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Technical textiles subsidary of Ruddick registers sales decline

31
Oct '08

Ruddick Corporation (NYSE:RDK) today reported that consolidated sales for fiscal 2008 increased by 9.7% to $3.99 billion from $3.64 billion in fiscal 2007. Consolidated sales for the fiscal fourth quarter ended September 28, 2008 increased by 8.8% to $1.03 billion from $0.94 billion in the fourth quarter of fiscal 2007.

The increase in consolidated sales for the year was attributable to sales increases of 11.1% at Harris Teeter, the Company's supermarket subsidiary, that were partially offset by sales declines of 3.6% at American & Efird ("A&E"), the Company's sewing thread and technical textiles subsidiary.

The increase in consolidated sales during the quarter was driven by sales increases of 10.2% at Harris Teeter that were partially offset by sales declines of 5.8% at A&E.

The Company reported consolidated net income of $96.8 million, or $2.00 per diluted share for fiscal 2008, an increase of 19.9% from the $80.7 million, or $1.68 per diluted share reported for fiscal 2007. Consolidated net income for the fiscal fourth quarter ended September 28, 2008, was $24.8 million, or $0.51 per diluted share, an increase of 17.2% from the $21.2 million, or $0.44 per diluted share, in the fourth quarter of fiscal 2007.

The increase in net income over the prior fiscal year and quarterly period was driven by improved operating profit at the Company's subsidiaries and a lower effective income tax rate realized in fiscal 2008. Income tax expense for fiscal 2008 included refund claims related to prior years of approximately $2.4 million associated with A&E's foreign operations.

Harris Teeter sales for fiscal 2008 increased by 11.1% to $3.66 billion from $3.30 billion in fiscal 2007. Sales for the fourth quarter of fiscal 2008 were $948.8 million, an increase of 10.2% from the $861.1 million in the fourth quarter of fiscal 2007. The increase in sales was attributable to incremental new stores and comparable store sales increases of 2.86% for the year and 2.16% for the fourth quarter.

During fiscal 2008, Harris Teeter opened 15 new stores, closed 3 older stores (2 of which were replaced by new stores) and completed the major remodeling of 7 stores (4 of which were expanded in size). The Company operated 176 stores at September 28, 2008.

Operating profit at Harris Teeter for fiscal 2008 was $177.8 million (4.85% of sales), an increase of 15.4% from $154.1 million (4.67% of sales) in fiscal 2007 (an improvement of 18 basis points). For the fourth quarter of fiscal 2008, operating profit was $42.6 million (4.49% of sales), an increase of 5.2% from $40.5 million (4.71% of sales) in the prior year period (a reduction of 22 basis points).

Operating profit was impacted by new store pre-opening costs of $15.4 million (0.42% of sales) and $17.9 million (0.54% of sales) in fiscal 2008 and 2007, respectively. Pre-opening costs for the fiscal fourth quarter of 2008 and 2007 were $3.8 million (0.40% of sales) and $4.4 million (0.51% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule and market location.

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