Ruddick Corporation Reports Fiscal Second Quarter 2008 Results

Business Wire, May 1, 2008

CHARLOTTE, N.C. -- Ruddick Corporation (NYSE:RDK) today reported that consolidated sales for the fiscal second quarter ended March 30, 2008 increased by 9.4% to $976 million from $892 million in the second quarter of fiscal 2007. For the 26 weeks ended March 30, 2008, consolidated sales of $1.95 billion were 10.1% above the $1.77 billion for the comparable period of fiscal 2007. The overall increase in consolidated sales during the quarter, and fiscal year to date, was attributable to sales increases at the Company's Harris Teeter supermarket subsidiary that were partially offset by sales declines at the Company's American & Efird ("A&E") sewing thread and technical textiles subsidiary.

The Company reported that consolidated net income increased by 20.4% to $24.1 million, or $0.50 per diluted share, in the second quarter of fiscal 2008 from $20.0 million, or $0.42 per diluted share, in the prior year second quarter. For the 26 weeks ended March 30, 2008, consolidated net income increased by 23.8% to $47.4 million, or $0.98 per diluted share, from $38.3 million, or $0.80 per diluted share, in the same period of fiscal 2007. The increase for both the fiscal quarter and 26-week period was driven by improved operating profit at Harris Teeter.

Harris Teeter sales increased by 10.9% to $893.1 million in the second quarter of fiscal 2008 compared to sales of $805.6 million in the second quarter of fiscal 2007. For the 26 weeks ended March 30, 2008, sales rose 11.7% to $1.79 billion from $1.60 billion in the same period of fiscal 2007. The increase in sales was attributable to incremental new stores and comparable store sales increases of 3.28% for the 2008 second fiscal quarter and 3.83% for the 26-week period.

During the first half of fiscal 2008, Harris Teeter opened 6 new stores, closed 1 older store (which was replaced by a new store) and completed the major remodeling of 3 stores (2 of which were expanded in size). Since the second quarter of fiscal 2007, Harris Teeter has opened 18 new stores, while closing or divesting 5 stores, for a net addition of 13 stores. Harris Teeter operated 169 stores at March 30, 2008.

Operating profit at Harris Teeter increased by 21.3% to $46.4 million (5.19% of sales) for the second quarter of fiscal 2008 as compared to $38.2 million (4.75% of sales) in the prior year period (an improvement of 44 basis points). For the 26 weeks ended March 30, 2008, operating profit was $90.6 million (5.06% of sales), an increase of 23.0% from $73.7 million (4.60% of sales) in the prior year period (an improvement of 46 basis points).

Operating profit was impacted by new store pre-opening costs of $4.2 million (0.47% of sales) and $4.6 million (0.57% of sales) in the second quarter of fiscal 2008 and fiscal 2007, respectively. Pre-opening costs for the 26-week periods ended March 30, 2008 and April 1, 2007 were $7.8 million (0.44% of sales) and $9.6 million (0.60% of sales), respectively. New store pre-opening costs fluctuate between reporting periods depending on the new store opening schedule.

Harris Teeter's operating profit improved primarily as a result of increased store sales attributed to comparable store sales gains driven by our continuous attention to customer service, and through targeted promotional spending and retail pricing programs. The sales increases, along with a continued emphasis on operational efficiencies and cost controls, have provided the leverage to offset the incremental costs associated with Harris Teeter's 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, "We are pleased to report continued positive comparable store sales gains and operating profit increases at Harris Teeter. We have achieved these results while opening 18 new stores, representing 11.5% of our existing store base, during the last twelve months. Our commitment to providing our customers with a superior shopping experience together with our focused promotional strategies have enabled us to continue to grow our market share and our customer base."

A&E sales were $82.5 million for the second quarter of fiscal 2008 as compared to $86.3 million in the second quarter of fiscal 2007 and were $162.6 million for the 26 weeks ended March 30, 2008, as compared to $170.8 million in the 26-week period ended April 1, 2007. Foreign sales accounted for approximately 55% of A&E's fiscal 2008 sales as compared to foreign sales of approximately 54% in fiscal 2007 for both the quarterly and the 26-week periods.

A&E recorded an operating loss of $0.7 million for the second quarter of fiscal 2008 as compared to operating profit of $0.3 million in the second quarter of fiscal 2007. For the 26 weeks ended March 30, 2008, A&E's operating loss was $0.5 million as compared to operating profit of $0.7 million for the same period of fiscal 2007. 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.