Sales declines at American & Efird

06 Aug '09

5 min read

Ruddick Corporation reported that consolidated sales for the fiscal third quarter ended June 28, 2009 increased by 1.1% to $1.02 billion, from $1.01 billion in the third quarter of fiscal 2008. For the 39 weeks ended June 28, 2009, consolidated sales of $3.03 billion were 2.2% above the $2.97 billion for the comparable period of fiscal 2008.

The increase in consolidated sales for the quarter and 39-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 third quarter of fiscal 2009 was $16.5 million, or $0.34 per diluted share, as compared to $24.5 million, or $0.51 per diluted share in the prior year third quarter. For the 39 weeks ended June 28, 2009, consolidated net income was $62.3 million, or $1.29 per diluted share, as compared to $71.9 million, or $1.49 per diluted share in the same period of fiscal 2008.

Fiscal 2009 results include non-cash charges totaling $9.9 million ($6.1 million after tax benefits, or $0.13 per diluted share) related to goodwill and long-lived asset impairments recognized by A&E. During the third quarter of fiscal 2009, A&E recorded non-cash impairment charges related to its U.S. operations. The impairment charges consisted of $7.7 million for the write-off of all of the goodwill associated with A&E's U.S. acquisitions made in 1995 and 1996 and $2.2 million for the write-down of long-lived assets.

Net income for the third quarter and 39-week period of fiscal 2009 decreased from the prior year periods as a result of the non-cash charges discussed above, operating losses at A&E and a slight decrease in operating profit at Harris Teeter from the prior year periods. The decrease in net income for the 39-week period was partially offset by the previously disclosed adjustment recorded in the second quarter of fiscal 2009 that reduced income taxes by approximately $1.6 million for the reversal of valuation allowances associated with foreign tax credits.

Harris Teeter sales increased by 4.1% to $964.2 million in the third quarter of fiscal 2009, compared to sales of $926.3 million in the third quarter of fiscal 2008. For the 39 weeks ended June 28, 2009, sales rose 4.7% to $2.84 billion from $2.72 billion in the same period of fiscal 2008.

The increase in sales for both the quarter and 39-week period was attributable to incremental new stores and was partially offset by comparable store sales declines of 1.42% for the quarter and 1.15% for the 39-week period. As previously disclosed, comparable store sales for the third quarter of fiscal 2009 were impacted by the shift of the Easter holiday from second quarter in fiscal 2008 to third quarter in fiscal 2009.

This shift in the Easter holiday had a 32 basis points impacton third quarter comparable store sales. Comparable store sales continue to be 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.

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