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.
Ruddick Corporation Consolidated Condensed Statements of
Operations (in thousands, except per share data) (unaudited)
13 Weeks Ended 26 Weeks Ended April 3,
March 28, April 3, March 28, 2011 2010
2011 2010
Net Sales: Harris
Teeter $ 1,050,146 $ 1,000,651 $ 2,082,427 $ 1,972,966 American
& Efird 82,627 70,787
155,817 138,984 Total 1,132,773
1,071,438 2,238,244 2,111,950
Cost of Sales: Harris Teeter 733,070 697,079
1,458,928 1,378,873 American & Efird 62,190
54,116 117,803 106,290
Total 795,260 751,195 1,576,731
1,485,163
Gross Profit: Harris
Teeter 317,076 303,572 623,499 594,093 American & Efird
20,437 16,671 38,014
32,694 Total 337,513 320,243
661,513 626,787
Selling,
General and Administrative Expenses: Harris Teeter 266,606
256,451 528,130 504,693 American & Efird 14,128 13,531 26,162
25,604 Corporate 2,366 1,429
5,085 4,231 Total 283,100
271,411 559,377 534,528
Operating Profit (Loss): Harris Teeter 50,470 47,121 95,369
89,400 American & Efird 6,309 3,140 11,852 7,090 Corporate
(2,366 ) (1,429 ) (5,085 ) (4,231 )
Total 54,413 48,832 102,136
92,259
Other Expense (Income):
Interest expense 5,163 4,981 9,732 10,014 Interest income (82 )
(122 ) (115 ) (139 ) Net investment loss (gain) 114
- (19,392 ) (1 ) Total 5,195
4,859 (9,775 ) 9,874
Earnings Before Taxes 49,218 43,973 111,911 82,385
Income Tax Expense 19,104 16,336
43,429 30,731
Net Earnings
30,114 27,637 68,482 51,654
Less: Net Earnings Attributable to
the Noncontrolling Interest 208 158
443 444
Net Earnings
Attributable to Ruddick Corporation $ 29,906 $ 27,479
$ 68,039 $ 51,210
Earnings Per Share
Attributable to Ruddick Corporation: Basic $ 0.62 $ 0.57
$ 1.40 $ 1.06 Diluted $ 0.61 $ 0.57 $ 1.39 $ 1.06
Weighted Average Number of Shares of Common Stock
Outstanding: Basic 48,481 48,193 48,446 48,144 Diluted 48,818
48,538 48,806 48,516
Dividends Declared Per Common
Share $ 0.13 $ 0.12 $ 0.26 $ 0.24
Effective Income
Tax Rate 38.8 % 37.1 % 38.8 % 37.3 %
Ruddick Corporation
Consolidated Condensed Balance Sheets (in thousands)
(unaudited) April 3, October 3, March 28,
2011 2010 2010
Assets
Current Assets: Cash and Cash Equivalents $ 74,311 $ 73,612 $
36,785 Accounts Receivable, Net 105,023 99,407 93,529 Refundable
Income Taxes 1,237 16,767 2,876 Inventories 319,816 320,506 319,366
Deferred Income Taxes 1,024 2,236 6,962 Prepaid Expenses and Other
Current Assets 30,921 32,443
24,700 Total Current Assets 532,332 544,971 484,218
Property, Net 1,076,574 1,067,807 1,062,451 Investments 175,765
174,733 165,339 Deferred Income Taxes 1,002 977 28,847 Goodwill 515
515 515 Intangible Assets 20,504 21,434 22,548 Other Long-Term
Assets 84,618 79,449 81,551
Total Assets $ 1,891,310 $ 1,889,886
$ 1,845,469
Liabilities and
Equity
Current Liabilities: Notes Payable $ 8,054 $ 6,785 $ 6,631 Current
Portion of Long-Term Debt and Capital Lease Obligations 4,592
12,035 10,283 Accounts Payable 232,024 228,748 212,154 Dividends
Payable - - 5,853 Deferred Income Taxes 368 159 27 Accrued
Compensation 56,442 64,102 56,331 Other Current Liabilities
78,643 90,218 91,602 Total
Current Liabilities 380,123 402,047 382,881 Long-Term Debt
and Capital Lease Obligations 286,467 296,131 325,913 Deferred
Income Taxes 1,836 1,721 574 Pension Liabilities 152,977 185,445
175,394 Other Long-Term Liabilities 113,816 105,619 102,559
Equity: Common Stock 99,644 98,285 92,363 Retained Earnings 974,106
918,843 869,742 Accumulated Other Comprehensive Loss
(123,408 ) (124,679 ) (109,710 ) Total Equity of
Ruddick Corporation 950,342 892,449 852,395 Noncontrolling Interest
5,749 6,474 5,753 Total
Equity 956,091 898,923 858,148
Total
Liabilities and Equity $ 1,891,310 $ 1,889,886 $
1,845,469
Ruddick Corporation Consolidated
Condensed Statements of Cash Flows (in thousands) (unaudited)
26 Weeks Ended April 3, March 28, 2011
2010
Cash Flow From Operating Activities: Net
Earnings $ 68,039 $ 51,210 Non-Cash Items Included in Net Earnings
Depreciation and Amortization 69,590 66,387 Deferred Income Taxes
(23 ) 1,305 Net Gain on Sale of Property and Investments (20,130 )
(900 ) Share-Based Compensation 3,999 2,856 Other, Net (5,206 )
(3,490 ) Changes in Operating Accounts Providing (Utilizing) Cash:
Accounts Receivable (6,040 ) (12,963 ) Inventories (136 ) (9,452 )
Prepaid Expenses and Other Current Assets 1,418 3,817 Accounts
Payable 3,637 (16,229 ) Other Current Liabilities (1,996 ) 3,626
Other Long-Term Operating Accounts (31,485 ) 6,855 Dividends
Received - 100
Net Cash Provided by
Operating Activities 81,667 93,122
Investing Activities: Capital Expenditures (74,109 )
(49,000 ) Purchase of Other Investments (14,402 ) (9,483 ) Proceeds
from Sale of Property and Investments 52,303 4,646 Return of
Partnership Investments - 3,364 Investments in COLI, Net of
Proceeds from Death Benefits (1,073 ) (85 ) Other, Net (862
) (1,592 )
Net Cash Used in Investing
Activities
(38,143 ) (52,150 )
Financing
Activities: Net Proceeds from (Payments on) Short-Term Debt
Borrowings 1,678 (18 ) Net Payments on Revolver Borrowings -
(20,700 ) Payments on Long-Term Debt and Capital Lease Obligations
(29,291 ) (8,735 ) Dividends Paid (12,776 ) (11,676 ) Proceeds from
Stock Issued 360 2,092 Share-Based Compensation Tax Benefits 926
559 Shares Effectively Purchased and Retired for Withholding Taxes
(2,485 ) (1,366 ) Purchase and Retirement of Common Stock - (1,491
) Other, Net (1,318 ) (134 )
Net Cash Used in
Financing Activities (42,906 ) (41,469 )
Increase (Decrease) in Cash and Cash Equivalents 618 (497 )
Effect of Foreign Currency Fluctuations on Cash 81 (28 )
Cash and Cash Equivalents at Beginning of Period
73,612 37,310
Cash and Cash
Equivalents at End of Period $ 74,311 $ 36,785
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for: Interest $ 9,798 $ 9,351 Income
Taxes 18,171 25,035 Non-Cash Activity: Assets Acquired Under
Capital Leases 12,144 - Note Received in Connection with Sale of
Investments 2,855 -
Ruddick Corporation Other
Statistics April 3, 2011 (dollars in millions)
Consolidated Harris American Ruddick Teeter
& Efird Corporate Corporation Depreciation
and Amortization: 2nd Fiscal Quarter $ 31.8 $ 2.9 $ 0.3 $ 35.0
Fiscal Year to Date 63.1 5.9 0.6 69.6 Capital Expenditures:
2nd Fiscal Quarter $ 39.7 $ 1.5 $ - $ 41.2 Fiscal Year to Date 71.6
2.5 - 74.1 Purchase of Other Investment Assets: 2nd Fiscal
Quarter $ 5.8 $ - $ - $ 5.8 Fiscal Year to Date 14.4 - - 14.4
Harris Teeter Store Count:
Quarter
Year to Date
Beginning number of stores 201 199 Opened during the period
2 4 Closed during the period (1 ) (1 ) Stores in
operation at end of period 202 202
Quarter Year to Date Harris Teeter Comparable
Store Sales 1.42 % 1.81 %
Definition of
Comparable Store Sales:
Comparable store sales are computed using
corresponding calendar weeks to account for the occasional extra
week included in a fiscal year. A new store must be in operation
for 14 months before it enters into the calculation of comparable
store sales. A closed store is removed from the calculation in the
month in which its closure is announced. A new store opening within
an approximate two-mile radius of an existing store that is to be
closed upon the new store opening is included as a replacement
store in the comparable store sales measure as if it were the same
store. Sales increases resulting from existing comparable stores
that are expanded in size are included in the calculations of
comparable store sales, if the store remains open during the
construction period.
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