Sales growth doesn’t translate to rising profits for Ingles

Ingles Markets saw a 2.8% increase in net sales during the third quarter ending June 24, climbing more than $27 million to reach $984.4 million, the company reported Friday.

The upward trajectory did not translate to profit growth as net income fell for the quarter, dropping to $11.5 million from $12.7 million during the third quarter of 2016.

The discrepancy is due in part to Easter’s calendar placement during the past two years, with the holiday arriving during 2016’s second quarter, leaving the third quarter of 2016 shorthanded compared to 2017.

Aside from gasoline and the impact of extra sales due to the holiday during the third quarter, comparable store sales climbed .8% year-over-year.

The current sales number is also the result of growth in each retail product category that the company offers as well as climbing numbers in non-retail operations.

Average transaction size at the Asheville, N.C.-based retailer for items other than gasoline increased by 2%. The number of transactions for non-gasoline receipts remained unchanged.

The Q3 profit dip adds to the 36.1% hole generated by the previous quarter ending March 24. Sales for that period had increased as well by a margin of 2.4% despite being unable to invigorate positive earnings.

Despite the lack of growth in net profits, the company declared that it currently holds $162.6 million in available credit—on a line of $175 million—and that this, combined with other financial resources will be enough to cover planned capital expenditures, debt service and working capital requirements for the “foreseeable future.”

For the present, capital expenditures for the current nine-month period are down, settling at  $90 million. They stood at nearly $108 million for the same nine-month stretch ending June 2016.

Operating and administrative expenses for the quarter climbed to $207.6 million compared to $199.4 million for the same time in 2016. Total debt at the end of June sat at $870.7 million, an improvement over last June’s $898.2 million.

"We continue to improve our store base to offer more products and a great shopping experience to our customers,” Robert P. Ingle II, chairman of Ingles Markets, said in a statement. “We have a number of projects in process that will contribute to our long-term performance.”

Ingles operates 199 supermarkets. It also operated neighborhood shopping centers, most of which contain an Ingles supermarket.