Sales Rise, Profits Fall at Ingles

During the quarter ending March 26, sales for the Black Mountain, NC chain rose 7% over the same quarter in 2004 but earnings declined from $7.2 million, or 31 cents per diluted share, to $5.5 million, or 23 cents.

Sales grew the most in high-margin perishables and the chains pharmacy and gasoline departments but increased spending on promotions and lower margins on gas and pharmacy sales affected profits, the company said.

The firm's 2004's first quarter earnings were helped by the after tax gain of $2.5 million from the sale of a shopping center in which Ingles no longer operated. Without that gain, earnings for the first quarter of 2004 would have been $4.7 million or about 20 cents per share.

An earlier Easter season also had an influence with Easter sales occurring in the March quarter of fiscal 2005 but in the third quarter of fiscal 2004.

Despite the decline in profits, CFO Ronald Freeman said in a conference call with investors Friday that the company's bottom line has remained strong since the start of its fiscal year in September.

"We're very proud of our performance in the first half of our fiscal year. We hope to continue to build on the sales momentum we already have and bring increased profitability to the bottom line," he said.

The company, which operates in six southeastern states, also outlined its expansion plans, saying it added one new store, and purchased three future store sites during the first quarter of 2005. During that same time period, the firm closed two stores and remodeled and expanded one other. For the remainder of the year, the company expects to spend $70 million in capital to add three new stores to its existing 195 supermarkets, remodel and expand one other store, complete seven fuel sites and purchase an additional site for future store expansion.