How Did Ingles Markets Perform in Q3?
Asheville, N.C.-based Ingles Markets Inc. reported results for its third quarter as well as its nine months ended June 29.
Net sales totaled $1.39 billion for Ingles' latest quarter, compared with $1.43 billion for the quarter ended June 24, 2023. Gross profit totaled $329.8 million, or 23.7% of sales, down from last year’s $338.1 million, or 23.6% of sales.
Ingles’ $31.7 million Q3 net income is a drop from last year’s $48.3 million. Operating and administrative expenses totaled $286.3 million, an uptick from $270.9 million in the year-ago period. Interest expenses remained unchanged, totaling $5.4 million.
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Taking a dip, Ingles' Q3 basic and diluted earnings per share (EPS) for Class A Common Stock were $1.71 and $1.67, respectively, compared with $2.60 and $2.54, respectively, for Q3 2023. Basic and diluted EPS for Class B Common Stock were each $1.55. Last year, they were $2.36.
Chairman of the Board Robert P. Ingle II, who is the son of the company founder, said, "We continue to stay focused on our goal of providing excellent customer service and products at affordable prices."
Meanwhile, the company's net sales totaled $4.24 billion for the nine months ended June 29, a drop from last year’s $4.31 billion.
Gross profit remained relatively steady, totaling $1.00 billion, or 23.6% of sales. Gross profit last year totaled $1.04 billion, or 24.0% of sales.
Also relatively unchanged in the past nine months were interest expenses, which came to $16.7 million. Last year, they were $16.1 million.
During the first nine months of its fiscal 2024, Ingles increased its operating and administrative expenses, which came in at $860.8 million. Last year, these expenses totaled $816.0 million.
Ingles reported a decrease for the first nine months of the fiscal year in net income, which totaled $107.0 million, compared with last year's $158.2 million.
Basic and diluted EPS for Class A Common Stock also took a dive during this time. Ingles reported $5.76 and $5.63, respectively, compared with last year’s $8.51 and $8.33, respectively. It was the same story for basic and diluted EPS for Class B Common Stock, which were each $5.23. Last year, the retailer reported $7.74 in basic and diluted EPS.
Capital expenditures for the June 2024 nine-month period totaled $143.0 million, compared with $137.1 million for the June 2023 nine-month period. Cap ex for the entire fiscal year 2024 is expected to be approximately $170 million to $190 million.
Ingles currently has no outstanding borrowings under its $150.0 million line of credit. The company believes that its financial resources, including its line of credit and other internal and external sources of funds, will be sufficient to meet planned capital expenditures, debt service and working capital requirements for the foreseeable future.
In May, Asheville Watchdog published a deep dive into how Ingles is as much a real estate company as a food purveyor. In Buncombe County, N.C., alone, Ingles and its related companies own 427 acres spread among 76 parcels, with a taxable value of $272 million, making them the 30th-largest nongovernment landholder in the county, according to property records.
As reported by Asheville Watchdog, Ingles has been criticized for buying or holding onto vacant or defunct properties and old stores for years, sometimes decades, in its operating region, stymieing development and competition from other grocery chains. The news organization reported that in some cases, Ingles puts deed restrictions on properties that specifically prohibit other grocery operations from coming in.
“You’ve got to understand that Ingles is different from most grocery store chains,” said Rusty Pulliam, principal and CEO of Pulliam Properties, an Asheville-based commercial real estate company, in the article. “Most only lease the space they’re in. Ingles owns probably 95% of the shopping centers they have. Not only is Ingles a large grocery store chain with [nearly] 200 stores, they’re a large real estate company.”
Ingles operates 198 supermarkets in six southeastern states. In conjunction with its supermarket operations, the company operates neighborhood shopping centers, most of which contain an Ingles supermarket. It also owns a fluid-dairy facility that supplies its supermarkets and unaffiliated customers. Ingles is No. 54 on Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
