ASHEVILLE, N.C. -- Ingles Markets here last week said it is taking "a harder look" at its pricing strategies, seeking to keep prices low on a variety of core products while exploring opportunities to raise prices on other items to grow margins.
In a conference call with analysts discussing earnings results for the fourth quarter and fiscal year ended Sept. 28, the company, which operates 200 supermarkets in the Southeast, said it needed to offer low prices on items that consumers compare with offerings from other retailers, but it was beginning to raise prices on other items to compensate.
The company also said it would open four new stores during fiscal 2003, after not opening any during fiscal 2002. Two new stores are planned for South Carolina and another two for Georgia, including one that opened in October shortly after the current fiscal year began. Ingles said it would increase its capital spending in fiscal 2003 by about 40%, to $70 million.
Net sales increased 0.4% for the year, to $1.96 billion. The company said it closed five stores in fiscal 2002, but comparable-store sales were up 0.9% for the year and 0.3% for the fourth quarter.
However, increased interest expenses of $8.6 million from the 10-year notes issued last December crimped Ingles' net income for the year ended Sept. 28. Net income fell about 17.9%, to $14.7 million, compared with last year.
For the fourth quarter, net income totaled $3.8 million, down about 11.6% from year-ago levels, on sales of $484.9 million, down less than 1% from the preceding year.
Income from operations increased 4.9% for the year, to $70.5 million, while in the quarter, income from operations rose 7.9%, to $17 million, compared with year-ago levels.
The company said it was able to increase its margins in the quarter through a better mix of high-margin perishable and frozen items, as well as from expanded general merchandise assortments being offered in its remodeled locations.
Ingles said it expected to face 22 competitive openings in the coming year, including eight Wal-Mart supercenters and nine Publix stores.
