ASHEVILLE, N.C. — Lower margins on rising gasoline prices and milder winter weather contributed to flat same-store sales and a dip in profits during the fiscal second quarter for Ingles Markets, the retailer here said Monday.
Net sales for the 12-week quarter, which ended March 24 increased 1.3% to $881.7 million but were flat excluding gas. Non-fuel comparable store sales dipped by 0.1%.
Net income declined 15.2% to $6.5 million as spiking gas prices resulted in lower fuel margins. Excluding fuel, profits as a percent of sales dropped from 26% to 25.9% during the quarter.
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“Last year in our market area we benefited from school closings and from people being at home due to the bad weather,” Ron Freeman, Ingles’ chief financial officer, said in a conference call discussing results Monday. “Gasoline margins were lower this year and contributed even less to net income.”
While the number of transactions increased slightly, average basket size showed a slight decrease, Freeman added.
Ingles’ capital expenditures should total approximately $160 million for the fiscal year, a figure at the high end of previous estimates, Freeman acknowledged. The costs include a new distribution center scheduled to open later this year, as well as a program of interior store renovations. Freeman said the company expects to touch “dozens” of stores with remodelings this year.