Ingles Markets, Inc., reported higher sales and pretax income for the three months ended December 29, 2018, compared with the three months ended December 30, 2017. Total sales rose 4.7% over the comparative quarters. Pretax income totaled $28.1 million for the quarter ended December 29, 2018, 10.9% higher than pretax income of $25.4 million for the quarter ended December 30, 2017. The December 2017 quarter included a reduction in non-cash deferred tax expense from changes to federal income tax law, resulting in higher net income for the December 2017 quarter compared with the current quarter.
Robert P. Ingle II, Chairman of the Board, stated, “We had a successful first quarter and holiday season due to the dedication and hard work from all our associates. We also made significant investments in our Company that will benefit many future periods.”
First Quarter Results
Net sales totaled $1.06 billion for the quarter ended December 29, 2018, compared with $1.01 billion for the quarter ended December 30, 2017, an increase of $48.1 million. Comparable store sales, excluding gasoline, increased 3.9%. Gasoline gallons sold and the price per gallon increased comparing the December 2018 quarter with the December 2017 quarter. The number of customer transactions (excluding gasoline) and the comparable average transaction size (excluding gasoline) increased compared with the same quarter last year.
Gross profit for the December 2018 quarter rose to $258.4 million, or 24.3% of sales. Gross profit for the December 2017 quarter was $244.7 million, also 24.1% of sales. Operating and administrative expenses for the December 2018 quarter totaled $218.7 million, compared with $208.8 million for the December 2017 quarter. Increased personnel costs accounted for much of the increase, influenced by increased sales and by continued high demand for labor.
Interest expense totaled $12.2 million for the three-month period ended December 29, 2018, compared with $11.5 million for the three-month period ended December 30, 2017. Total debt at the end of December 2018 was $880.0 million, compared with $890.5 million at the end of December 2017. Market interest rates have been rising steadily over the past twelve months.
Net income totaled $22.2 million for the quarter ended December 29, 2018, compared with $45.1 million for the quarter ended December 30, 2017. During last year’s first quarter, the Company recognized a $26.7 million deferred tax benefit from the December 2017 reduction in the federal income tax rate. This year’s quarter contains no such benefit.
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