Harps Food Grows Amid Market Turmoil

Despite the tumultuous economy, one of Arkansas’ private companies is on a growth path that has it gobbling up stores and erecting new buildings.

Harps Food Stores Inc. of Springdale hoisted its revenue 10 percent to $440 million during its fiscal 2008. That growth is not because of food inflation resulting from the spike in gasoline prices last year, Harps Chairman and CEO Roger Collins said.

Instead, Collins attributed the organic growth in sales to the company’s aggressive and unflinching growth path. During the last six months, Harps added 10 stores.

Harps acquired a grocery chain based in Malden, Mo., called Wallace & Owens Inc., in a deal that closed in December. That purchase added eight stores to Harps’ portfolio, including stores in Jonesboro and Corning. Collins wouldn’t disclose the cost of the purchase.

Up until about four years ago, Harps had grown primarily by acquiring other stores. “And then we started a program of aggressively trying to build stores,” Collins said. “I’d be disappointed if we didn’t build three or four stores a year.”

Harps can better brand itself as higher quality through building new stores than by acquiring older, outdated buildings, Collins said.

Harps recently built a store in Benton, which opened in mid-March. Collins wouldn’t divulge proposed site locations for new stores, but did say the company looked at a site in Little Rock.

Collins said he sees the possibility of an advantage arising from the Affiliated Foods’ bankruptcy and Harvest Foods’ diminished market presence. However, he wouldn’t comment on how Harps might gain an edge from the situation, citing competitive reasons.

Employee Incentive Plan
Not all of Harps’ success has been external.  In 2001, Harps bought all of the company’s stock from the Harp family, which had owned the chain since it opened during the Great Depression in 1930.

Since the buyback, Harps has used the stock as an incentive program for employees. To qualify for the Employee Stock Ownership Plan, an employee must have worked for Harps for 12 consecutive months, be 21 or older and have worked at least 1,000 hours.

Collins said the program had attracted better employees and benefited the bottom line by reducing turnover and theft.

The shares, which are evaluated by an investment bank every year, vest over a seven-year period.

In the company’s fiscal 2008, employees were given a portion of stock that was equal to about 20 percent of their salary. Collins expects Harps to allocate about 8 percent in 2009. Harps has about 2,400 employees in Arkansas.

“It’s converting a person from being just an employee to being an owner in the company,” Collins said. “And the goal is to have a company where the stockers and checkers and everybody look at it as being their store and they are the owner of that store. So to the extent that you have a stocker or checker who treats you like they’re an owner, we think that’s a real competitive advantage for us.”