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Ingles Markets Inc. Reports Operating Results (10-Q)

April 30, 2009 | About:

Ingles Markets Inc. (IMKTA) filed Quarterly Report for the period ended 2009-03-28.

Ingles Markets Incorporated is a leading supermarket chain with operations in the southeastern United States. Ingles' strategy is to locate its supermarkets primarily in suburban areas small towns and rural communities where management believes the market may be underserved by existing supermarkets. Ingles Markets Inc. has a market cap of $382.6 million; its shares were traded at around $15.61 with a P/E ratio of 7.6 and P/S ratio of 0.1. The dividend yield of Ingles Markets Inc. stocks is 4.3%. Ingles Markets Inc. had an annual average earning growth of 7.1% over the past 10 years. GuruFocus rated Ingles Markets Inc. the business predictability rank of 2-star.

Highlight of Business Operations:

The Company receives funds for a variety of merchandising activities from the many vendors whose products the Company buys for resale in its stores. These incentives and allowances are primarily comprised of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts. The purpose of these incentives and allowances is generally to help defray the costs incurred by the Company for stocking, advertising, promoting and selling the vendors products. These allowances generally relate to short term arrangements with vendors, often relating to a period of a month or less, and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Whenever possible, vendor discounts and allowances that relate to buying and merchandising activities are recorded as a component of item cost in inventory and recognized in merchandise costs when the item is sold. Due to system constraints and the nature of certain allowances, it is sometimes not practicable to apply allowances to the item cost of inventory. In those instances, the allowances are applied as a reduction of merchandise costs using a rational and systematic methodology, which results in the recognition of these incentives when the inventory related to the vendor consideration received is sold. Vendor allowances applied as a reduction of merchandise costs totaled $25.6 million and $25.6 million for the fiscal quarters ended March 28, 2009 and March 29, 2008, respectively. For the six-month periods ended March 28, 2009 and March 29, 2008, vendor allowances applied as a reduction of merchandise costs totaled $49.2 million and $50.5 million, respectively. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendors specific products are recorded as a reduction to the related expense in the period that the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $3.2 million for the fiscal quarter ended March 28, 2009 and $4.1 million for the fiscal quarter ended March 29, 2008. For the six-month periods ended March 28, 2009 and March 29, 2008, vendor advertising allowances recorded as a reduction of advertising expense totaled $6.5 million and $6.7 million, respectively.

Gain (Loss) From Sale or Disposal of Assets. Gains from the sale or disposal of assets totaled $0.4 million for the three months ended March 28, 2009, compared with a loss on sale or disposal of assets totaling $0.5 million for the three months ended March 29, 2008. During the March 2009 quarter, the Company sold an outparcel at a gain of approximately $1.0 million, offset by losses on the disposal of equipment resulting from store redevelopment activities.

Interest Expense. Interest expense increased $1.5 million for the three-month period ended March 28, 2009 to $13.1 million from $11.6 million for the three-month period ended March 29, 2008. Total debt at March 28, 2009 was $778.3 million compared with $626.1 million at March 29, 2008. New borrowings were incurred to fund the Companys higher level of capital expenditures during fiscal year 2008 and the first half of fiscal year 2009. Interest capitalized as construction costs increased due to the greater number of new store, remodel and relocation projects undertaken by the Company in recent quarters.

Net Income. Net income totaled $7.8 million for the three-month period ended March 28, 2009 compared with $13.0 million for the three-month period ended March 29, 2008. Net income, as a percentage of sales, was 1.0% for the quarter ended March 28, 2009 and 1.7% for the quarter ended March 29, 2008. Basic and diluted earnings per share for Class A Common Stock were $0.33 and $0.32 for the quarter ended March 28, 2009 compared to $0.56 and $0.53, respectively, for the quarter ended March 29, 2008. Basic and diluted earnings per share for Class B Common Stock were each $0.30 for the quarter ended March 28, 2009 compared to $0.51 of basic and diluted earnings per share for the quarter ended March 29, 2008.

Gain (Loss) From Sale or Disposal of Assets. Gains from the sale or disposal of assets totaled $0.3 million for the six months ended March 28, 2009, compared with a loss on sale or disposal of assets totaling $0.6 million for the six months ended March 29, 2008. During the March 2009 quarter, the Company sold an outparcel at a gain of approximately $1.0 million, offset by losses on the disposal of equipment resulting from store redevelopment activities.

Net Income. Net income totaled $18.9 million for the six-month period ended March 28, 2009 compared with $25.6 million for the six-month period ended March 29, 2008. Net income, as a percentage of sales, was 1.2% for the six months ended March 28, 2009 and 1.7% for the six months ended March 29, 2008. Basic and diluted earnings per share for Class A Common Stock were $0.80 and $0.77 for the six months ended March 28, 2009 compared to $1.10 and $1.05, respectively, for the six months ended March 29, 2008. Basic and diluted earnings per share for Class B Common Stock were each $0.73 for the six months ended March 28, 2009 compared to $1.00 of basic and diluted earnings per share for the six months ended March 29, 2008.

Read the The complete Report

Rating: 2.0/5 (1 vote)

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