ASHEVILLE, N.C. -- Ingles Markets here said last week it expects capital expenditures in 2006 to fall between $60 million and $70 million to open five new stores.
The company said it anticipates spending approximately $70 million this year to open four new stores, one of which has already opened, and expand two other locations, both of which have been completed; it also purchased three future store sites and closed two stores. It said it is scheduled to open three stores during the fourth quarter: in Bowling Springs, S.C.; Lake Lure, N.C.; and a former Winn-Dixie in Boone, N.C.
Robert Ingle, chief executive officer, said the competitive environment is fairly stable, although the company expects to pick up business as Winn-Dixie closes stores in its operating area. He said he's not sure how many of those 40 or so Winn-Dixies are likely to close, "[but] we feel very good about the fact we can pick up some of that business."
Ingle made his remarks during a conference call with analysts to discuss results for the third quarter and 39 weeks that ended June 25, during which sales rose and net income declined.
Net income fell 20.1% to $6.6 million for the quarter and 4.3% for the year to date to $17.2 million. The year-ago period included a net gain of $3.5 million on the sale of real estate.
Sales climbed 5.4% to $566.7 million for the quarter and 5.7% to $1.7 billion for the year to date. Comparable-store sales increased 5.5% for the quarter and 5.6% for the 39 weeks; excluding the effect of the Easter holiday, which fell in this year's second quarter and last year's third quarter, comps for the quarter were up 6.2%.
Ronald B. Freeman, vice president, finance, and chief financial officer, said Ingles' largest sales increases occurred in perishables, pharmacy and gasoline. Comps were up, excluding sales at the 24 fuel centers and 38 pharmacies at the chain's 195 stores, he added, although he did not give specific numbers. Inflation is "pretty flat, other than in gasoline, and we've seen basket size increases of about $1," he said.
In response to a question, Robert Ingle said an investigation into the company's vendor practices was continuing, although he declined to comment beyond what the company published in its 10-K filing with the Securities and Exchange Commission. In that filing, the company said the SEC issued a formal order in May for a private investigation of the chain's accounting practices for vendor allowances following an informal inquiry late last year. He said last week the issues in the formal investigation are the same.