Harris Teeter 1999 Annual Report Download - page 12

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Ruddick Corporation and Subsidiaries
products, offering a better value to our customers, and
improve category management through SKU rationaliza-
tion, designed to increase sales and drive improvement in
operating profit per square foot.
We are firmly focused on growth in operating profit.
We recognize that our current operating margin is not
among the best in the industry. Harris Teeter’s basic phi-
losophy is to offer better service and greater variety, but
I believe we can also significantly reduce our operating
costs and become more profitable. We have researched
and developed industry best practices with the aid of out-
side resources and have tested them at selected Harris
Teeter stores.With success at the test stores and the roll-
out of these practices to more and more stores, we
expect profitability to continue to rise. In fact, our oper-
ating margin, before deducting the non-recurring costs
related to the dispositions and acquisitions of the store
sites with Kroger, did increase this year.
The thread business is often considered a relatively
slow growth business. What are your strategies for top
line growth at A&E?
Organic thread sales are normally targeted to grow
between 3% and 5% annually. However, even before
taking possible acquisitions into account, there are a
number of opportunities for us to continue this sales
growth, including increasing foreign sales, expanding
sales of filament thread and launching new thread prod-
ucts.We have seen in the last several years a dramatic shift
of apparel manufacturing out of the U.S. and we con-
tinue to develop our infrastructure in Latin and Central
America, as well as in Asia. We now have six sales and
distribution centers in Mexico, as well as facilities in
Costa Rica, El Salvador, Guatemala, Honduras and the
Dominican Republic.
Asia remains a significant opportunity for A&E and
we are making steady progress, including building a new
dyeing and finishing facility in southern China which will
Store manager Christine Lawson (right) assists
a mother-to-be in the frozen foods aisle of her
Charlotte, N.C. store. Many Harris Teeter frozen
foods departments have been relocated to the front
of our stores after customers told us they prefer
frozen goods near checkout.