Ingles Markets is Pleased with Earnings Increase in Second Quarter

ASHEVILLE, N.C. - Regional supermarket operator Ingles Markets, Inc. today reported an increase in income and sales for its second quarter ended March 27, 2004.

Net income for the second quarter increased to $7.2 million, or $0.31 per diluted share, compared to $1.8 million, or $0.08 per diluted share, for the March 2003 quarter. The quarter included the effect of an after-tax charge of $1.6 million or $0.07 per share for the adoption of a new accounting pronouncement (EITF 02-16), which changed the accounting treatment of certain consideration received from vendors.

Net sales for the second quarter moved up 6.5 percent, while comparable store sales grew 5.6 percent for the same period. At the beginning of fiscal 2004, Ingles introduced its Ingles Advantage Savings and Reward Card, which was designed to drive sales.

Gross profit for the March 2004 quarter increased 7.8 percent to 26.4 percent of sales, compared to 26.1 percent of sales for the same quarter last year. The quarter also included a pre-tax charge to cost of sales of $2.6 million for the adoption of the new accounting pronouncement (EITF 02-16) mentioned above. The effect of the charge as a percentage of sales was 0.5 percent in the March 2003 quarter.

For the balance of the fiscal year, Ingles said it expects to open one new store, complete one major remodel/expansion and open one replacement store. Capital expenditures for the entire fiscal year are expected to be approximately $70 million, including expenditures for stores to open in fiscal 2005.

Commenting on the results, Robert P. Ingle, chairman and c.e.o., said, "We are obviously very pleased with our increases in sales and earnings for the quarter. We have an enthusiastic team working together to improve our business by both driving sales and managing expenses. Performance was excellent in our grocery operations, and once again our real estate value was demonstrated by the gain on the sale of the shopping center."

Asheville, N.C.-based Ingles Markets has operates 197 supermarkets in six southeastern states. In conjunction with its supermarket operations, the company also operates 76 neighborhood shopping centers, all but 16 of which contain an Ingles supermarket.
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