Ruddick Corporation earnings decline in Q2

04 May '09

6 min read

Ruddick Corporation reported that consolidated sales for the fiscal second quarter ended March 29, 2009 increased by 3.5% to $1.01 billion from $0.98 billion in the second quarter of fiscal 2008. For the 26 weeks ended March 29, 2009, consolidated sales of $2.00 billion were 2.7% above the $1.95 billion for the comparable period of fiscal 2008.

The increase in consolidated sales for the quarter and 26-week period was attributable to sales increases at Harris Teeter, the Company's supermarket subsidiary, that were partially offset by sales declines at American & Efird (“A&E”), the Company's sewing thread and technical textiles subsidiary.

The Company reported that consolidated net income in the second quarter of fiscal 2009 was $22.9 million, or $0.48 per diluted share, as compared to $24.1 million, or $0.50 per diluted share in the prior year second quarter. For the 26 weeks ended March 29, 2009, consolidated net income was $45.8 million, or $0.95 per diluted share, as compared to $47.4 million, or $0.98 per diluted share in the same period of fiscal 2008.

The decrease in net earnings for both the fiscal quarter and 26-week period was driven by operating losses at A&E and a slight decrease in operating profit at Harris Teeter from the prior year periods that was offset, in part, by an income tax expense adjustment. Income tax expense for the quarter and 26-week period of fiscal 2009 included a reversal of $1.6 million of valuation allowances associated with foreign tax credits which management now believes will be realized.

Harris Teeter sales increased by 6.3% to $949.4 million in the second quarter of fiscal 2009, compared to sales of $893.1 million in the second quarter of fiscal 2008. For the 26 weeks ended March 29, 2009, sales rose 5.0% to $1.88 billion from $1.79 billion in the same period of fiscal 2008. The increase in sales for the quarter was attributable to incremental new stores and comparable store sales increases of 0.09%. The sales increase for the 26-week period was attributable to incremental new stores and was partially offset by comparable store sales declines of 1.01%.

Comparable store sales for the second quarter were impacted by the timing of the New Year's and Easter holidays, while the 26-week period was impacted by the timing of the Easter holiday. As previously disclosed, the New Year's holiday fell in the second quarter of fiscal 2009 as compared to the first quarter of fiscal 2008.

The Easter holiday will be included in Harris Teeter's third fiscal quarter of 2009 and was included in the second quarter of fiscal 2008. Adjusting for the positive impact of the New Year's holiday shift and the negative impact of the Easter holiday shift, comparable store sales increased by 0.11% for the quarter.

Adjusting for the negative impact of the Easter holiday shift, comparable store sales for the year-to-date period decreased by 0.71%. Comparable store sales were also negatively impacted by changes in consumer buying habits created by the current economic environment and, to some extent, the cannibalization created by opening additional stores in certain key major markets that have a close proximity to existing stores. During the first half of fiscal 2009, Harris Teeter realized a higher percentage of sales of its lower priced store branded products and sales declines in more discretionary categories such as floral, health and beauty, and certain general merchandise.

Ruddick Corporation

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