Harris Teeter 2002 Annual Report Download - page 10

markets. We opened six new stores in close proximity to
existing stores and maintained our focus on customers
in our core markets. This has resulted in some
cannibalization of sales in a number of our stores. We
estimate that the negative impact on comparable store
sales was nearly 2%, but this is a price we are willing to
accept in order to achieve the longer-term benefits of
market share.
As our newer stores reach their first anniversary the
negative impact on sales comparisons will diminish. We
plan to add five new stores in fiscal 2003 in our core
markets, which should enable us to continue to drive
sales growth. We also plan to remodel and/or expand 24
stores during the year. As part of this program we will add
pharmacies in several of our stores that do not already
have them. And we will be expanding the General
Merchandise and Health and Beauty Care areas in our
stores. In addition, the Fresh Foods Department is
another area of the store where we have an opportunity to
expand sales through selection and quality in 2003.
We have been very pleased with the performance of
our stores in the Washington D.C. market. Although
this is a relatively new territory for us, it has also been
very successful. Five of the six stores we operate in the
D.C. market are exceeding expectations, and the sixth
gives every indication of reaching our goals.
While driving sales is important, it must be done
profitably. We continued to make significant gains on
our operating margins. The programs implemented in
2001 and 2002 to reduce waste, improve employee
productivity and to drive customer visits have produced
outstanding results. Productivity per employee-hour
rose significantly, but the gains were not achieved by
reducing customer service. In fact, we monitor our
stores and our competitors’ to enable us to deliver the
highest level of customer service and quickest checkouts
in our markets.
In addition to the productivity gains, we made great
progress with our cost-containment programs. In 2002
we continued to reduce shrinkage, both in absolute
dollars and as a percent of sales. The result of these
improvements was to bring our operating margin to an
all-time high, 3.75% of sales for fiscal 2002. We believe
that these results better position us with our industry
peers, especially during these competitive times.
We provide our customers with the best and safest
food products and variety. We have recently begun a new
program called “Harris Teeter RancherTM”. Rather than
depend on commodity beef, we now work with a
consortium of ranchers and packers who provide our
customers with branded beef selected especially for
Harris Teeter. This beef exceeds Harris Teeter’s high
Ruddick Corporation and Subsidiaries
annual report 2002
page
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