Sales Mix Drives Ingles' Q4 Gains

ASHEVILLE, N.C. — Increased store traffic and a more productive sales mix helped Ingles Markets here post gains in sales and earnings for the fourth quarter and fiscal year that ended Sept. 25, the retailer said last week.

“Given the extended recession and intensified competition for a smaller amount of consumer dollars, we're pleased with our growth in sales and customer traffic,” Ron Freeman, chief financial officer of Ingles, said in a conference call discussing results. “We believe we have reacted well in this difficult environment.”

Ingles reported quarterly net income of $8.5 million — a 63.5% increase from the same period a year ago — on sales of $856 million. Overall sales increased 2.1% and comparable-store sales, excluding gas, increased by 1.8%.

Store traffic was up by 5.4% for the quarter, more than making up for a lower average ticket per visit, Freeman said. Gross margins improved by 70 basis points in the quarter as customers bought more higher-margin items including produce, he added.

Sales for the fiscal year improved 4.3% to $3.4 billion, and net earnings of $31.7 million improved by 10.1%.

In its annual report filed with federal regulators last week, Ingles noted that annual perishable sales increased by 2.4% in 2010 while grocery sales were up by 0.6%. Rising prices for gasoline and milk helped those categories increase sales, the company added.

“In general, grocery segment sales increases excluding gasoline during fiscal 2010 were driven by effective promotions, cost competitiveness, service execution and expanded product selections,” Ingles said. “The company believes it is important to aggressively protect market share and customer traffic during difficult economic conditions and increased unemployment in its market area.”

Ingles said it expected “modest” sales gains in fiscal 2011 as executives anticipate the recovery would be gradual and choppy.

“I think, overall, [consumers] are feeling better, but like most things in the economy these days, I think it's going to be a slow incremental move forward,” Freeman said.

Capital expenditures are expected to increase from $92 million in fiscal 2010 to between $100 million and $140 million in 2011, the company said. Projects include a plan to expand its current distribution center in Asheville, funded in part by $99.7 million in tax-exempt Recovery Zone bonds.

Q4 RESULTS

* EXCLUDING GAS.