Ingles Sees Q3 Sales, Earnings Surge

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Ingles Sees Q3 Sales, Earnings Surge

ASHEVILLE, N.C. – With "ambitious plans" to improve its store base and enlargen its stores to stay competitive, Ingles Markets, Inc. Friday reported beefy increases in net income and sales for the quarter ended June 30, 2007.

The chain posted a 42.6 percent rise in net income, and a 12.1 percent increase in net sales for the three months, compared to the year-ago period.

For the first nine months of fiscal year 2007, net income grew 43.0 percent and net sales increased 11.5 percent, compared with the year-ago period, the grocer said. The nine-month fiscal 2007 net income of $44.4 million is a record for Ingles, surpassing fiscal 2006’s record full-year earnings of $42.6 million.

“We’re pleased with the sales increases in our existing stores as well as the contribution from our recent new and remodeled stores,” said company c.e.o. Robert P. Ingle. “We have ambitious plans to continue to improve our store base for the benefit of our customers and shareholders.”

Net sales went up $79.5 million, to $738.7 million for the quarter, while grocery segment comparable-store sales rose 11.9 percent for the same period, representing the grocer’s 17th consecutive quarter of comparable-store sales growth. Excluding gasoline sales, third-quarter comparable-store sales grew 9.4 percent.

Gross profit for the quarter rose 6.7 percent, to $175.2 million, an increase of $11.0 million vs. last year, but gross profit as a percentage of sales slipped from 24.9 percent to 23.7 percent, primarily because of higher relative sales growth in such lower-margin departments as gasoline.

Additionally, food cost increases and competitive pressures contributed to lower grocery segment margins, according to Ingles, which said that it chose to accept lower margins to beef up sales, maintain market share and keep prices low for its shoppers.

Net income rose $5.9 million, or 42.6 percent, for the quarter, to $19.7 million, vs. last year, while net income as a percentage of sales improved to 2.7 percent from 2.1 percent.

Net sales grew $216.3 million, or 11.5 percent, to $2.11 billion for the nine months ended June 2007. For the first time in the Ingles’ 44-year history, sales exceeded $2 billion after three quarters. Grocery segment comparable-store sales went up 11.6 percent for the same period, vs. last year. Excluding gas sales, third-quarter comparable store sales rose 8.6 percent.

Gross profit dollars for the nine-month period rose $32.4 million, or 6.8 percent, to $506.7 million, compared with $474.3 million for the year-ago period. Gross profit as a percentage of sales was 24.1 percent and 25.1 percent for the nine months ended June 2007 and June 2006, respectively.

Net income soared $13.3 million, or 43.0 percent, for the nine-month period, to $44.4 million, vs. $31.1 million last year. Net income as a percentage of sales was 2.1 percent for the June 2007 and 1.6 percent for the June 2006 nine-month periods, respectively.

During the nine-month period, Ingles completed one new store, two remodeled stores, one replacement store, and one convenience store/fuel center, and bought 11 land parcels for future store and distribution development. The retailer added six fuel centers and three pharmacies either in conjunction with the aforementioned store development activities, or to existing store locations.

In a conference call on Friday, c.f.o. Ron Freeman noted that the company is trending toward larger stores, so it can offer its customers a larger array of products.

Capital expenditures for the nine-month period came to $96.4 million and are expected to be about $120 million for the full fiscal year, including expenditures for stores to open in fiscal 2008. For the rest of the fiscal year, Ingles said it expects to open one owned remodeled store, one owned new store, one leased replacement store; buy two sites for future store and fluid dairy expansion; and add two new fuel stations and one pharmacy to existing stores.

Ingles operates 196 supermarkets and 42 fuel centers in six southeastern states, as well as 71 shopping centers, all but 16 of which contain an Ingles store.