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Ingles Markets, Inc. Friday reported that its sales grew to $837.0 million and $1.68 billion for the three and six months ended March 27, 2010. Net income of $5.6 million and $11.6 million for the respective three and six month periods, however, was lower than the prior-year periods because of higher interest expense, other costs associated with Ingles’ ramped-up store development activity over the past two fiscal years, and slower acceleration in the profitability of new stores during the recession.
“In this challenging economic and competitive environment, we continue to focus on growth in sales and customer traffic,” said CEO Robert P. Ingle. “We’re experiencing success in both those areas, even though it’s not yet reflected in our bottom line.”
Net sales rose $47.8 million to $837.0 million for the three-month period, from $789.2 million in the year-ago period. Excluding gasoline, where retail prices were about 49 percent higher than in the March 2009 quarter, grocery segment total sales grew 1.8 percent and comparable-store sales edged up 1.1 percent. The number of customer transactions (excluding gas) rose 7.8 percent, while the comparable average transaction size declined 6.3 percent vs. the same quarter last year. Ingles attributed this trend to the recession having caused consumers to make more store trips but buy less on average.
Gross profit for the March 2010 quarter increased 2.6 percent to $185.9 million, a rise of $4.8 million, vs. the second quarter of last fiscal year. Gross profit, as a percentage of sales, was 22.2 percent for the March 2010 quarter, compared with 23.0 percent for the year-ago period. Gross profit as a percentage of sales was affected by considerably higher prices and lower margins for gasoline and fluid dairy products. Excluding gasoline sales, grocery segment gross profit as a percentage of sales grew to 25.4 percent for the three-month period, vs. 25.2 percent last year.
Net income was $5.6 million for the three-month period, compared with $7.8 million for the three-month period ended March 28, 2009. Net income, as a percentage of sales, was 0.7 percent for the second quarter of fiscal 2010, and 1.0 percent in the year-ago period.
Net sales rose $83.9 million to $1.68 billion for the six-month period, from $1.59 billion for the six months last year. Excluding gas, where retail prices were about 29 percent higher than the March 2009 six-month period, grocery segment sales grew 2.0 percent and comps went up 1.0 percent. The number of customer transactions (excluding gas) increased 10.8 percent, while the comparable average transaction size fell 8.1 percent from the year-ago period.
Gross profit for the six-month period rose 1.2 percent, to $371.1 million, an increase of $4.4 million vs. the first six months of last fiscal year. Gross profit, as a percentage of sales, was 22.1 percent for the six-month period compared with 23.0 percent last year. Gross profit dollars increased because of higher sales volume and a change in the mix of products sold in the grocery segment. Excluding gas sales, grocery segment gross profit as a percentage of sales was 25.2 percent for the six-month period, compared with 25.1 percent for the year-ago period.
Net income came to $11.6 million for the six-month period, vs. $18.9 million for the March 2009 six-month period. Net income, as a percentage of sales, was 0.7 percent for the six months ended March 27, 2010 and 1.2 percent for the six months ended March 28, 2009.
During the March 2010 six-month period, Ingles opened two new stores and one remodeled store. Cap ex for the six-month period totaled $34.2 million, vs. $103.7 million last year. For the remainder of the fiscal year, the chain plans to open five new, replacement or remodeled stores, as well as four new fuel stations. Because of general economic conditions, the company has trimmed planned development activities, with cap ex for the entire fiscal year expected to be about $120 million in fiscal 2010, including expenditures for stores slated to open in fiscal 2011. For fiscal 2009 and 2008 combined, Ingles’ cap ex totaled $389.8 million.
Asheville, N.C.-based Ingles operates 202 supermarkets, in addition to 70 neighborhood shopping centers, all but 12 of which contain an Ingles supermarket.