Ingles Markets reported Friday higher sales and net income for the three and six months ended March 29, 2014, as compared with the three and six months ended March 30, 2013. Second quarter net sales rose $27.1 million to $947.8 million and net income increased 29.2 percent to $10.5 million, compared with net income of $8.1 million for the prior year’s second quarter. For the first six months of fiscal 2014, net sales rose $37.2 million to $1.89 billion and net income increased 1.7 percent to $20.0 million, compared with the first six months of fiscal 2013.
“We are pleased with our sales and net income growth this quarter,” said CEO Robert P. Ingle II. “Our stores continue to focus on sales growth and that certainly made a difference this quarter.”
Second quarter results
Net sales increased by 2.9 percent to $947.8 million for the three months ended March 29, from $920.7 million for the three months ended March 30, 2013. The growth in sales was negatively affected by the Easter holiday, which benefited sales in the second quarter of last fiscal year but will not occur until the third quarter this fiscal year. Comparable store sales, excluding gasoline and extra Easter 2013 sales, increased 2.5 percent over the comparable quarters. The number of customer transactions (excluding gasoline) increased 0.5 percent, while the comparable average transaction size (excluding gasoline) increased 1.5 percent compared with the same quarter last year. Ingles operated 203 stores containing a total of approximately 11.1 million s.f. on March 29. In the past 12 months the North Carolina-based company opened one new store and closed one store, resulting in a slight increase in square footage.
Gross profit for the March 2014 quarter increased 3.8 percent to $206.1 million, compared with $198.6 million for the second quarter of last fiscal year. Gross profit, as a percentage of sales, was 21.7 percent for the March 2014 quarter compared with 21.6 percent for the March 2013 quarter. Gross profit contributed by gasoline sales was lower this quarter, partly attributable to promotional activities involving gasoline sales, the company says.
Operating and administrative expenses for the March 2014 quarter totaled $178.4 million, an increase of $3.4 million, or 2.0 percent over the March 2013 quarter. The dollar growth in operating expenses was primarily in payroll and store base expenses, offset by better self-insurance claims experience.
The results for the prior year’s second quarter included $4.1 million in gains from the sale or disposal of assets compared with $83,000 in the second quarter of the current fiscal year. During the prior year second quarter, the company sold a former store property. There was no comparable sale in the current year’s second quarter.
Interest expense totaled $11.7 million for the three-month period ended March 29 and $15.7 million for the three-month period ended March 30, 2013.
Net income totaled $10.5 million for the three-month period ended March 29, compared with $8.1 million for the three-month period ended March 30, 2013. Net income, as a percentage of sales, was 1.1 percent for the quarter ended March 29, compared with 0.9 percent for the quarter ended March 30, 2013.
First half results
Net sales increased $37.2 million to $1.89 billion for the six months ended March 29, from $1.86 billion for the six months ended March 30, 2013. Excluding gasoline and extra Easter 2013 sales, grocery segment comparable store sales increased 0.8 percent.
Gross profit for the six months ended March 29 totaled $409.6 million compared with the $406.9 million for the first six months of last fiscal year. Gross profit, as a percentage of sales, was 21.6 percent for the March 2014 six-month period compared with 21.9 percent for the March 2013 six-month period.
Operating and administrative expenses increased $6.0 million, or 1.7 percent, to $355.8 million for the six months ended March 29, from $349.8 million for the six months ended March 30, 2013. As with the three month results, payroll and store base expense increases were offset by lower self-insurance expense, the company reports.
Interest expense totaled $23.5 million for the six-month period ended March 29, compared with $31.3 million for the six-month period ended March 30, 2013. The change in total debt during the first six months of fiscal year 2013 was insignificant, according to the company.
Net income totaled $20.0 million for the six-month period ended March 29, compared with $19.7 million for the six-month period ended March 30, 2013. Net income, as a percentage of sales, was 1.1 percent for both six-month periods.
Capital expenditures for the March 2014 six-month period totaled $51.8 million, compared with $47.0 million for the March 2013 six-month period. Capital expenditures for the entire fiscal year are expected to be approximately $100 million to $140 million, including expenditures for stores to open in fiscal 2014 and 2015, as well as for the company’s ongoing remodeling program to multiple stores.
