(Source: Business Wire)
Ruddick Corporation (NYSE:RDK) (the "Company") today 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.
During the first half of fiscal 2009, Harris Teeter opened 4 new stores, closed 1 older store (which was replaced by a new store) and completed the major remodeling of 2 stores. Since the second quarter of fiscal 2008, Harris Teeter has opened 13 new stores, while closing 3 stores, for a net addition of 10 stores. Harris Teeter operated 179 stores at March 29, 2009.
Operating profit at Harris Teeter was $45.0 million (4.74% of sales) for the second quarter of fiscal 2009 as compared to $46.4 million (5.19% of sales) in the second quarter of fiscal 2008. For the 26 weeks ended March 29, 2009, operating profit was $89.4 million (4.76% of sales), as compared to $90.6 million (5.06% of sales) in the prior year period. Operating profit was impacted by new store pre-opening costs of $3.4 million (0.36% of sales) and $4.2 million (0.47% of sales) in the second quarter of fiscal 2009 and fiscal 2008, respectively. Pre-opening costs for the 26-week periods ended March 29, 2009 and March 30, 2008 were $7.4 million (0.39% of sales) and $7.8 million (0.44% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.
The decrease in Harris Teeter's operating profit resulted primarily from additional promotional activity designed to provide more value to our customers. The sales increases, along with a continued emphasis on operational efficiencies and cost controls, have provided the leverage to partially offset the additional costs associated with Harris Teeter's increased promotional activity and new store program (pre-opening costs and incremental start-up costs), increased associate benefit costs, credit and debit card fees, supply costs and other occupancy costs.
Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of Ruddick Corporation commented that, "These periods of continued economic uncertainty, rising unemployment and declining consumer confidence are changing our customers' spending habits and shopping demands. Therefore, we have been enhancing the overall value we deliver to our customers in response to these changes in customer needs. This quarter we made further investments in promotional price activity to drive customer loyalty and shopping visits. As a result, according to our customer loyalty data, the number of active households increased 1.99% per comparable store during the quarter, while store brand penetration increased over the prior year quarter. Store brand penetration for the second quarter of fiscal 2009 was 24.80%, an increase of 62 basis points over the prior year. A significant portion of our promotional activity investment was offset by operational efficiencies and cost saving initiatives made at all levels of the organization. As a result, selling, general and administrative costs as a percent of sales decreased to 26.33% for the quarter, as compared to 26.61% for the same period last year. We remain focused on the customer and reacting to their needs, while delivering the quality, value and customer service they have come to expect from us."
A&E sales were $60.6 million for the second quarter of fiscal 2009, as compared to $82.5 million in the second quarter of fiscal 2008 and were $126.6 million for the 26 weeks ended March 29, 2009, as compared to $162.6 million in the prior year 26-week period. Foreign sales for the second quarter of fiscal 2009 accounted for approximately 53% of A&E's sales, as compared to foreign sales of approximately 55% for the second quarter of fiscal 2008. For the 26-week periods, foreign sales accounted for approximately 55% of A&E's sales in both fiscal 2009 and fiscal 2008.
A&E recorded an operating loss of $4.6 million for the second quarter of fiscal 2009, as compared to an operating loss of $0.7 million in the second quarter of fiscal 2008. For the 26 weeks ended March 29, 2009, A&E's operating loss was $5.7 million, as compared to an operating loss of $0.5 million for the same period of fiscal 2008. Management continues to rationalize A&E's operations in the Americas and focus on providing best-in-class service to its customers, while expanding its product lines throughout A&E's supply chain.
Mr. Dickson said, "A&E had a significant decline in sales as a result of the serious economic conditions facing A&E's customers in the apparel and non-apparel markets, including the automotive segment. All geographic areas of A&E's operations, including Asia, experienced weak business conditions as a result of poor retail sales on a global basis. Although A&E has been successful in reducing expenses during the quarter, the reduction was not enough to offset the rapid decline in sales and reduced operating schedules. A&E's management intends to continue to reduce expenses to more closely match sales volumes during these difficult economic times. In addition, we will continue to evaluate A&E's structure to best position A&E to take advantage of opportunities available through its enhanced international operations."
For the first half of fiscal 2009, depreciation and amortization for the consolidated Ruddick Corporation totaled $61.3 million and capital expenditures totaled $110.0 million. Total capital expenditures during the 26 weeks ended March 29, 2009 were comprised of $108.7 million for Harris Teeter and $1.3 million for A&E. During the first half of fiscal 2009, Harris Teeter made an additional net investment of $0.2 million ($3.3 million additional investments less $3.1 million received from property investment sales and partnership returns) in connection with the development of certain of its new stores. As previously disclosed, A&E invested another $8.7 million for an additional 14% ownership interest in Vardhman Yarns and Treads Limited located in India and an additional $0.7 million in its joint venture in Brazil during the first quarter of fiscal 2009.
Harris Teeter's strong operating performance and financial position provides the flexibility to continue with its store development program for new and replacement stores along with the remodeling and expansion of existing stores. Harris Teeter plans to open an additional 12 new stores (1 of which will replace an existing store) and complete the major remodeling on 1 additional store, which will be expanded in size, during the remainder of fiscal 2009. The new store development program for fiscal 2009 is expected to result in a 9.3% increase in retail square footage as compared to an 8.5% increase in fiscal 2008. The Company 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 entail 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. As previously disclosed, Harris Teeter has reduced or delayed the number of new store openings originally planned for the current year, as well as for fiscal 2010 and beyond due to the current economic environment. 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 would impact the expected capital expenditures, sales and operating results.
Consolidated capital expenditures for the Company during fiscal 2009 are planned to total approximately $216 million, consisting of $212 million for Harris Teeter and $4 million for A&E. Such capital investment is expected to be financed by internally generated funds, liquid assets and borrowings under the Company's revolving line of credit. The Company's revolving line of credit provides substantially more liquidity than 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 2009 due to the current economic environment and its impact on the Company's customers. The Company will continue to refine its merchandising strategies to respond to the changing shopping demands as a result of the challenging economic environment. The retail grocery market remains intensely competitive and the textile and apparel environment faces additional challenges during this recessionary period. Further operating improvement will be dependent on the Company's ability to continue to increase Harris Teeter's market share, rationalize A&E's operations, offset increased operating costs with additional operating efficiencies, 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; the cost and availability of energy and raw materials; the continued solvency of third parties on leases 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 successful execution of 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 along the eastern seaboard 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 March 29, March 30, March 29, March 30, 2009 2008 2009 2008 NET SALES Harris Teeter $ 949,427 $ 893,064 $ 1,878,354 $ 1,789,668 American & Efird 60,577 82,508 126,635 162,647 Total 1,010,004 975,572 2,004,989 1,952,315 COST OF SALES Harris Teeter 654,421 609,109 1,294,999 1,232,286 American & Efird 50,705 65,092 104,269 127,625 Total 705,126 674,201 1,399,268 1,359,911 GROSS PROFIT Harris Teeter 295,006 283,955 583,355 557,382 American & Efird 9,872 17,416 22,366 35,022 Total 304,878 301,371 605,721 592,404 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Harris Teeter 249,962 237,591 494,004 466,783 American & Efird 14,442 18,126 28,037 35,502 Corporate 1,452 1,578 2,858 3,157 Total 265,856 257,295 524,899 505,442 OPERATING PROFIT (LOSS) Harris Teeter 45,044 46,364 89,351 90,599 American & Efird (4,570 ) (710 ) (5,671 ) (480 ) Corporate (1,452 ) (1,578 ) (2,858 ) (3,157 ) Total 39,022 44,076 80,822 86,962 OTHER EXPENSE (INCOME) Interest expense 4,135 4,950 9,024 9,911 Interest income (43 ) (107 ) (120 ) (197 ) Net investment loss (gains) (35 ) 41 (35 ) 95 Minority interest 68 111 176 198 Total 4,125 4,995 9,045 10,007 INCOME BEFORE TAXES 34,897 39,081 71,777 76,955 INCOME TAXES 11,955 15,019 25,953 29,545 NET INCOME $ 22,942 $ 24,062 $ 45,824 $ 47,410 NET INCOME PER SHARE: Basic $ 0.48 $ 0.50 $ 0.96 $ 0.99 Diluted $ 0.48 $ 0.50 $ 0.95 $ 0.98 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING: Basic 47,972 47,815 47,932 47,834 Diluted 48,287 48,265 48,288 48,314 DIVIDENDS DECLARED PER SHARE - Common $ 0.12 $ 0.12 $ 0.24 $ 0.24 -------------------------------------------------------------------------------
RUDDICK CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) (unaudited) March 29, September 28, March 30, 2009 2008 2008 ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 30,142 $ 29,759 $ 29,158 Accounts Receivable, Net 84,288 91,528 94,501 Refundable Income Taxes 7,346 8,607 - Inventories 302,959 312,589 297,104 Deferred Income Taxes 6,944 6,477 12,110 Prepaid Expenses and Other Current Assets 23,226 28,196 23,182 Total Current Assets 454,905 477,156 456,055 PROPERTY, NET 1,024,542 967,331 924,065 INVESTMENTS 154,991 143,902 126,702 DEFERRED INCOME TAXES 864 361 9,735 GOODWILL 8,169 8,169 8,169 INTANGIBLE ASSETS 25,030 26,355 26,486 OTHER LONG-TERM ASSETS 73,183 73,133 72,715 Total Assets $ 1,741,684 $ 1,696,407 $ 1,623,927 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes Payable $ 7,558 $ 11,150 $ 10,564 Current Portion of Long-Term Debt and Capital Lease Obligations 10,380 9,625 8,256 Accounts Payable 213,422 236,649 202,104 Dividends Payable 5,822 - - Federal and State Income Taxes - - 1,035 Deferred Income Taxes 52 347 506 Accrued Compensation 55,372 63,826 56,578 Other Current Liabilities 98,503 89,206 76,207 Total Current Liabilities 391,109 410,803 355,250 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 335,909 310,953 331,050 DEFERRED INCOME TAXES 15,483 10,877 1,106 PENSION LIABILITIES 44,866 44,306 66,234 OTHER LONG-TERM LIABILITIES 90,805 89,685 91,422 MINORITY INTEREST 6,124 5,948 5,907 SHAREHOLDERS' EQUITY: Common Stock 86,346 83,252 80,183 Retained Earnings 801,744 767,562 729,807 Accumulated Other Comprehensive Income (Loss) (30,702 ) (26,979 ) (37,032 ) Total Shareholders' Equity 857,388 823,835 772,958 Total Liabilities and Shareholders' Equity $ 1,741,684 $ 1,696,407 $ 1,623,927 -------------------------------------------------------------------------------
RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) 26 WEEKS ENDED March 29, March 30, 2009 2008 CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 45,824 $ 47,410 Non-Cash Items Included in Net Income Depreciation and Amortization 61,341 54,904 Deferred Income Taxes 3,865 (4,005 ) Net (Gain) Loss on Sale of Property (369 ) 68 Impairment Losses - 113 Share-Based Compensation 2,877 2,766 Other, Net 323 208 Changes in Operating Accounts Utilizing Cash (1,261 ) (18,638 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 112,600 82,826 INVESTING ACTIVITIES Capital Expenditures (109,964 ) (92,280 ) Purchase of Other Investments (12,750 ) (27,352 ) Proceeds from Sale of Property 3,080 3,071 Return of Partnership Investments 596 129 Investments in Company-Owned Life Insurance (656 ) (1,091 ) Other, Net (174 ) (284 ) NET CASH USED IN INVESTING ACTIVITIES (119,868 ) (117,807 ) FINANCING ACTIVITIES Net Payments on Short-Term Debt Borrowings (2,687 ) (769 ) Net Proceeds from (Payments on) Revolver Borrowings 24,200 (38,000 ) Proceeds from Long-Term Debt Borrowings 1,470 100,077 Payments on Long-Term Debt and Capital Lease Obligations (8,950 ) (8,215 ) Dividends Paid (5,820 ) (11,595 ) Proceeds from Stock Issued 1,094 2,011 Share-Based Compensation Tax Benefits 287 1,375 Purchase and Retirement of Common Stock - (6,601 ) Other, Net (1,165 ) (1,300 ) NET CASH PROVIDED BY FINANCING ACTIVITIES 8,429 36,983 INCREASE IN CASH AND CASH EQUIVALENTS 1,161 2,002 EFFECT OF FOREIGN CURRENCY FLUCTUATIONS ON CASH (778 ) 409 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,759 26,747 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,142 $ 29,158 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest $ 9,139 $ 9,308 Income Taxes 20,340 26,356 Non-Cash Activity: Assets Acquired Under Capital Leases 8,560 19,276 -------------------------------------------------------------------------------
RUDDICK CORPORATION OTHER STATISTICS March 29, 2009 (dollars in millions) Consolidated Harris American Ruddick Teeter & Efird Corporate Corporation Depreciation and Amortization: 2nd Fiscal Quarter $ 27.0 $ 4.0 $ - $ 31.0 Fiscal Year to Date 53.4 7.9 - 61.3 Capital Expenditures: 2nd Fiscal Quarter $ 59.9 $ 0.6 $ - $ 60.5 Fiscal Year to Date 108.7 1.3 - 110.0 Purchase of Other Investment Assets: 2nd Fiscal Quarter $ 0.5 $ - $ - $ 0.5 Fiscal Year to Date 3.3 9.4 - 12.7 Harris Teeter Store Count: Quarter Year to Date Beginning number of stores 176 176 Opened during the period 4 4 Closed during the period (1 ) (1 ) Stores in operation at end of period 179 179 Quarter Year to Date Harris Teeter Comparable Store Sales Increase 0.09 % -1.01 % 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. -------------------------------------------------------------------------------
A service of YellowBrix, Inc.
