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Wall Street JournalINGLES MARKETS, INCORPORATED AND SUBSIDIARIES FORM 10-Q
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES FORM 10-Q
For the quarter ended December 28, 2024, Ingles Markets, Inc. reported net sales of $1.23 billion, a 3.1% increase from the same period last year. The company’s gross profit margin decreased to 23.1% from 23.5% in the prior year period, while operating income decreased to $34.4 million from $36.5 million in the same period last year. Net income for the quarter was $23.1 million, or $1.59 per diluted share, compared to net income of $25.5 million, or $1.77 per diluted share, in the same period last year. The company’s cash and cash equivalents decreased to $143.1 million from $164.1 million at the end of the prior year period, while its long-term debt increased to $444.9 million from $394.9 million.
Summary and Analysis of Ingles Markets, Inc. Financial Report
Overview of Financial Performance
Ingles Markets, Inc. reported a decrease in net income for the first quarter of fiscal 2025 compared to the same period in the prior year. Net income for the first quarter of fiscal 2025 totaled $16.6 million, down from $43.4 million in the first quarter of fiscal 2024. This decline was primarily driven by a 13.0% decrease in net sales, which fell from $1.48 billion in Q1 2024 to $1.29 billion in Q1 2025.
Revenue and Profit Trends
The decrease in net sales was largely attributable to the impact of Hurricane Helene, which the company estimates resulted in $55-65 million in lost revenue during the three-week period immediately following the storm. Comparable store sales, excluding fuel, decreased 9.4% compared to the prior year quarter. Gross profit also declined by 13.7% to $301.1 million, with gross profit margin decreasing slightly from 23.6% to 23.4%.
Operating and administrative expenses decreased by 3.1% to $280.7 million, primarily due to lower salaries and wages as a result of the store closures from the hurricane. However, as a percentage of sales, operating expenses increased from 19.6% to 21.8% due to the significant drop in revenue.
Strengths and Weaknesses
A key strength for Ingles is its ability to manage costs, as evidenced by the reduction in operating expenses despite the significant sales decline. The company was also able to maintain a relatively stable gross profit margin. However, the company’s vulnerability to natural disasters like Hurricane Helene is a weakness, as it can lead to substantial disruptions and lost revenue.
Outlook and Future Prospects
Ingles expects capital expenditures of $120-$160 million in fiscal 2025, primarily focused on store improvements, technology upgrades, and the reopening of stores closed due to the hurricane. The company believes its financial resources, including its line of credit and long-term debt financing, will be sufficient to meet its planned capital needs and working capital requirements.
However, the company acknowledges that future results could be impacted by factors such as increased competition, changing economic conditions, natural disasters, and pandemics. The company’s ability to effectively manage these risks and continue executing its strategic initiatives will be crucial for its future performance.