ASHEVILLE, N.C. — Ingles Markets continues paying the price for an accelerated store development strategy.
Expenses associated with 22 new or redeveloped stores in fiscal 2008 and 2009 — which have been slower to ramp up as a result of the economy — contributed to a 28% decline in net income for the second quarter, the company here said Friday. Sales in the quarter, which ended March 27, of $837 million increased by 6.1%, and comparable-store sales, excluding gasoline, improved by 1.1%.
“Current economic conditions have extended the time needed for new and redeveloped stores to reach targeted levels of sales and operating expenses leverage,” Ron Freeman, chief financial officer of Ingles, said in a conference call.
Ingles said it had slowed its estimated capital expenditures for fiscal 2010 to about $120 million, down from earlier projections of $150 million and from nearly $200 million it spent in each of the previous two fiscal years. Ingles has opened two new stores in the first half of this fiscal year and plans as many as five more.
Freeman said the effects of deflation in food “seem to have decreased,” but that price competition has influenced margins. Ingles said grocery segment profit as a percentage of sales was 25.4%, up slightly from the same period last year.
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