Ingles Markets(IMKTA) - 2023 Q4 - Annual Report

Financial Performance - Total revenues for the fiscal year ended September 30, 2023, were $5,892.8 million, an increase from $5,678.8 million in 2022, representing a growth of 3.8%[27] - Grocery revenues reached $2,062.4 million in 2023, up from $1,940.4 million in 2022, marking an increase of 6.3%[27] - Perishables revenues increased to $1,482.1 million in 2023 from $1,445.0 million in 2022, reflecting a growth of 2.6%[27] - The company’s income from operations for retail was $263.2 million in 2023, down from $353.0 million in 2022, a decrease of 25.5%[27] Store Operations - The company operated 189 supermarkets under the "Ingles" name and nine under "Sav-Mor" as of September 30, 2023[29] - The average sales per store for the fiscal year 2023 was $28,565, an increase from $27,622 in 2022, indicating a growth of 3.4%[33] - The Company opened no new stores in fiscal year 2023, maintaining a total of 198 stores[49] - The average store size increased to 57,589 square feet in 2023 from 57,281 square feet in 2022[49] Customer Service and Convenience - The company operates 114 pharmacies and 108 fuel stations at its grocery store locations, aiming to improve customer service and convenience[29] - The Ingles Curbside service is available at 129 stores, with plans to add more each month[37] - The company plans to continue its renovation and expansion strategy to enhance customer convenience and modernize store layouts[20] Supply Chain and Inventory - The Company supplies approximately 57% of its supermarkets' inventory from its own distribution facilities, totaling 1.65 million square feet[40] - The Company experienced increased customer traffic and occasional product shortages due to supply chain issues during the fiscal year ended September 30, 2023[44] Workforce and Labor Market - The Company had approximately 26,420 associates as of September 30, 2023, with 93% being supermarket personnel[57] - The Company is facing a tight labor market, impacting its ability to attract and retain qualified personnel[44] - The Company has slowed new store and remodeling plans due to inflation and supply chain issues[47] Competitive Advantages - The Company believes its competitive advantages include convenient locations and quality service[52] Debt and Financial Instruments - As of September 30, 2023, the total long-term debt with variable interest rates amounts to $151,070,000, with an average interest rate of 6.95%[170] - The Recovery Zone Bonds with variable interest rates total $54,440,000, maintaining an average year-end interest rate of 5.20%[170] - The Company has $350,000,000 in Senior Notes with a fixed interest rate of 4.00%[170] - The long-term debt with variable interest rates increased from $164,833,000 in September 24, 2022 to $151,070,000 in September 30, 2023, reflecting a decrease in total debt[170] - The average year-end interest rate for long-term debt decreased from 4.09% in 2022 to 6.95% in 2023[170] - The Company does not consider potential near-term losses from changes in interest rates and exchange rates to be material[172] - The Company has not utilized highly leveraged financial instruments for interest rate risk management[172] - The average interest rate for Recovery Zone Bonds decreased from 2.94% in 2022 to 5.20% in 2023[170] - The Company has a fixed interest rate swap that fixes at 3.962% for $24.5 million of variable interest rate debt[172] - The Company has a fixed interest rate swap that fixes at 2.998% for $124.6 million of variable interest rate debt[171] Regulatory Environment - The Company is subject to various governmental regulations, including those from the U.S. Food and Drug Administration and the Occupational Safety and Health Administration[65]