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ASHEVILLE, N.C. - Southeastern supermarket chain Ingles Markets Inc. on Monday reported a 4.9 percent increase in its second-quarter net income, but said comparable store sales slid because of weak economic conditions in its operating area.
Net income for the March 2003 quarter ended March 29, 2003 rose to $3.5 million, or $0.15 per diluted share, compared to $3.3 million, or $0.14 per diluted share, for the March 2002 quarter.
Net sales decreased 0.8 percent to $489.4 million from $493.2 million for the same quarter last year. Comparable store sales for the same period decreased 1.3 percent. Comparable store sales growth for the quarter excluding the effect of Easter sales decreased 0.4 percent.
The retailer noted that Easter-related sales will be included in the third quarter of fiscal 2003.
Gross profit for the March 2003 quarter decreased 2.0 percent to 26.5 percent of sales, compared to 26.9 percent of sales for the same quarter last year. Operating and administrative expenses for the March 2003 quarter decreased in total dollars by 0.4 percent and increased slightly as a percentage of sales to 23.7 percent in the March 2003 quarter compared to 23.6 percent in the March 2002 quarter.
Other income increased $1.2 million for the March 2003 quarter over the March 2002 quarter due primarily to the gain realized in the March 2003 quarter on the sale of a shopping center in which the company no longer operated a store. Interest expense decreased $1.2 million for the March 2003 quarter principally due to a decrease in aggregate debt of $33.4 million from March 2002 to March 2003.
"We are very happy to report an increase in earnings for the quarter. We believe the slight decline in comparable store sales growth for the quarter, adjusted for the Easter holiday, is primarily the result of a continuation of weak economic conditions in our operating area," said chairman and CEO Robert P. Ingle. "As a result of the weaker economic conditions, our gross margin as a percentage of sales was slightly lower. Sales distributions in the higher margin deli, bakery and meat departments were affected the most. Operating and administrative costs declined $0.5 million for the second quarter as we made a concerted effort to control operating costs."
During the March 2003 six-month period, Ingles opened three new stores, completed one major remodel and three minor remodels, and closed one older store. For the balance of the fiscal year, Ingles said it expects to complete one major remodel/expansion and open one new store and one replacement store.
Robert Ingle added that the company is "optimistic" about its future. "We have a new president on board who is focused on improving sales. We have a modern store base in excellent locations. We are constantly looking for ways to streamline our operating cost structure and improve our operations. We believe all of these factors should position us well for the future," he said.
Ingles Markets, headquartered in Asheville, N.C., operates 199 supermarkets. The company also operates 76 neighborhood shopping centers, all but 17 of which contain an Ingles supermarket.