Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported increased sales for the three and nine month periods ended June 26, 2010, compared with the same periods of the previous year. Net income was higher for the current year three month period and level for the comparative nine month periods, influenced by improving operating performance and economic conditions thus far in fiscal year 2010 and by extra costs in fiscal year 2009 in conjunction with the Company’s financing transactions.
Robert P. Ingle, chief executive officer, stated, “We are pleased with our growth in sales and in customer visits to our stores. Our improved results highlight our goals of building sales and customer visits as drivers to deliver better results in an economic and competitive environment that still has significant challenges.”
Third Quarter Results
Net sales rose 3.5% to $856.1 million for the three months ended June 26, 2010, compared with $826.8 million for the three months ended June 27, 2009. Ingles operated 202 stores and 10.8 million retail square feet at the end of June 2010 compared with 201 stores and 10.7 million retail square feet at the end of June 2009. Excluding gasoline, where retail prices were significantly higher in the June 2010 quarter compared with the June 2009 quarter, grocery segment comparable store sales increased 0.8%. The number of customer transactions (excluding gasoline) increased 7.9%, while the comparable average transaction size decreased 7.0% compared with the same quarter last year. The trend in total and average transactions has followed this pattern for several recent quarters, and is indicative of the effect of economic recession on consumer spending that is characterized by more trips to the store and lower average purchases.
Gross profit for the June 2010 quarter increased 2.8%, to $196.9 million, an increase of $5.3 million compared with the third quarter of last fiscal year. Gross profit, as a percentage of sales, was 23.0% for the June 2010 quarter compared with 23.2% for the June 2009 quarter. The increase in gross profit dollars is attributable to increased sales. Excluding gasoline sales, grocery segment gross profit as a percentage of sales improved to 26.0% for the three months ended June 26, 2010, compared with 25.9% for the same quarter of last fiscal year. The Company is pleased with this margin stability in conjunction with its growth in sales and customer visits. Gross profit for the Company’s milk processing subsidiary was 11.9% of sales for the June 2010 quarter compared to 14.8% of sales for the June 2009 quarter. Raw milk prices were higher during the June 2010 quarter, which decreased gross profit as a percentage of sales, as relatively stable per-gallon milk profit margins were applied to the higher sales price. Competitive issues also served to keep gross margins lower for milk products in the most recent quarter.