ASHEVILLE, N.C. — Holding the line on rising prices helped Ingles Markets post a 12.1% increase in sales for the fiscal third quarter that ended June 30.
Comparable-store sales increased by 11.9% — 9.4% excluding fuel — as both shopping trips and average basket size increased, company officials said. While new and remodeled stores with expanded product offerings set the sales pace, the fact that the chain absorbed product cost increases rather than pass them along to consumers helped too, officials said.
“Consistent with our emphasis on sales growth and customer value, we have absorbed much of our price increases to protect market share and keep prices low for our customers,” Ronald Freeman, Ingles' chief financial officer, said in a conference call discussing third-quarter results.
Freeman cited Bureau of Labor statistics figures indicating food and beverage prices increased by 4.1% during the quarter, compared with 1.9% in the same period a year ago.
When asked if Ingles anticipated passing its costs along, Freeman was noncommittal. “It's something we look at on a day-to-day basis,” he said. “We can't commit to passing along inflation, or any pricing decisions.”
The stance took a toll on profits as a percent of sales, which totaled 23.7% in the quarter. Margin percentage in the same period last year was 24.9%. A higher percentage of low-margin gasoline sales also pressured margins during the quarter.
Net earnings of $19.7 million during the quarter — an increase of 42.6% — were boosted in part by the sale of a shopping center generating a pre-tax gain of $7.9 million, Freeman said.
Ingles through the third quarter of fiscal 2007 had spent about $96.4 million of the $120 million in capital expenditures it has planned for the year. Completed projects include one new store, one replacement store and two remodels. Ingles also purchased 11 sites for future development.
Sales during the quarter totaled $738.7 million. For the first nine months of the fiscal year, net income increased 43% to $44.4 million, already more than the company generated in the 2006 fiscal year. Sales for the nine-month period increased 11.5% to $2.1 billion.
| Qtr Ended | 6/30/07 | 6/24/06 |
|---|---|---|
| Sales | $738.7 million | $659.2 million |
| Change | +12.1% | |
| Comp Store | +11.9% | |
| Net Income | $19.7 million | $13.8 million |
| Change | +42.6% | |
| Inc/Share | 81 cents | 57 cents |
| 9 Months | 2007 | 2006 |
| Sales | $2.1 billion | $1.9 billion |
| Change | +11.5% | |
| Net Income | $44.4 million | $31.1 million |
| Change | +43% | |
| Inc/Share | $1.81 | $1.27 |
