Ruddick improves sales by 1.9% in Q1 of fiscal 2009
Ruddick Corporation reported that consolidated sales for the first quarter of fiscal 2009 ended December 28, 2008 increased by 1.9% to $995 million from $977 million in the first quarter of fiscal 2008. The increase in consolidated sales for the quarter was attributable to sales increases of 3.6% at Harris Teeter, the Company's supermarket subsidiary, that were partially offset by sales declines of 17.6% at American & Efird (“A&E”), the Company's sewing thread and technical textiles subsidiary.
In the first quarter of fiscal 2009, consolidated net income was $22.9 million, or $0.47 per diluted share, compared to $23.3 million, or $0.48 per diluted share, in the prior year's first quarter. The slight decrease in net earnings over the prior year was driven by an operating loss at A&E that was partially offset by operating profit improvement at Harris Teeter.
Harris Teeter's sales increased by 3.6% to $928.9 million in the first quarter of fiscal 2009, compared to sales of $896.6 million in the first quarter of fiscal 2008. The increase in sales was attributable to incremental new stores and was partially offset by a comparable store sales decline of 2.12% for the quarter. Comparable store sales were negatively impacted by the timing of the New Year's holiday which will be included in Harris Teeter's second fiscal quarter of 2009.
In the prior year, the New Year's holiday was included in the first fiscal quarter. Management estimates that this shift in the holiday accounted for approximately 0.76% of the comparable store sales decline. Comparable store sales were also negatively impacted by changes in consumer buying habits created by the current economic environment.
During the first quarter of fiscal 2009, Harris Teeter realized a higher percentage of sales of its lower priced store branded products and sales declines in more discretionary items such as floral and certain general merchandise.
During the first quarter of fiscal 2009, Harris Teeter did not open any new stores or close any existing stores, but completed the remodeling of 2 stores. Since the end of the first quarter of fiscal 2008, Harris Teeter has opened 13 new stores, closed 3 older stores (2 of which were replaced by new stores) and completed the major remodeling of 8 stores (3 of which were expanded in size). Harris Teeter operated 176 stores at December 28, 2008.
Operating profit at Harris Teeter in the first quarter of fiscal 2009 increased by 0.2% to $44.3 million (4.77% of sales), from $44.2 million (4.93% of sales) in the first quarter of fiscal 2008.
Operating profit was impacted by new store pre-opening costs of $4.0 million (0.43% of sales) and $3.7 million (0.41% of sales) in the first quarter of fiscal 2009 and fiscal 2008, respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.
Harris Teeter's operating profit improved in spite of the comparable sales decline. Management was effective in initiating additional expense reduction programs to offset the incremental promotional activity designed to drive sales and respond to the changing consumer buying habits.