Ingles Q2, 1H Dented by Holiday Timing, Weather

Ingles Markets Inc.'s second quarter and first half of fiscal 2017 earnings lacked the benefit of 2016's earlier Easter and were adversely affected by this year's milder weather.

Ingles Markets Inc. reported net sales of $946.2 million for the fiscal 2017 second quarter ended March 25, while net income came to $9.2 million, compared with $924.3 million and $14.4 million, respectively, for the year-ago period. For the six months ended at the same time, net sales were $1.93 billion, and net income totaled $23 million, versus $1.88 billion and $27.3 million, respectively, last year.

“Our stores reported higher sales in the second quarter as we continued to deliver a great shopping experience to our customers,” said Chairman of the Board Robert P. Ingle II. “We expect our planned investments in new and existing stores to contribute to our long-term performance.”

Ingles’ net sales grew by $21.9 million, or 2.4 percent, to $946.2 million for the quarter ended March 25, 2017, from $924.3 million last year. Excluding gasoline sales and the effect of extra 2016 Easter sales, retail grocery comparable-store sales were essentially flat, decreasing 0.3 percent over the comparative fiscal second quarters. Higher gasoline sales, both in dollars and gallons, offset the negative comparable impact of Easter sales. The number of customer transactions, excluding gasoline, edged up 0.2 percent, while the comparable average transaction size, excluding gas, dipped 0.8 percent from the same quarter last year.

Gross profit for the March 2017 quarter came to $228.1 million, a little lower than the $228.7 million logged for the year-ago period. Gross profit, as a percentage of sales, was 24.1 percent for the March 2017 quarter versus 24.7 percent last year. Excluding gas sales, retail gross margin rose seven basis points comparing the March 2017 and March 2016 fiscal quarters.

First-half fiscal 2017 and 2016 sales were $1.93 billion and $1.88 billion, respectively. Retail comps, excluding the effect of gas and extra 2016 Easter sales, rose 0.8 percent. The number of customer transactions, excluding gasoline, bumped up 1.2 percent, while the comparable average transaction size, again excluding gas, declined 0.2 percent from the first half of last fiscal year.

Net income, as a percentage of sales, was 1.2 percent for the six months ended March 25, versus 1.5 percent for the year-ago period. Basic and diluted earnings per share for Class A Common Stock were $1.17 and $1.13, respectively, for the six months ended March 25, versus $1.39 and $1.35, respectively, last year. Basic and diluted earnings per share for Class B Common Stock were each $1.06 for the six months ended March 25, compared with $1.26 of basic and diluted earnings per share for the year-ago period.

Asheville, N.C.-based Ingles operates 201 supermarkets, as well as neighborhood shopping centers, most of which contain an Ingles supermarket. The company also owns a fluid dairy facility that supplies its supermarkets and unaffiliated customers.