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ASHEVILLE, N.C. -- Despite a challenging competitive landscape, Ingles Markets, Inc. yesterday reported a 43.1 percent surge, or $4.1 million, in net income, to $13.5 million, and a 12.3 percent rise in net sales for the three months ended March 31, 2007, vs. last year.
For the first half of fiscal year 2007, net income skyrocketed 43.4 percent, or $7.5 million, to $24.7 million, and net sales grew 11.1 percent, or $136.8 million, to $1.37 billion, compared with the year-ago period.
Net sales increased $74.5 million, to $681.2 million, for the quarter, while grocery segment comparable store sales rose 12.4 percent. Sales growth was broad-based across the grocer's departments, including increases in the number of customer visits and in average purchase amount. Excluding gas sales, second-quarter comparable store sales grew a whopping 8.9 percent. Total gasoline gallons sold increased about 62 percent, while the average price per gas gallon was essentially flat in comparison with the same period last year.
"The competitive environment was tougher during the second quarter, so we are pleased with our sales increases," said c.e.o. Robert P. Ingle in a statement. "We believe it is important to take care of our customers and keep prices as low as we can, even if it affects the bottom line."
Gross profit for the quarter grew 7.1 percent, to $166.6 million, an increase of $11.0 million vs. the second quarter of last fiscal year. Gross profit, as a percentage of sales, was 24.5 percent for the quarter, as opposed to 25.7 percent for the year-ago period. Gross profit as a percentage of sales declined mainly because of higher relative sales growth in the lower-margin gasoline and pharmacy departments. Excluding gas sales, grocery segment gross profit as a percentage of sales was 27.0 percent for the quarter, compared with 27.5 percent last year.
Heightened competitive pressures, particularly in gas, and food cost hikes also contributed to lower grocery segment margins. Ingles said chose to accept lower margins to boost sales, maintain market share, and keep prices low for its shoppers.
For the six months ended March 2007, grocery segment comparable-store sales grew 11.4 percent compared with last year. Excluding gas sales, comparable-store sales rose 8.1 percent. Total gas gallons sold increased about 66 percent, and the average price per gas gallon decreased about 4 percent vs. the year-ago period.
Gross profit dollars for the six-month period increased $21.3 million, or 6.9 percent, to $331.4 million, vs. $310.1 million for the same period of fiscal 2006. Gross profit as a percentage of sales was 24.2 percent and 25.2 percent for the six months ended March 31, 2007 and March 25, 2006, respectively. Excluding gas sales, grocery segment gross profit as a percentage of sales came to 26.6 percent for the period, compared with 26.9 percent last year.
During the six-month period, Ingles completed one new store, one remodeled store, bought six future store sites, and added three fuel centers and two pharmacies to existing store locations. Two stores were closed. Capital expenditures for the six-month period totaled $42.7 million.
For the balance of the fiscal year, Ingles said it expects to open two remodeled stores, three replacement stores, and add three new fuel stations at existing stores. Capital expenditures for the entire fiscal year are expected to be about $100 million, including expenditures for stores to open during fiscal 2008.