Ingles Posts 49th Year of Record Sales for FY2013

Ingles Markets Inc. has reported record sales of $3.74 billion for fiscal 2013 – the Asheville, N.C.-based grocer’s 49th straight year of sales growth. Net sales rose $20.2 million, or 0.5 percent, from the $3.72 billion posted last year. For the quarter ended Sept. 28, net sales were $948.9 million, compared with $993.9 million for the year-ago period, however.

Net income for the fourth quarter came to $15.6 million, a 17.2 percent increase from the $13.3 million posted in the year-ago period. For the full fiscal year, net income was $20.8 million in 2013, versus $43.4 million in 2012.

The full year and fourth quarter of fiscal 2013 contained 52 weeks and 13 weeks, respectively, compared with 53 weeks and 14 weeks for the full year and fourth quarter of fiscal 2012. Adjusting for the difference in weeks, total sales, minus gasoline, edged up 1.8 percent in the fourth quarter of fiscal 2013 and 2.1 percent for fiscal 2013, versus the comparable periods in fiscal 2012.

“We have increased sales every year since the company’s founding, and completed a refinancing this year that positions the company for future sales and profitability growth,” said CEO Robert P. Ingle II. “That wouldn’t be possible without listening to what our customers want and by having dedicated associates fulfilling those needs.”

Quarterly Comp-sales Growth

Comparing the 13 weeks of the fourth fiscal quarter of 2013 with the corresponding 13 calendar weeks of the previous year quarter, grocery-segment comparable-store sales, excluding gasoline, rose 1.3 percent. According to Ingles, grocery segment comps benefited from increases in average weekly customer visits and in the average purchase amount from the fourth quarter of fiscal 2012. Adjusting for the difference in weeks, gallons of gas sold increased, while the average price per gallon declined slightly.

Gross profit for the fourth quarter of fiscal 2013 was $210.3 million, versus $219.4 million last year. Gross profit as a percentage of sales was 22.2 percent and 22.1 percent for the 2013 and 2012 fourth quarters, respectively. Grocery-segment gross margins, less gasoline, were 26.3 percent for the current-year quarter and 26 percent for the fourth quarter of fiscal 2012.

Operating and administrative expenses for the September 2013 quarter came to $178.9 million. Operating and administrative expenses as a percentage of sales were 18.9 percent for the fourth quarter of fiscal 2013, from 18.6 percent for the year-ago period. The biggest line item increases, according to Ingles, were personnel costs and depreciation related to store base improvements and the opening of an 839,000-square-foot distribution center in June 2012. During fiscal 2013, the grocery chain opened one new store and closed one store, with additional store improvement capital projects aiming to enhance merchandising, convenience and product range.

Basic and diluted earnings per share for Ingles’ publicly traded Class A common stock rose to 71 cents and 68 cents per share, respectively, for the September 2013 quarter, versus 58 cents and 55 cents per share, respectively, for the year-ago period.

Fiscal Year 2013 Results

Comparing fiscal 2013 with the previous year, grocery-segment comps rose 1.8 percent, excluding gas sales where the retail per-gallon price was about 1.6 percent lower. The number of customer transactions grew 1.7 percent and the average transaction size was essentially flat, excluding gas sales.

Gross profit for the fiscal year ended Sept. 28 increased $7 million, or 0.9 percent, to $827.8 million, or 22.1 percent of sales, versus $820.8 million, also 22.1 percent of sales, for fiscal 2012.

Ingles attributed the increase in grocery-segment gross-profit dollars mainly to higher sales volume, despite fiscal 2012’s extra week. Grocery-segment gross profit as a percentage of total sales, excluding gas, was 26.1 percent and 25.9 percent for fiscal 2013 and 2012, respectively. A favorable change in sales mix and modest inflation was generally offset by competitive effects, the company noted, adding that in response to the current competitive environment, it has kept prices as low as possible to boost sales and market share.

Operating expenses rose $8.9 million in fiscal 2013, versus last year, and were 18.9 percent of sales for fiscal 2013, versus 18.8 percent of sales for fiscal 2012. Excluding gas sales and associated gas operating expenses (mainly payroll), operating expenses were 22.1 percent of sales for fiscal 2013, versus 21.9 percent for fiscal 2012.

Net income for fiscal 2013 was $20.8 million, compared with net income of $43.4 million for fiscal 2012. Basic and diluted earnings per share for the Ingles’ publicly traded Class A common stock were 89 cents and 87 cents per share, respectively, for the year ended Sept. 28, compared with $1.87 and $1.79 per share, respectively, last year.

Cap ex came to $101.5 million and $180.6 million for fiscal 2013 and 2012, respectively. The largest capital expenditure in fiscal 2012 was for the completion of the new distribution facility, including related vehicles and equipment.

Ingles operates 203 supermarkets in six southeastern states, as well as neighborhood shopping centers, most of which contain an Ingles supermarket.