Ingles Posts Higher Q3 Comps, Net Sales

Net sales were up more than 5 percent in Ingles Markets Inc.'s third quarter, with same-store sales up nearly 2 percent for the period ending June 30.

Net income for the past three and nine months of Ingles' 2018 fiscal year was positively affected by the passage of the Tax Cuts and Jobs Act of 2017 last December, the retailer reported, while the timing of Easter this fiscal year benefited the second quarter rather than the third, which benefited in fiscal 2017.

“This past quarter’s concentration on increasing sales showed positive results,” said Chairman of the Board Robert P. Ingle II. “Our associates have worked very hard to improve the product and service offering in our stores.”

q3 Results

Net sales rose $50.4 million, or 5.1 percent, to $1.03 billion for the three months ended June 30, from $984.4 million for the year-ago period, with Ingles noting that sales had increased in every retail product category.

Excluding gasoline sales and the effect of last year’s extra Easter sales, retail grocery comparable-store sales edged up 1.8 percent over last year, while the number of customer transactions (excluding gas) and average transaction size (excluding gas) both grew. Gas sales in both dollars and gallons increased from the prior year.

Ingles’ gross profit for the June 2018 quarter grew 2.8 percent to $243.9 million, versus $237.1 million for last year, although gross profit as a percentage of sales was 23.6 percent for the June 2018 quarter, down slightly from the 24.1 percent logged in the year-ago period. Excluding gas, the grocer’s 2018 Q3 retail grocery gross margin rose 34 basis points from the 2017 Q3 fiscal quarter.

Net income came to $24.5 million for the three-month period ended June 30, compared with $11.5 million last year, with $10.6 million attributable to the Tax Act, leading to an income tax benefit of $6 million for the quarter. Basic and diluted earnings per share for Class A Common Stock were $1.24 and $1.21, respectively, for the quarter ended June 30, versus 58 cents and 57 cents, respectively, last year. Basic and diluted earnings per share for Class B Common Stock were each $1.13 for the quarter ended June 30, while they were 53 cents for the June 2017 quarter.

Nine-Month Results

Nine-month fiscal 2018 and 2017 sales were $3.03 billion and $2.91 billion, respectively, with the sales increase broad-based across all retail product categories, according to Ingles. Retail grocery comps, excluding the effect of gasoline, bumped up 1.9 percent, and the number of customer transactions and the average transaction size, both excluding gas, both rose.

Gross profit for the nine months ended June 30 grew 3.1 percent, totaling $723.7 million, compared with $702.3 million last year, while gross profit as a percentage of sales dipped to 23.9 percent for the June 2018 nine-month period from 24.1 percent for the June 2017 nine-month period. Retail grocery segment gross profit as a percentage of sales, excluding gas sales, for the nine-month period ended June 30 climbed 17 basis points from the prior year, and gas gross-profit dollars were higher for the nine months ended June 30 than they were for the year-ago period.

Net income was $78.9 million for the nine-month period ended June 30, versus $34.5 million last year, with an income tax benefit of $22.9 million resulting from the Tax Act included in the fiscal 2018 nine-month net income. Basic and diluted earnings per share for Class A Common Stock were $4and $3, respectively, for the nine months ended June 30, compared with $1.75 and $1.70, respectively, for year-ago period, while basic and diluted earnings per share for Class B Common Stock were each $3.64 for the nine months ended June 30, versus $1.59 of basic and diluted earnings per share last year.

Capital expenditures for the June 2018 nine-month period were $120.5 million, compared with $90 million last year. Ingles noted that its cap ex this year was focused on stores opened this year and slated to open early next year, in addition to improvements to existing stores. The company said it expected cap ex for the entire fiscal year to be about $140 million to $180 million.

Based in Asheville, N.C., Ingles operates 200 supermarkets, as well as neighborhood shopping centers, most of which contain an Ingles supermarket, and the company also owns a fluid-dairy facility that supplies its supermarkets and unaffiliated customers. Ingles is No. 30 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.