Ingles Posts ‘Record’ Q2 Growth

Ingles Markets Inc. reported higher sales and net income for the three and six months ended March 26. Second-quarter net sales increased 4.0 percent to $870.4 million and net income surged 38.0 percent to $7.7 million from the year-ago period. For the first six months of fiscal 2011, net sales climbed 3.9 percent to $1.74 billion and net income shot up 32.4 percent to $15.4 million from last year.

“Our record results for the second quarter are a testament to the legacy of Robert Ingle, the company’s founder, who passed during this quarter,’ noted Robert P. Ingle II, CEO of the Asheville, N.C.-based supermarket chain. “He always emphasized increased sales and would have been proud of these results.”

Net sales rose $33.4 million to $870.4 million for the three months ended March 26, vs. $837.0 million in the year-ago period, when the company operated one fewer store. Excluding gasoline, where retail prices were significantly higher than in the March 2010 quarter, total sales grew 2.4 percent and grocery-segment comparable-store sales edged up 1.9 percent compared with last year. The number of customer transactions, excluding gas, increased 0.8 percent, while the comparable average transaction size rose 1.5 percent from last year.

Gross profit for the second quarter of fiscal 2011 grew 4.7 percent to $194.6 million, an increase of $8.8 million vs. the year-ago period. Gross profit, as a percentage of sales, increased to 22.4 percent for the March 2011 quarter compared with 22.2 percent for the March 2010 quarter. Excluding gas sales, grocery-segment gross profit as a percentage of sales increased to 26.0 percent for the second quarter of fiscal 2011, compared with 25.5 percent last year.

Sales and gross profit dollars in the company’s fluid-dairy operations rose because of higher milk prices for the second quarter of fiscal 2011 than in the year-ago period. The case volume of products sold dipped slightly over the comparable quarters.

Net income rose to $7.7 million for the quarter ended March 26, vs. $5.6 million last year. Net income, as a percentage of sales, edged up to 0.9 percent for the quarter ended March 26, compared with 0.7 percent for the year-ago period.

Net sales rose $65.2 million to $1.74 billion for the six months ended March 26, from $1.68 billion last year. Excluding gas, where retail prices were significantly higher than in the year-ago period, sales grew 3.1 percent and grocery-segment comps went up 2.4 percent. The number of customer transactions, excluding gas, increased 0.7 percent, while the comparable average transaction size rose 2.2 percent from last year.

Gross profit for the six months ended March 26 increased 4.6 percent, to $388.1 million, an increase of $17.0 million from the year-ago period. Gross profit, as a percentage of sales, was 22.3 percent for the March 2011 six-month period vs. 22.1 percent last year. Gross profit dollars grew as a result of the higher sales volume and inflationary impact on certain products, according to Ingles. Excluding gas sales, grocery-segment gross profit as a percentage of sales rose to 25.6 percent for the six-month period ended March 26, compared with 25.2 percent last year.

Gross profit as a percentage of sales for Ingles’ milk-processing subsidiary was 12.3 percent for the March 2011 six-month period, vs. 12.4 percent of sales in the year-ago period. Raw-milk prices increased, but lower case-volume sales and competitive issues had an adverse effect on the gross margin, the company explained.

Net income came to $15.4 million for the six-month period ended March 26, compared with $11.6 million last year. Net income, as a percentage of sales, was 0.9 percent for the six months ended March 26, vs. 0.7 percent in the year-ago period

During the six months ended March 26, Ingles opened one new store and three renovated locations. Capital expenditures for the six-month period totaled $42.9 million, vs. $34.2 million for the year-ago period. Ingles expected cap ex for the whole of fiscal 2011 to be about $100 million to $140 million, including costs for a new distribution center and stores slated to open during fiscal 2012.

Ingles operates 70 stores in six southeastern states, in addition to 70 neighborhood shopping centers, all but 12 of which contain an Ingles supermarket.