INGLES MARKETS, INCORPORATED FORM 10-K (Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934)

Press release·03/03/2025 19:49:45

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Ingles Markets, Incorporated, a grocery store chain, filed its annual report on Form 10-K for the fiscal year ended September 28, 2024. The company reported net sales of $4.4 billion, an increase of 3.5% from the prior year. Net income was $143.4 million, a decrease of 4.5% from the prior year. The company’s gross profit margin decreased to 24.1% from 24.5% in the prior year, while its operating expenses increased by 2.5%. The company’s diluted earnings per share were $1.01, a decrease of 5.5% from the prior year. As of September 28, 2024, the company had cash and cash equivalents of $143.4 million and total debt of $1.1 billion. The company’s market value of voting stock held by non-affiliates was approximately $1.13 billion as of March 30, 2024.

Ingles Markets: Navigating Challenges and Maintaining Resilience

Ingles Markets, a prominent regional grocery store chain, has recently released its financial report for the fiscal year ended September 28, 2024. The report highlights the company’s performance amidst a challenging environment, marked by the impact of Hurricane Helene and ongoing industry trends.

Overview of Financial Performance

Ingles’ net income for the fiscal year 2024 was $105.5 million, a significant decrease from the $210.8 million reported in the previous fiscal year. This decline was primarily attributed to the difference in the number of weeks in each year, with fiscal year 2024 having 52 weeks compared to 53 weeks in fiscal year 2023. Additionally, the company faced inflationary pressures on the cost of goods and increased operating expenses due to a competitive labor market.

Revenue and Profit Trends

Net sales for the fiscal year 2024 totaled $5.64 billion, down from $5.89 billion in the previous year. This decrease was partly due to the disruptions caused by Hurricane Helene, which resulted in store closures, power outages, and the inability to process credit and debit card transactions for a period of time. The company estimates that it lost approximately $14 million in sales during the last two days of the fiscal year due to these disruptions.

Comparable store sales, excluding fuel, decreased by 1.7% in fiscal year 2024 compared to the previous year. The number of transactions (excluding fuel) decreased by 0.3%, while the average transaction size (excluding fuel) decreased by 1.4%. Fuel sales also saw a decline, with gallons sold decreasing by 5.5% and per-gallon fuel prices decreasing by 3.3%.

Gross profit for the fiscal year 2024 decreased by $105.1 million, or 7.5%, to $1.3 billion, primarily due to a $30.4 million inventory loss resulting from Hurricane Helene. As a percentage of sales, gross profit decreased from 23.8% in fiscal year 2023 to 23.0% in fiscal year 2024.

Strengths and Weaknesses

One of Ingles’ key strengths is its ongoing investment in modernizing and expanding its store base. The company has dedicated significant capital expenditures to opening new stores, completing major remodels, and expanding existing stores. This focus on providing customers with clean, modern, and conveniently located stores has been a crucial part of Ingles’ strategy to maintain a loyal customer base.

However, the company’s performance in fiscal year 2024 was significantly impacted by the disruptions caused by Hurricane Helene. The physical damage to stores, water outages, and connectivity issues resulted in lost sales and additional expenses for cleanup and repairs. These challenges are expected to continue to affect the company’s results in the first quarter and full fiscal year of 2025.

Another weakness is the company’s exposure to volatile fuel prices, which can impact both its fuel sales and overall gross margins. Ingles has attempted to mitigate this risk through the use of interest rate swaps, but the volatility in the fuel market remains a concern.

Outlook and Future Trends

Ingles expects the impact of Hurricane Helene to continue to affect its performance in the first quarter and full fiscal year of 2025. The company also anticipates that the supermarket industry will remain highly competitive, with ongoing consolidation, fragmented food retail platforms, and continued competition from supercenters and other non-supermarket operators.

The company also expects that traditional supermarket products will be acquired by customers in new and diverse ways, including online ordering, home delivery, and pre-picked customer pickup. Additionally, the company and its customers are likely to become more environmentally aware, leading to changes in packaging, energy efficiency, and recycling practices.

Despite these challenges, Ingles plans to continue focusing on balancing sales growth and gross margin maintenance (excluding the effect of fuel sales). The company will carefully monitor its product mix and customer trends to adapt to the changing market conditions.

Conclusion

Ingles Markets has faced significant challenges in the past fiscal year, with the impact of Hurricane Helene and ongoing industry trends affecting its financial performance. However, the company’s commitment to modernizing its store base, diversifying its product offerings, and adapting to changing customer preferences demonstrates its resilience and ability to navigate the evolving retail landscape. As Ingles looks to the future, it will need to continue to address the lingering effects of the hurricane, manage its exposure to fuel price volatility, and capitalize on emerging trends to maintain its position as a leading regional grocery store chain.