Ruddick Corporation earnings decline in Q2
During the first half of fiscal 2009, Harris Teeter opened 4 new stores, closed 1 older store (which was replaced by a new store) and completed the major remodeling of 2 stores. Since the second quarter of fiscal 2008, Harris Teeter has opened 13 new stores, while closing 3 stores, for a net addition of 10 stores. Harris Teeter operated 179 stores at March 29, 2009.
Operating profit at Harris Teeter was $45.0 million (4.74% of sales) for the second quarter of fiscal 2009 as compared to $46.4 million (5.19% of sales) in the second quarter of fiscal 2008. For the 26 weeks ended March 29, 2009, operating profit was $89.4 million (4.76% of sales), as compared to $90.6 million (5.06% of sales) in the prior year period.
Operating profit was impacted by new store pre-opening costs of $3.4 million (0.36% of sales) and $4.2 million (0.47% of sales) in the second quarter of fiscal 2009 and fiscal 2008, respectively. Pre-opening costs for the 26-week periods ended March 29, 2009 and March 30, 2008 were $7.4 million (0.39% of sales) and $7.8 million (0.44% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.
The decrease in Harris Teeter's operating profit resulted primarily from additional promotional activity designed to provide more value to our customers. The sales increases, along with a continued emphasis on operational efficiencies and cost controls, have provided the leverage to partially offset the additional costs associated with Harris Teeter's increased promotional activity and new store program (pre-opening costs and incremental start-up costs), increased associate benefit costs, credit and debit card fees, supply costs and other occupancy costs.
Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of Ruddick Corporation commented that, “These periods of continued economic uncertainty, rising unemployment and declining consumer confidence are changing our customers' spending habits and shopping demands. Therefore, we have been enhancing the overall value we deliver to our customers in response to these changes in customer needs. This quarter we made further investments in promotional price activity to drive customer loyalty and shopping visits.
As a result, according to our customer loyalty data, the number of active households increased 1.99% per comparable store during the quarter, while store brand penetration increased over the prior year quarter. Store brand penetration for the second quarter of fiscal 2009 was 24.80%, an increase of 62 basis points over the prior year. A significant portion of our promotional activity investment was offset by operational efficiencies and cost saving initiatives made at all levels of the organization. As a result, selling, general and administrative costs as a percent of sales decreased to 26.33% for the quarter, as compared to 26.61% for the same period last year. We remain focused on the customer and reacting to their needs, while delivering the quality, value and customer service they have come to expect from us.”
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