BLACK MOUNTAIN, N.C. -- Ingles Markets here said an aggressive store expansion program had a negative impact on earnings for the third quarter and nine months ended June 24.
For the quarter, the 181-store company reported net income of $4.5 million, down 0.4% over the same period last year. For the year-to-date, net income was $10.6 million, down almost a third from the first nine months of 1994.
Meanwhile, net sales increased 10.8% to $347.8 million in the third quarter and 10.1% to $1 billion for the year-to-date.
Ingles said last year's third quarter included a payment of $900,000 to terminate a lease by a tenant, while this year's quarter included a $1 million drop in rental income and a 47.7% increase in interest expense to $6.5 million -- mainly to fund a beefed-up capital expenditures program.
The 39-week period of 1994 included a $1.5 million gain in connection with the early termination of leases by three tenants, and the similar period this year included a $1.6 million decrease in rental income and a 34.6% increase in interest expense to $17.5 million.
"This year's quarter and the results year-to-date were impacted by our investment in building our store base for long-term growth," said Robert P. Ingle, chairman and chief executive officer. "In the past nine months, we opened six new stores, replaced eight older stores and remodeled eight stores. Year-to-date capital expenditures were $90.3 million."