Ingles Sees Sales Rise, Net Income Drop in Q1

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Ingles Sees Sales Rise, Net Income Drop in Q1

Ingles Markets, Inc. Friday reported an overall increase in sales of 4.5 percent to $841.0 million for its first fiscal quarter ended Dec. 26, 2009, compared with $804.9 million for the year-ago period. Net income for the quarter came to $6.0 million, vs. $11.1 million last year, however.

Comparable-store sales grew $26.5 million, or 3.4 percent, and excluding gas sales, comps rose $5.6 million, or 0.8 percent. Price deflation in many staple items and the ongoing recession had an adverse effect non-gasoline sales growth, according to the grocer. Average weekly customer visits went up 11.6 percent, although the average purchase amount declined 9.8 percent when comparing December 2009 and December 2008 quarters.

“We’re pleased with the growth in sales and the number of customer visits, said Robert P. Ingle, CEO of Asheville, N.C.-based Ingles. “The current operating environment is very competitive, and that’s had an effect on our bottom line.”

Gross profit for the three-month period ended Dec. 26 fell $0.3 million to $185.3 million, or 22.0 percent of sales, vs. $185.6 million, or 23.1 percent of sales, for the year-ago period.

Grocery segment gross profit as a percentage of total sales was negatively affected by lower margins on gasoline, competition and the effect of price deflation on some of the company’s products. Ingles’ concentration on sales growth, market share and customer satisfaction has had an adverse effect its prices and margins. Comparing the December 2009 and 2008 quarters, per-gallon gasoline prices were higher, but margins were lower. Excluding gas sales, grocery segment gross profit as a percentage of sales stayed relatively constant at 25.0 percent for the three months ended Dec. 26, compared with 24.9 percent in the year-ago period.

Total operating expenses totaled $160.6 million for the first quarter of fiscal 2010 compared with $156.3 million last year. Excluding gas sales and related operating expenses, operating and administrative expenses as a percentage of sales were 21.7 percent and 21.5 percent for the three months ended Dec. 26, 2009, and Dec. 27, 2008, respectively. The growth in operating expenses was due primarily to rises in depreciation, insurance and payroll arising from stores opened or renovated since the first quarter of last year.

Capital expenditure totaled $17.7 million for the first quarter of fiscal year 2010. During that quarter, Ingles opened one new and one remodeled store. After a period of stepped-up store development in fiscal years 2008 and 2009, the grocer said it’s being more cautious in its development plans until the economy recovers. Cap ex plans for the company’s fiscal year 2010 include investments of about $120 million to $150 million.

The grocer said it currently intends to open seven new, replacement or remodeled stores, and add around four new fuel stations at either new or existing stores during the rest of fiscal 2010.

Ingles operates 202 supermarkets and 71 neighborhood shopping centers, all but 14 of which contain an Ingles supermarket.