick has allocated $101.2 million for capital expenditures at Harris Teeter in the fiscal year ending Oct. 1 -- nearly a 24% increase over last year. Two-thirds of that sum will go toward building new stores and remodeling old ones.

This year the chain will open 10 new stores, including its first in the Tidewater area of Virginia, officials told shareholders. In fiscal 1995 the retailer spent $82 million on capital improvements, adding five stores, replacing six, remodeling nine and closing five.

Although it will be new to the Tidewater region when its first store opens this summer, the area's three primary competitors are no strangers to Harris Teeter. The retailer

already competes with Food Lion Salisbury, N.C., and Hannaford Bros., Scarborough, Maine, a newcomer to the area with one store in Virginia Beach.

Harris Teeter doesn't currently compete with the third player, Norfolk, Va.-based Farm Fresh. But years ago, when Farm Fresh still had stores in Raleigh, N.C., Harris Teeter was one of its competitors, officials said.

Harris Teeter will likely be positioned as the upscale competitor among those top players, but Harris Teeter President Edward S. Dunn Jr. played down the company image.

"There's no such thing as upscale," said Dunn in an interview following the meeting. "Everybody is competing for every sales dollar. I expect that market to be like the Carolinas -- very competitive."

Harris Teeter also plans to close many of its smaller, old format stores as their leases expire. They will be replaced by larger format stores. Examples are two units near Ruddick headquarters here, which are considerably more plush than the stores they replaced. They feature such amenities as free gourmet coffee tasting, a fresh pizza bar, restaurant seating, a full-service bakery, and deli, seafood, meat and floral departments.

"We go after the customer who likes food," Dunn said. "They like to eat it; they like to prepare it, and they like to know about it. And they like a very large selection.

"We try to provide an atmosphere or an ambience where people enjoy shopping for food. As you know, a lot of people consider grocery shopping drudgery and we want to eliminate that."

In other news, Ruddick said the sale of its Jordan Graphics division to Reynolds & Reynolds will not affect 1996 results. Shareholders also approved Edwin B. Borden Jr., R. Stuart Dickson and Hugh McColl Jr. for another three years of service on the board of directors. Shareholders also approved a new stock option plan that would reserve an additional 600,000 shares of common stock for future grants to executives and other key employees.