|View printer-friendly version|
|Ruddick Corporation Reports Fiscal Second Quarter 2011 Results|
CHARLOTTE, N.C., May 05, 2011 (BUSINESS WIRE) --
Ruddick Corporation (NYSE:RDK) (the "Company") today reported that consolidated sales for the fiscal second quarter ended April 3, 2011 increased by 5.7% to $1.13 billion from $1.07 billion in the second quarter of fiscal 2010. For the 26 weeks ended April 3, 2011, consolidated sales increased by 6.0% to $2.24 billion from $2.11 billion for the comparable period of fiscal 2010. The increase in consolidated sales for the quarter and 26-week period was attributable to sales increases at both of the Company's operating subsidiaries - Harris Teeter, Inc., the Company's supermarket subsidiary, and 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 2011 increased by 8.8% to $29.9 million, or $0.61 per diluted share, from the $27.5 million, or $0.57 per diluted share reported in the prior year second quarter. For the 26 weeks ended April 3, 2011, consolidated net income increased by 32.9% to $68.0 million, or $1.39 per diluted share, from the $51.2 million, or $1.06 per diluted share reported in the same period of fiscal 2010. The increase in net earnings for the fiscal quarter was driven by operating profit improvements at both Harris Teeter and A&E when compared to the second quarter of fiscal 2010. The increase in net earnings for the 26-week period was driven by operating profit improvements at both operating subsidiaries and a pre-tax gain of $19.5 million ($10.3 million after tax or $0.21 per diluted share) from the sale of the Company's interest in a foreign investment that was recorded in the first quarter of fiscal 2011.
Harris Teeter sales increased by 4.9% to $1.05 billion in the second quarter of fiscal 2011, from sales of $1.00 billion in the second quarter of fiscal 2010. For the 26 weeks ended April 3, 2011, sales rose 5.5% to $2.08 billion from $1.97 billion in the same period of fiscal 2010. The increase in sales for the quarter and 26-week period was attributable to incremental new store sales and an increase in comparable store sales of 1.42% for the quarter and 1.81% for the 26-week period ended April 3, 2011. The 2011 Easter holiday sales will be reported in the third quarter of fiscal 2011 and the 2010 Easter holiday sales were reported in the third quarter of fiscal 2010; however, the 2010 Easter holiday sales are included in the second quarter of fiscal 2010 when computing comparable store sales because of a shift of one week caused by the 53-week year in fiscal 2010. Management has estimated that the Easter holiday shift negatively impacted the fiscal 2011 comparable store sales calculation by approximately 68 basis points for the quarter and 35 basis points for 26-week period ended April 3, 2011.
During the first half of fiscal 2011, Harris Teeter has opened four new stores (one of which replaced an existing store) and closed one store. Since the second quarter of fiscal 2010, Harris Teeter has opened eight new stores (one of which replaced an existing store) and closed one store, for a net addition of seven stores. Harris Teeter operated 202 stores at the end of the second quarter of fiscal 2011.
Harris Teeter's operating profit for the second quarter of fiscal 2011 increased 7.1% to $50.5 million (4.81% of sales) from the $47.1 million (4.71% of sales) reported in the second quarter of fiscal 2010. For the 26 weeks ended April 3, 2011, operating profit increased by 6.7% to $95.4 million (4.58% of sales), from $89.4 million (4.53% of sales) in the prior year period. Operating profit was impacted by new store pre-opening costs of $1.9 million (0.18% of sales) and $2.2 million (0.22% of sales) in the second quarter of fiscal 2011 and fiscal 2010, respectively. Pre-opening costs for the 26-week periods ended April 3, 2011 and March 28, 2010 were $3.9 million (0.18% of sales) and $4.8 million (0.24% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.
The fiscal 2011 increases in Harris Teeter's operating profit described above resulted primarily from Harris Teeter's increased sales and a continued emphasis on operational efficiencies and cost controls. A portion of the savings realized from these efforts have been utilized to fund increased promotional activity designed to provide additional value to our customers and offset increased occupancy costs, healthcare expense and increased debit and credit card fees.
Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of Ruddick Corporation commented that, "We are very pleased with our results for the first half of fiscal 2011. Our comparable store sales remain strong on a comparable holiday basis. For a number of our customers, consumer confidence appears to be more optimistic as evidenced by a trading up in categories such as premium meats and wines, specialty breads and fresh produce. We are also seeing an increase in purchases of other categories such as prepared dinners, bottled water, organic produce, natural bulk foods and frozen natural and organic items, all of which had declined during the recession. During the first half of fiscal 2011, Harris Teeter's operating profit has increased as a result of our focus on operating efficiencies and cost saving initiatives. So far this year we have been successful in passing along most of the cost inflation created by increased commodity prices, as evidenced by our gross profit margin percentage excluding our LIFO charge. Our gross margin, calculated without the LIFO charges of $4.8 million for the quarter and $5.3 million for the 26-week period of fiscal 2011, would have increased year over year by 31 basis points for the quarter and 9 basis points for the first half of fiscal 2011. We have also made further strides at increasing our overall customer base. During the second quarter of fiscal 2011, our customer loyalty data indicates that the number of active households increased by 1.74% (2.18% excluding the Easter holiday week). While we remain cautious in our expectations for the remainder of the year, we are encouraged by the indication of a more positive change in our customers' purchasing habits and will continue to adjust our promotional activity to continue to increase our market share. In addition, we remain focused on controlling both store operating and corporate expenses."
A&E sales increased by 16.7% to $82.6 million in the second quarter of fiscal 2011, from sales of $70.8 million in the second quarter of fiscal 2010. For the 26 weeks ended April 3, 2011, sales rose 12.1% to $155.8 million from sales of $139.0 million in the prior year 26-week period. Foreign sales accounted for approximately 55% of A&E's sales in the second quarter and 26-week period of fiscal 2011, as compared to 53% and 54% in the second quarter and 26-week period of fiscal 2010, respectively.
A&E's operating profit for the second quarter of fiscal 2011 increased 100.9% to $6.3 million from $3.1 million in the second quarter of fiscal 2010. For the 26 weeks ended April 3, 2011, A&E's operating profit increased by 67.2% to $11.9 million, from the $7.1 million for the same period of fiscal 2010. Operating profit improvements were realized in A&E's U.S. operations and the majority of its foreign operations. The increase in sales contributed to improved operating schedules at most of A&E's manufacturing facilities throughout the world.
Mr. Dickson said, "We remain encouraged by A&E's operating results for the first half of fiscal 2011. A&E's success in expanding sales and manufacturing capacity in Asia while consolidating manufacturing capacities and reducing operating and overhead costs in the U.S. and Europe resulted in significant improvements in operating profit in fiscal 2011. A&E's Asian operations reported sales increases of 29% for the second quarter of fiscal 2011 and 25% for the 26-week period. During the first half of fiscal 2011, over 65% of the finished goods produced were manufactured at A&E's Asian facilities, including its joint ventures. A&E will continue to expand its manufacturing capacity in Asia to support its growth in sales and market share in this vibrant market. We will also continue to enhance our other international operations and evaluate A&E's structure to best position A&E to take advantage of opportunities available through these operations."
Consolidated capital expenditures for the Company during the first half of fiscal 2011 totaled $74.1 million and depreciation and amortization totaled $69.6 million. Total capital expenditures during the 26 weeks ended April 3, 2011 were comprised of $71.6 million for Harris Teeter and $2.5 million for A&E. During the first half of fiscal 2011, Harris Teeter received $22.6 million of cash in connection with the sale of its ownership position in five investment properties along with one owned property. In addition, Harris Teeter invested an additional $14.4 million and received an additional $5.9 million in connection with the development of certain of its new stores.
Harris Teeter's operating performance and the Company's strong financial position provides the flexibility to continue with Harris Teeter's store development program for new and replacement stores along with the remodeling and expansion of existing stores. Harris Teeter plans to open an additional four new stores and complete the major remodeling on six additional stores during the remainder of fiscal 2011. The new store development program for fiscal 2011 is expected to include a total of eight new stores and result in a 4.1% increase in retail square footage, as compared to a 6.4% increase in fiscal 2010. New store openings currently scheduled for the remainder of fiscal 2011 are: two in the third quarter; and two in the fourth quarter. The decrease in planned new store openings from fiscal 2010 to fiscal 2011 reflects the Company's efforts, as previously initiated and disclosed, to delay new store openings during these challenging economic times. Management will continue to evaluate Harris Teeter's new store program and may adjust its strategic plan accordingly. In addition, Harris Teeter routinely evaluates its existing store operations in regards to its overall business strategy and from time to time will close or divest underperforming stores.
Harris Teeter's capital expenditure plans include the continued expansion of its existing markets, including the Washington, D.C. metro market area which incorporates northern Virginia, the District of Columbia, southern Maryland and coastal Delaware. Real estate development by its nature is both unpredictable and subject to external factors including weather, construction schedules and costs. Any change in the amount and timing of new store development can impact the expected capital expenditures, sales and operating results.
Consolidated capital expenditures for the Company during fiscal 2011 are planned to total approximately $173 million, consisting of $165 million for Harris Teeter and $8 million for A&E. Such capital investment is expected to be financed by internally generated funds, liquid assets or borrowings under the Company's revolving line of credit. Management believes that the Company's revolving line of credit provides sufficient liquidity for what management expects the Company will require through the expiration of the line of credit in December 2012.
The Company's management remains cautious in its expectations for the remainder of fiscal 2011 due to the current economic environment and its impact on the Company's customers. Harris Teeter will continue to refine its merchandising strategies to respond to the changing shopping demands and to maintain or increase its customer base. The retail grocery market remains intensely competitive and there is no assurance that the improvements in the textile and apparel industries will continue. Any operating improvement will be dependent on the Company's ability to increase Harris Teeter's market share, to continue the improvement in A&E's sales and resulting operating schedules, and to effectively execute the Company's strategic expansion plans.
This news release may contain forward-looking statements that involve uncertainties. A discussion of various important factors that could cause results to differ materially from those expressed in such forward-looking statements is shown in reports filed by the Company with the Securities and Exchange Commission and include: generally adverse economic and industry conditions; changes in the competitive environment; economic or political changes in countries where the Company operates; changes in federal, state or local regulations affecting the Company; the passage of future tax legislation, or any negative regulatory or judicial position which prevails; management's ability to predict the adequacy of the Company's liquidity to meet future requirements; volatility of financial and credit markets which would affect access to capital for the Company; changes in the Company's expansion plans and their effect on store openings, closings and other investments; the ability to predict the required contributions to the Company's pension and other retirement plans; the Company's requirement to impair recorded goodwill or long-lived assets; the cost and availability of energy and raw materials; the Company's ability to pass along product cost increases through increased sales prices; the continued solvency of third parties on leases that the Company guarantees; the Company's ability to recruit, train and retain effective employees; changes in labor and employer benefits costs, such as increased health care and other insurance costs; the Company's ability to successfully integrate the operations of acquired businesses; the extent and speed of successfully executing strategic initiatives; and, unexpected outcomes of any legal proceedings arising in the normal course of business. Other factors not identified above could cause actual results to differ materially from those included, contemplated or implied by the forward-looking statements made in this news release.
Ruddick Corporation is a holding company with two primary operating subsidiaries: Harris Teeter, Inc., a leading regional supermarket chain with operations in eight states primarily in the southeastern and mid-Atlantic United States, and the District of Columbia; and American & Efird, Inc., one of the world's largest global manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles.
Selected information regarding Ruddick Corporation and its subsidiaries is attached. For more information on Ruddick Corporation, visit our web site at:www.ruddickcorp.com.
SOURCE: Ruddick Corporation