Ingles Markets sees 15% comp-sales growth for 2020

Regional grocer Ingles Markets finished its 2020 fiscal year with double-digit net sales growth in the fourth quarter and saw net earnings more than double in both periods.

For the fourth quarter ended Sept. 26, net sales came in at nearly $1.2 billion, up 11.3% from $1.08 billion a year earlier, Ingles Markets said yesterday. The Asheville, N.C.-based company didn’t report comparable-store sales for the period.

Gross profit in the quarter totaled $324.5 million, or 27.1% of sales, up 24.6% from $260.3 million, or 24.2% of sales, in the fiscal 2019 quarter. 

At the bottom line, fourth-quarter net earnings rose 177% to $57.9 million from $20.9 million a year ago. Diluted earnings per share (EPS) for Class A common stock was $2.86 for the 2020 quarter versus $1.04 in the prior-year period. Diluted EPS for Class B common stock was $2.67 at the quarter’s end, up from 97 cents a year earlier.

Ingles Markets noted that the ongoing COVID-19 crisis had a significant impact on its fiscal 2020 financial results and operations.

“We take seriously the safety of our customers and associates and continue to do our best to provide them a safe and clean environment,” Chairman Robert Ingle said in a statement.

Fiscal 2020 net sales climbed 9.7% to $4.61 billion from $4.2 billion in 2019, Ingles Markets reported. In its 10-K filing with the Securities and Exchange Commission, the retailer said comparable sales excluding fuel rose 15.1% for fiscal 2020, with basket size up 15.8% and the number of transactions down 3.1%. Fuel gallons sold fell 6.3% year over year, while gas prices declined 15.6%.

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Sales of perishables — including produce, meat, deli and bakery — surged 13.6% during fiscal 2020 at Ingles Markets, while grocery sales rose even higher, up 17.4%.

“The company’s fiscal year 2020 performance was heavily influenced by the COVID-19 pandemic, which was declared a national emergency on March 13, 2020,” Ingles Markets stated in the 10-K filing. “Various stay-at-home measures were enacted, most schools closed to in-person learning and restaurant dining was severely restricted.  Many of these measures, though relaxed, have remained in place during the fall of 2020 and resulted in higher retail grocery sales throughout the United States.”

Grocery sales (including center-store groceries, dairy and frozen foods) jumped 17.4% $1.69 billion for fiscal 2020, while sales of perishables (meat, produce, deli and bakery) surged 13.6% to $1.26 billion, according to the SEC filing. Nonfood sales (alcoholic beverages, tobacco, pharmacy, and health and beauty aids) climbed 14% to $1.07 billion. Fuel sales dropped 20.9% to $459.6 million. 

Gross profit in fiscal 2020 was $1.2 billion, or 26% of sales, versus $1.02 billion, or 24.3% of sales, in 2019. Ingles Markets said in its 10-K report that the gross margin increase reflects COVID-19 market factors that impacted prices and mix of products sold. “There was less overall discounting of products sold in the company’s stores, and sales of higher-margin meal replacements benefitted from reduced restaurant dining,” the company stated in the filing.  

Related:Ingles Markets posts another double-digit sales gain in Q3

On the earnings side, full-year net income came in at $178.6 million, up 119% from $81.6 million in fiscal 2019. Diluted EPS was $8.82 for Class A common stock (versus $4.03 in 2019) and $8.24 for Class B common stock (versus $3.76 in 2019).

Ingles Markets said in the filing that the fiscal 2020 earnings result was “primarily due to the impact of the COVID-19 pandemic, as more persons relied upon their local grocery stores for food and nonfood products given travel restrictions and limited options for dining out.” Net income as a percentage of sales was 3.9% for fiscal 2020 versus 1.9% for 2019, according to the company.

The retailer finished fiscal 2020 with capital expenditures of $122.8 million, up from $161.8 million in 2019. 

“Increased fiscal 2020 sales resulted primarily from the COVID-19 pandemic, as stay-at-home orders closed schools, limited restaurant options and increased at-home meal preparation. Increased sales were also from new and replacement stores; the introduction of new products and product presentation, especially in higher-margin products; effective promotions; and cost competitiveness,” Ingles Markets said in the SEC filing. “We continue to improve our use of data gained from The Ingles Advantage Savings and Rewards Card to increase net sales and comparable-store sales through enhanced loyalty programs and special offers. Information obtained from holders of the Ingles Advantage Card also assists the company in optimizing product offerings and promotions specific to customer shopping patterns.”

Ingles Markets closed out fiscal 2020 with 197 supermarkets in six states, including 73 in North Carolina, 66 in Georgia, 35 in South Carolina, 21 in Tennessee, and one apiece in Virginia and Alabama, compared with 198 stores overall at the end of fiscal 2019. The food and drug retailer also currently operates 109 in-store pharmacies and 106 fuel centers.
 
“Sales in the 2021 fiscal year compared with fiscal 2020 will in large part depend upon the duration of the COVID-19 impact on our market area,” Ingles Markets said in its 10-K report. “Until there is a widely available vaccine, it is possible that restrictions will continue to be in place on restaurants and schools, among other things, which we expect will result in a continuation of above-average consumer reliance on grocery retailers. The company anticipates adding new stores in fiscal 2021, expects to continue remodeling a significant number of existing stores, and plans to add more fuel stations and pharmacies.”