ASHEVILLE, N.C. - Ingles Markets here reported a 9.8% increase in comparable-store sales for the first quarter ending Dec. 24, 2005, compared with the first quarter of the preceding year.
Net income rose 53.4% to $7.8 million, on an 11.5% increase in net sales, which grew to $623.4 million.
The largest percentage of sales increases were in pharmacy and gasoline, said Ron Freeman, Ingles' chief financial officer, during a conference call with analysts. Comparable-store sales growth was strong even if those two categories are excluded, he said.
Operating expenses increased 6.3% due to sales growth, but decreased by 100 basis points as a percentage of sales. Interest expense decreased $700,000 for the quarter, compared with year-ago results, due to a reduction in total debt from $595.2 million last year to $564.3 million this year.
Ingles' capital expenditures totaled $30.2 million for the quarter, with plans for cap-ex spending to total $75 million for the fiscal year 2006. During the remaining three quarters, the retailer is planning to open four new or replacement stores, add three fuel stations at existing store locations and purchase sites for future expansion.
The Securities Exchange Commission is undergoing an investigation into the company's accounting practices related to vendor allowances, but Freeman said it has no effect on day-to-day operations. "We're not completely in control of [the final outcome], but we're optimistic," he said.
Freeman wouldn't comment on an inquiry about the possibility that investors may seek to take the company private. "We're focusing on selling groceries," he said.
The company also is putting a heavy emphasis on organic products, Freeman said. Ingles has added 4-, 8-, and 12-foot organic sections throughout the stores, which he said would make it easier for customers to find organic products.
