Ingles Markets upheld the sales growth momentum from its recently completed fiscal year with gains in its 2020 first quarter.
For the three months ended Dec. 28, net sales totaled $1.08 billion, up 1.6% from $1.06 billion a year earlier, Asheville, N.C.-based Ingles said yesterday. Same-store sales climbed 2.4% year over year, excluding fuel.
Ingles’ fiscal 2019 sales grew 2.7% to $4.2 billion, with comparable-store sales excluding gasoline up 3.9% from the previous year.
In the 2020 first quarter, operating income came in at $38.5 million, down from $39.5 million a year ago. Gross profit was $257.5 million (23.9% of sales), compared with $258.4 million (24.3% of sales) in the prior-year period. Ingles noted that the results reflect “unusually high” gross profit for fuel industrywide in the 2018 quarter.
Ingles tallied $222 million in operating and administrative expenses for the 2020 quarter versus $218.7 million a year earlier. The grocer said the increase stems mainly from higher personnel costs, reflecting rising sales and continued strong demand for labor.
First-quarter 2020 net earnings were $17.7 million compared with $22.2 million in the year-ago period. Ingles said the decrease reflects $3.7 million of refinancing costs that will pare interest expense for future periods.
On a per-share basis, Ingles reported net income of 90 cents (basic) and 87 cents (diluted) for its publicly traded Class A common stock, down from $1.12 (basic) and $1.09 (diluted) in the fiscal 2018 quarter.
“We were pleased with our sales growth during the important holiday period,” Ingles Markets Chairman Robert Ingle II said in a statement. “We completed a successful long-term financing that will lower our interest cost for many years to come.”
During the first quarter, $155 million of 5.75% debt was refinanced with 10-year, fixed-rate secured debt at 2.95%, according to Ingles. Total debt declined to $850 million at the end of the quarter from $880 million a year earlier. Interest expense came in at $11.9 million in the 2020 quarter, down from $12.2 million in the prior-year period.
Ingles closed out the first quarter with 198 supermarkets in the Carolinas, Georgia, Tennessee, Alabama and Virginia, compared with 200 a year ago. The company said it totaled capital expenditures of $31.1 million versus $71 million in the 2019 quarter, which included additional new store construction, store remodeling and property acquisitions. Overall fiscal 2020 capital spending is projected at $120 million to $160 million.