US retailer Ingles Markets has posted a drop in second-quarter sales as a result of higher costs associated with the company’s accelerated store development.
For the period ended 28 March, net income dropped to US$7.8m from $13m in the same period of 2008.
Net income, as a percentage of sales, was 1% for the quarter compared with 1.7% for the 2008 quarter.
Despite this, sales increased by $6.4m to $789.2m for the three month period.
Grocery segment comparable store sales increased 4.9% for the three months compared with the same period of the previous year. The number of customer transactions increased 7.9%, while the average transaction size decreased slightly compared with the second quarter of the prior year.
CEO Robert Ingle said: “Our goal is to build sales while providing our customers with solid value. We are pleased to report growth in sales and gross profit even in this recessionary climate.
“We believe our accelerated store development program will put us in a good market position when the economy improves. We expect sales and profitability to improve in the new stores as the economy improves and will benefit our future earnings.”
For the six month period, net sales increased by $34.1m to reach $1.59bn. Net income totalled $18.9m compared to $25.6m in the same period of 2008.
For the balance of the fiscal year, Ingles said it expects to open four new, replacement, or remodelled stores, and add four new fuel stations.
Due to general economic conditions, the company said it has cut back on its planned development activities. Capital expenditures for the fiscal year are expected to be around $150m, including expenditures for stores to open in fiscal 2010.
