Ingles Posts Higher Q1 Sales, Net Income

Ingles Markets Inc. has reported an overall increase in sales of 5.2 percent to $918.2 million for its first fiscal quarter ended Dec. 24, 2011. For the quarter, net income rose to $10.6 million, versus $7.7 million for the year-ago quarter.

Net sales increased 5.2 percent to $918.2 million for the quarter ended Dec. 24, 2011, compared with $872.8 million last year. For the comparable December 2011 and 2010 quarters and excluding gasoline sales, grocery segment comparable-store sales increased 3.4 percent, average transaction size grew 1.3 percent and weekly customer visits rose 2.0 percent.

Gross profit for the first quarter of fiscal 2012 grew 4.3 percent to $201.7 million, an increase of $8.2 million versus the first quarter of fiscal 2011. Gross profit as a percentage of sales was 22.0 percent for the first quarter of fiscal 2012, compared with 22.2 percent in the year-ago quarter. Grocery segment gross margins, excluding gas, also increased from 25.2 percent in the first quarter of fiscal 2011 to 25.5 percent for the current-year quarter. Asheville, N.C.-based Ingles attributed the improvement in gross margin to inflation and vendor participation in pricing promotions during the highly competitive holiday season.

Net income for the December 2011 quarter increased 38.5 percent to $10.6 million, compared with net income of $7.7 million for year-ago quarter. Basic and diluted earnings per share for the Ingles’ publicly traded Class A common stock were 45 cents and 43 cents per share, respectively, for the December 2011 quarter, compared with 33 cents and 31 cents per share, respectively, for the December 2010 quarter.

Total operating expenses were $171.8 million for the first quarter of fiscal 2012 compared with $167.3 million last year. Operating and administrative expenses as a percentage of sales, excluding gas sales and associated operating expenses, improved to 21.6 percent from 21.8 percent for the three months ended Dec. 24, 2011, and Dec. 25, 2010, respectively. Operating expense growth consisted mainly of increases in repairs and depreciation, partially offset by decreased insurance expense, according to Ingles

Total debt on Dec. 24, 2011, was $882.5 million, versus $784.5 million last year. The company said that its increase in debt was primarily due to financing the construction of a new distribution center slated to open during calendar year 2012. Ingles added that its financial resources should be sufficient to meet planned capital expenditures, debt service and working capital requirements for the foreseeable future.

Capital expenditures came to $63.7 million for the three-month period ended Dec. 24. Most of this expense was related to construction of the new DC and procurement of related equipment, Ingles explained adding that cap ex also included the costs of upgrading and replacing store equipment, technology investments, maintaining its milk-processing plant, and stores scheduled to open later in fiscal 2012 and in fiscal 2013.

Ingles’ cap ex plans for fiscal 2012 include investments of about $120 million to $160 million. The majority of the grocer’s fiscal year 2012 cap ex is expected to go toward the new distribution and warehouse facility. The company noted that the number of new/replacement/remodeled stores rolled out during fiscal 2012 would depend on the timing of DC expenditures.

Ingles Markets operates 203 supermarkets. In conjunction with its supermarket operations, the company also operates 71 neighborhood shopping centers, all but 12 of which contain an Ingles supermarket.

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