Ingles Markets(US:IMKTA)2025-11-26 21:00Financial Performance - For the fiscal year ended September 27, 2025, total revenues were $5,334.0 million, a decrease of 5.4% from $5,639.6 million in the previous year[27]. - Net income for the fiscal year ended September 27, 2025 was $83.6 million, a decrease from $105.5 million for the fiscal year ended September 28, 2024, reflecting a net income margin of 1.6% compared to 1.9% in the prior year[130][143]. - Net sales for the fiscal year ended September 27, 2025 totaled $5.33 billion, down from $5.64 billion for the fiscal year ended September 28, 2024, with a comparable store sales decrease of 1.7% excluding fuel[131][143]. - Gross profit for the fiscal year ended September 27, 2025 was $1.27 billion, a decrease of $25.7 million or 2.0% from $1.30 billion in the previous fiscal year, with a gross profit margin of 23.9%[134]. - Operating and administrative expenses for the fiscal year ended September 27, 2025 were $1.159 billion, a slight decrease of $2.9 million from $1.162 billion in the prior year, representing 21.7% of net sales[135]. - The number of transactions (excluding fuel) decreased by 4.2% in fiscal year 2025, while the average transaction size increased by 0.1%[132]. - The Company generated $154.1 million in cash from operations for fiscal 2025, a decrease of 41.3% compared to $262.5 million in fiscal 2024[152]. - Cash used in investing activities for fiscal 2025 totaled $109.9 million, down 46.8% from $206.2 million in fiscal 2024, primarily due to a $96.4 million decrease in capital expenditures[153]. Operational Impact - The Company recognized impairment losses of $30.4 million related to inventory and $4.5 million related to property and equipment due to Hurricane Helene[15]. - The Company incurred approximately $9.0 million in cleanup and repair costs related to Hurricane Helene and received $6.2 million in insurance proceeds[16]. - The Company estimates approximately $55 to $65 million in lost revenue due to Hurricane Helene, which impacted operations during the last two days of the fiscal year ended September 28, 2024[130][126]. - The Company incurred $9.0 million in cleanup and repair expenses due to Hurricane Helene, partially offset by insurance proceeds of $1.5 million[130][135]. - The Company is subject to various governmental regulations, including those from the U.S. Food and Drug Administration and the U.S. Department of Agriculture, and believes it is in compliance with these regulations[61]. - The Company operates primarily in the Southeastern United States, making it susceptible to regional economic factors, including natural disasters like Hurricane Helene, which caused significant operational disruptions[64]. Store Operations - The Company operated 194 supermarkets as of September 27, 2025, with 185 under the "Ingles" name and 9 under "Sav-Mor"[29]. - The weighted average sales per store decreased to $25,916, down from $27,341 in the previous year[32]. - The average store size is 57,411 square feet, with 82 stores being at least 62,000 square feet[46]. - Approximately 58.8% of goods sold are supplied from the Company's distribution facilities, with the remaining 41.2% purchased from third parties[20]. - Approximately 58.8% of the Company's inventory is supplied from its warehouse and distribution facilities, with a total of 1.65 million square feet dedicated to these operations[39]. - The Company owns the real property for 174 of its supermarkets, including three temporarily closed stores due to Hurricane Helene[22]. - The Company operates fuel stations at 106 locations, with potential disruptions in fuel availability and pricing posing risks to financial performance[72]. Strategic Initiatives - The Company plans to continue its renovation and expansion strategy to modernize stores and enhance customer convenience[19]. - The Company aims to modernize its stores continuously, with ongoing construction and remodeling projects to enhance customer experience[44]. - The Company has a strong focus on private label products, which include milk, bread, and organic items, aimed at promoting customer loyalty[37]. - The Ingles Curbside service is available at 131 stores, allowing customers to order products online for pickup[36]. - The Company plans to invest approximately $120 to $140 million in capital expenditures for fiscal year 2026, focusing on store improvements and technology upgrades[148][149]. Financial Management - Capital expenditures for fiscal year 2025 totaled $114.5 million, significantly lower than $210.9 million in fiscal year 2024, primarily due to fewer purchases of new sites[146]. - Interest expense decreased to $19.7 million for the fiscal year ended September 27, 2025, down from $21.9 million in the previous year, with total debt at $514.8 million[141]. - The Company has a $150 million unsecured senior line of credit, which was amended in June 2025 and matures in June 2030[155]. - The outstanding aggregate principal amount of the Recovery Zone Bonds was $45.4 million as of September 27, 2025, with mandatory annual redemptions of $4.5 million starting from January 1, 2014[157]. - The Company expects to continue paying regular cash dividends, having paid $0.66 per share of Class A Common Stock in fiscal 2025[105]. - The Company expects to continue paying quarterly cash dividends of $0.165 per share on Class A Common Stock and $0.15 per share on Class B Common Stock[164]. Risk Factors - A shortage of qualified associates could lead to increased labor costs, which the Company may not be able to pass on to customers, significantly raising operating costs[66]. - Energy and utility costs have been volatile, prompting the Company to enhance energy efficiency in store construction and remodeling[68]. - The supermarket industry is highly competitive, with the Company facing pressure from competitors with greater financial resources[75]. - Economic conditions affecting consumer spending, such as employment levels and interest rates, could adversely impact the Company's financial results[77]. - Inflation has been noted, with the Consumer Price Index showing a 3.0% increase for all items year-over-year as of September 27, 2025[79]. - The Company is exposed to interest rate changes due to its borrowing activities, with variable interest rates on long-term debt averaging 5.90%[170]. - The Company anticipates that economic conditions will affect customer behavior, including purchasing patterns and product variety[172]. Governance and Compliance - The principal stockholder, Robert P. Ingle II, holds approximately 72.5% of the voting power, allowing significant influence over Company decisions[81]. - The Company has adopted an insider trading policy to promote compliance with insider trading laws and regulations[191]. - The Company has a Code of Ethics applicable to senior financial officers, including the CEO and CFO[192]. - The independent auditors, Deloitte & Touche LLP, audited the consolidated financial statements and internal control over financial reporting[185]. - The Company maintained effective disclosure controls and procedures as of September 27, 2025, providing reasonable assurance for timely reporting[180]. - The internal control over financial reporting was assessed as effective as of September 27, 2025, based on the COSO framework[184]. - There were no changes in internal control over financial reporting that materially affected the Company during the fiscal quarter ended September 27, 2025[186]. - The evaluation of the effectiveness of disclosure controls and procedures was conducted under the supervision of the CEO and CFO[179]. Audit and Vendor Relations - The audit identified vendor allowances as a critical audit matter due to the diversity of individual vendor agreements[210]. - Vendor allowances applied as a reduction of merchandise costs totaled $151.9 million for the fiscal year ended September 27, 2025[121]. - The Company received funds from vendors for merchandising activities, including volume-based incentives and advertising allowances[209]. - Vendor allowances are recorded as a reduction of inventory cost and recognized in cost of goods sold when the related inventory is sold[209].