Harris Teeter Supermarkets has groceries to health and beauty items in the bag. Through operating subsidiary Harris Teeter, Harris Teeter Supermarkets operates a regional chain of around 210 supermarkets in nine states primarily in the southeastern and mid-Atlantic US, as well as Washington, DC. The majority of the grocery stores house pharmacies and feature niceties such as sushi bars, gourmet delis, and cafes. The company sold its American & Efirdindustrial thread subsidiary to KPS Capital Partners for $180 million in cash in 2011. In 2012 the company changed its name from Ruddick Corp. to Harris Teeter Supermarkets to reflect its focus on grocery sales. Grocery giant Kroger is buying the company.
Change in Company Type
Harris Teeter Supermarkets (formerly Ruddick Corp.) reorganized in 2012 following the sale of Ruddick's industrial thread subsidiary, American & Efrid, in 2011. Now with the Harris Teeter supermarket chain its only business, Ruddick changed its name to Harris Teeter Supermarkets and its ticker symbol from RDK to HTSI in April 2012. In 2013 the company became the subject of takeover rumors, which proved true when grocery giant Kroger in July agreed to acquire Harris Teeter for $49.38 per share in cash, or about $2.5 billion.
North Carolina, home to about two-thirds of Harris Teeter's stores, is the grocery chain's largest market, followed by Virginia and South Carolina, with 38 and 14 stores, respectively.
In addition to its grocery stores, Harris Teeter operates grocery, frozen food, and perishable distribution centers in Greensboro and Indian Trail, North Carolina, as well as the Hunter Farms milk and ice cream plant in High Point, North Carolina. The High Point plant supplies Harris Teeter stores with milk, yogurt, and ice cream.
Harris Teeter's fiscal 2012 (ends September) sales increased 6% vs. the prior year, while net income fell by nearly 10% over the same period. The $4.5 billion in sales rung up at Harris Teeter supermarkets in fiscal 2012 was an all-time high for the company. Sales got a boost from higher sales at its existing stores (known as same-store sales) and sales from new stores, partially offset by store closings. Net income declined mainly because of increased expenses from expansion and higher operational costs, including labor, credit and debit card fees, rent and other occupancy costs.
Harris Teeter is steadily growing its retail footprint. Its management believes that its strategy of opening additional stores within close proximity to existing stores, and any similar new additions in the future, has a strategic benefit of enabling the grocery chain to capture sales and expand market share as the markets it serves continue to grow. During fiscal 2012, Harris Teeter added five new stores, on top of 15 supermarkets added over the previous two years. Going forward, the chain plans to add a dozen new stores and remodel about ten others in 2013.
The upscale grocery chain is feeling the heat as competitors, such as Publix, Whole Foods and Earth Fare, expand in its markets and lure away the grocer's customers. On the low end, discounters Wal-Mart and Target are chipping away at its market as well. In response, Harris Teeter is continuing to broaden its lineup of organic and natural foods while touting value. (Harris Teeter sells about 830 natural and organic products. Earth Fare has 26,000.)
To better compete with its high-end rivals, Harris Teeter is opening stores under a new format and banner called 201Central. The new format features a international variety of wine, beer, specialty foods, and other selected merchandise.
Mergers and Acquisitions
In June 2012 the company acquired 10 supermarkets in the central Carolinas from rival Lowes Food Stores, which in turn purchased six Harris Teeter stores in western North Carolina.
Investment firm Neuberger Berman Group owns about 12% of Harris Teeter's shares.