INGLES SAYS EXPANSION HURT 3RD-QUARTER PROFITS

GLEN A. BERES

BLACK MOUNTAIN, N.C. -- Ingles Markets here said an aggressive store expansion program had a negative impact on earnings for the third quarter and nine months ended June 24.

For the quarter, the 181-store company reported net income of $4.5 million, down 0.4% over the same period last year. For the year-to-date, net income was $10.6 million, down almost a third from the first nine months of 1994.

Meanwhile, net sales increased 10.8% to $347.8 million in the third quarter and 10.1% to $1 billion for the year-to-date.

Ingles said last year's third quarter included a payment of $900,000 to terminate a lease by a tenant, while this year's quarter included a $1 million drop in rental income and a 47.7% increase in interest expense to $6.5 million -- mainly to fund a beefed-up capital expenditures program.

The 39-week period of 1994 included a $1.5 million gain in connection with the early termination of leases by three tenants, and the similar period this year included a $1.6 million decrease in rental income and a 34.6% increase in interest expense to $17.5 million.

"This year's quarter and the results year-to-date were impacted by our investment in building our store base for long-term growth," said Robert P. Ingle, chairman and chief executive officer. "In the past nine months, we opened six new stores, replaced eight older stores and remodeled eight stores. Year-to-date capital expenditures were $90.3 million."

3RD-QUARTER RESULTS

Qtr Ended 6/24/95 6/25/94

Sales $347.8 million $313.9 million

Change 10.8%

Net Income $4.5 million $4.6 million

Change - 0.4%

Inc/Share 25 cents 25 cents

39 Weeks 1995 1994

Sales $1 billion $913.3 million

Change 10.1%

Net Income $10.6 million $15.6 million

Change - 32.3%

Inc/Share 58 cents 85 cents