Operating profit for fiscal 2011 increased to $180.7 million from $176.9 million in fiscal 2010, while operating profit for the 13-week period ended October 3, 2011 declined to $43.1 million from $49.0 million in the prior year period. The decline in operating profit for the fourth quarter of fiscal 2011 was primarily driven by the extra week of operations included in fiscal 2010 and the pre-tax gains recorded in fiscal 2010 as discussed above.

Operating profit at Harris Teeter for fiscal 2011 increased 5.2% to $191.1 million (4.46% of sales) from $181.6 million (4.43% of sales) in fiscal 2010. Operating profit for the 13 weeks ended October 2, 2011 decreased to $45.0 million (4.09% of sales) from $49.1 million (4.43% of sales) for the 14 weeks ended October 3, 2010. The decline in operating profit for the quarter was mostly attributable to the fourteen-week quarter last year versus the normal thirteen-week quarter in fiscal 2011. Our goal for the quarter and the year was to drive units and transactions. Therefore, we invested in additional promotional activities which included two promotional coupon events that were well received by our customers and were redeemed at higher than historical trends. The cost of these programs were mitigated by a higher level of sales and greater vendor participation but resulted in a decline in gross margin of 59 basis points for the quarter and 30 basis points for the year. The LIFO adjustment in fiscal 2011 amounted to $11.1 million (0.26% of sales), as compared to a credit of $1.6 million (0.04% of sales) in fiscal 2010. The LIFO adjustment for the 13 weeks ended October 2, 2011 amounted to a credit of $0.2 million (0.02% of sales), as compared to a credit of $1.6 million (0.14% of sales) for the 14 weeks ended October 3, 2010.

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