Ingles Markets said its sales grew faster than profits in its fiscal first quarter, as gross margins decreased as a percent of sales.
The Asheville, N.C.-based retailer reported $69.4 million in net income for the first quarter, which ended Dec. 24, 2022, an increase of 4.8% vs. year-ago results. Net sales, meanwhile, were up 7.3%, to $1.49 billion.
Gross profit as a percent of sales fell to 24.9%, or $371.2 million, compared with 25.2% of sales in the first quarter of fiscal 2022.
That’s a pattern that has been common among grocery retailers, as they seek to absorb some of the cost increases they are experiencing in the current inflationary environment in order to maintain competitive shelf prices for consumers.
Operating and administrative expenses for the first quarter increased 6.2%, to $276.2 million, compared with the preceding fiscal first quarter.
Capital expenditures for the first quarter of fiscal 2023 totaled $59.3 million, compared with $21.3 million for the first quarter of fiscal 2022, after the company said last year that it would ramp up its capital spending to between $120 million and $160 million this year.
Capital expenditures totaled $119.6 million in 2022 and $140.6 million in 2021.
In its most recent annual report, Ingles said it planned to dedicate most of its fiscal 2023 capital expenditures to continued improvement of its store base, including the construction of one or more new or remodeled stores.
Additionally, 2023 cap-ex is expected to include investments in stores expected to open in fiscal year 2024, as well as technology improvements, upgrading and replacing existing store equipment and warehouse and transportation equipment, and improvements to the company’s milk processing plant.
The company also said it plans to consider property acquisitions for future store development. Ingles currently operates 198 supermarkets and also operates neighborhood shopping centers, most of which contain an Ingles supermarket. The company did not open any net new stores in fiscal 2022.
“Ingles had strong performance results for the quarter,” said Robert P. Ingle II, chairman, in a statement. “We are thankful for our customers and our associates as we continue to focus on fresh and affordable food offerings.”