Ingles Posts Higher Q1 Sales, Net Income

Ingles Markets Inc. reported an overall increase in sales of 3.8 percent to $872.8 million for its first fiscal quarter of 2011, which ended Dec. 25, 2010. For that quarter, net income rose to $7.7 million vs. net income of $6.0 million for the year-ago period.

“We are off to a strong start for fiscal year 2011 with increased sales and profits for the quarter that included Thanksgiving and Christmas,” noted Ingles CEO Robert P. Ingle. “Overall conditions are improving somewhat, but we continue to be cautious about the next few quarters.”

Net sales increased 3.8 percent to $872.8 million for first quarter, compared with $841.0 million last year. Grocery-segment comps grew 2.9 percent, both with and excluding gasoline sales. Average transaction size rose, while weekly customer visits were about the same as in the year-ago period.

Gross profit for the first quarter rose 4.4 percent to $193.5 million, an increase of $8.2 million from first quarter of fiscal 2010. Gross profit as a percentage of sales grew to 22.2 percent for the first quarter of fiscal 2011 compared with 22.0 percent last year. Grocery-segment gross margins, excluding gas, also went up, riding from 25.0 percent in the first quarter of fiscal 2010 to 25.2 percent for the current-year quarter. According to Asheville, N.C.-based Ingles, the improvement in gross margin was attributable to changes in sales mix and vendor participation in pricing promotions during the highly competitive holiday season.

Sales and gross profit dollars in the grocer’s fluid dairy operations rose because of higher milk prices and a small volume increase for the first quarter of fiscal 2011 vs. the year-ago period, Ingles said.

Total operating expenses came to $167.3 million for the first quarter, compared with $160.6 million last year. Operating and administrative expenses as a percentage of sales, excluding gas sales and associated operating expenses, were essentially flat at 21.8 percent and 21.7 percent for the three months ended Dec. 25, 2010, and Dec. 26, 2009, respectively. The growth in operating expenses came primarily from increases in depreciation, insurance, bank charges, utilities and payroll arising from stores opened or remodeled since the first quarter of last year, according to the company. Net income for the December 2010 quarter grew 27.2 percent to $7.5 million vs. $6.0 million for the year-ago period.

Capital expenditures were $25.7 million for the first quarter of fiscal 2011. During the quarter, Ingles opened one new and two remodeled stores. After a period of increased store development in fiscal 2008 and 2009, the company is being more cautious in its development plans until economic conditions improve. Ingles’ capital ex plans for fiscal 2011 include investments of about $100 million to $140 million. During fiscal 2011, the company expects to begin building an addition to its current distribution center and a new store in Buncombe County, N.C., both of which will open during fiscal 2012, as well as open two new, replacement or remodeled stores and add around four new fuel stations at either new or existing stores.

Ingles operates 203 supermarkets in six southeastern states, along with 70 neighborhood shopping centers, all but 12 of which contain an Ingles supermarket.


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