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What changed in INGLES MARKETS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of INGLES MARKETS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+175 added−152 removedSource: 10-K (2024-12-27) vs 10-K (2023-11-29)

Top changes in INGLES MARKETS INC's 2024 10-K

175 paragraphs added · 152 removed · 127 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

37 edited+13 added−9 removed40 unchanged
Biggest changeInformation about the Company’s operations is as follows (for information regarding the Company’s industry segments, see Note 11, “Segment Information” to the Consolidated Financial Statements contained in this Annual Report on Form 10-K): Fiscal Year Ended September (dollars in millions) 2023 2022 2021 Revenues from unaffiliated customers: Grocery $ 2,062.4 $ 1,940.4 $ 1,762.9 Non-foods 1,326.9 1,204.5 1,136.3 Perishables 1,482.1 1,445.0 1,349.1 Fuel 792.5 885.8 583.7 Total retail 5,663.9 96.1% 5,475.7 96.4% 4,832.0 96.9% Other 228.9 3.9% 203.1 3.6% 156.0 3.1% $ 5,892.8 100.0% $ 5,678.8 100.0% $ 4,988.0 100.0% Income from operations: Retail $ 263.2 90.0% $ 353.0 93.7% $ 327.6 93.6% Other 29.1 10.0% 23.9 6.3% 22.5 6.4% 292.3 100.0% 376.9 100.0% 350.1 100.0% Other income, net 8.3 5.9 2.9 Interest expense 22.1 21.5 24.3 Loss on early extinguishment of debt — — 1.1 Income before income taxes $ 278.5 $ 361.3 $ 327.6 The “Grocery” category includes grocery, dairy and frozen foods.
Biggest changeInformation about the Company’s operations is as follows (for information regarding the Company’s industry segments, see Note 11, “Segment Information” to the Consolidated Financial Statements contained in this Annual Report on Form 10-K): Fiscal Years Ended (dollars in millions) September 28, 2024 September 30, 2023 September 24, 2022 Revenues from unaffiliated customers: Grocery $ 1,983.2 $ 2,062.4 $ 1,940.4 Non-foods 1,273.3 1,326.9 1,204.5 Perishables 1,441.1 1,482.1 1,445.0 Fuel 724.2 792.5 885.8 Total retail 5,421.8 96.1% 5,663.9 96.1% 5,475.7 96.4% Other 217.8 3.9% 228.9 3.9% 203.1 3.6% $ 5,639.6 100.0% $ 5,892.8 100.0% $ 5,678.8 100.0% Income from operations: Retail $ 123.0 83.6% $ 263.2 90.0% $ 353.0 93.7% Other 24.2 16.4% 29.1 10.0% 23.9 6.3% 147.2 100.0% 292.3 100.0% 376.9 100.0% Other income, net 14.2 8.3 5.9 Interest expense 21.9 22.1 21.5 Income before income taxes $ 139.5 $ 278.5 $ 361.3 The “Grocery” category includes grocery, dairy and frozen foods.
The Company’s stores are also subject to local laws regarding zoning, land use and the sale of alcoholic beverages and tobacco products. The Company believes that its locations are in material compliance with such laws and regulations. The Company is not aware of any proposed regulations that would materially affect the Company’s business, financial condition, or results of operations.
The Company’s stores are also subject to local laws regarding zoning, land use and the sale of alcoholic beverages and tobacco products. The Company believes that its locations are in material compliance with such laws and regulations. The Company is not aware of any proposed regulations that would materially affect the Company’s business, financial condition, or results of operations. 10
The Company also provides its customers with an expanded selection of frozen food items (including organics) to meet the increasing demands of its customers. The Ingles Curbside service allows customers to order any product in the Company’s stores online. The order is picked by store associates and loaded into the customer’s vehicle.
The Company also provides its customers with an expanded selection of frozen food items (including organics) to meet the increasing demands of its customers. 7 The Ingles Curbside service allows customers to order any product in the Company’s stores online. The order is picked by store associates and loaded into the customer’s vehicle.
The “Sav-Mor” store concept accommodates smaller shopping areas and carries dry groceries, dairy, fresh meat and produce, all of which are displayed in a modern, readily accessible environment. The following table sets forth certain information with respect to the Company’s supermarket operations.
The “Sav-Mor” store concept accommodates smaller shopping areas and carries dry groceries, dairy, fresh meat and produce, all of which are displayed in a modern, readily accessible environment. 6 The following table sets forth certain information with respect to the Company’s supermarket operations.
These service 9 marks and the trademarks are federally registered in the United States pursuant to applicable intellectual property laws and are the property of Ingles. The Company believes it has all material licenses and permits necessary to conduct its business.
These service marks and the trademarks are federally registered in the United States pursuant to applicable intellectual property laws and are the property of Ingles. The Company believes it has all material licenses and permits necessary to conduct its business.
Management considers labor relations to be good. The Company values its associates and believes that associate loyalty and enthusiasm are key elements of its operating performance.
Management considers labor relations to be good. The 9 Company values its associates and believes that associate loyalty and enthusiasm are key elements of its operating performance.
To further ensure product quality, the Company also owns and operates a milk processing and packaging plant that supplies approximately 72% of the milk products sold by the Company’s supermarkets as well as a variety of organic milk, fruit juices and bottled water products.
To further ensure product quality, the Company also owns and operates a milk processing and packaging plant that supplies approximately 68% of the milk products sold by the Company’s supermarkets as well as a variety of organic milk, fruit juices and bottled water products.
Ingle II, our Chairman, beneficially owned approximately 72.2% of the combined voting power and 22.9% of the total number of shares of the Company’s outstanding Class A and Class B Common Stock (in each case including stock held by the Company’s Investment/Profit Sharing Plan and Trust of which Mr. Ingle II serves as one of the trustees).
Ingle II, our Chairman, beneficially owned approximately 72.5% of the combined voting power and 22.7% of the total number of shares of the Company’s outstanding Class A and Class B Common Stock (in each case including 5 stock held by the Company’s Investment/Profit Sharing Plan and Trust of which Mr. Ingle II serves as one of the trustees).
Goods from the warehouse and distribution facilities and the milk processing and packaging plant are distributed to the Company’s stores by a fleet of 183 tractors and 864 trailers that the Company owns, operates and maintains. The Company invests on an ongoing basis in the maintenance, upgrade and replacement of its tractor and trailer fleet.
Goods from the warehouse and distribution facilities and the milk processing and packaging plant are distributed to the Company’s stores by a fleet of 182 tractors and 842 trailers that the Company owns, operates and maintains. The Company invests on an ongoing basis in the maintenance, upgrade and replacement of its tractor and trailer fleet.
Number of Supermarkets Percentage of Total at Fiscal Net Sales for Fiscal Year Ended September Year Ended September 2023 2022 2021 2023 2022 2021 North Carolina 75 75 75 41% 41% 41% South Carolina 35 35 35 19% 19% 19% Georgia 65 65 65 32% 32% 32% Tennessee 21 21 21 8% 8% 8% Virginia 1 1 1 — — — Alabama 1 1 1 — — — 198 198 198 100% 100% 100% The Company believes that today’s supermarket customers focus on convenience, quality and value in an attractive store environment.
Number of Supermarkets Percentage of Total at Fiscal Year Ended Net Sales for Fiscal Years Ended September 28, September 30, September 24, September 28, September 30, September 24, 2024 2023 2022 2024 2023 2022 North Carolina 75 75 75 41% 41% 41% South Carolina 35 35 35 19% 19% 19% Georgia 65 65 65 32% 32% 32% Tennessee 21 21 21 8% 8% 8% Virginia 1 1 1 — — — Alabama 1 1 1 — — — 198 198 198 100% 100% 100% The Company believes that today’s supermarket customers focus on convenience, quality and value in an attractive store environment.
The current expiration dates for significant trade and service marks are as follows: “Ingles” – December 9, 2025; “Laura Lynn” – March 13, 2024; “Harvest Farms Organic” – August 5, 2024; and “The Ingles Advantage” – August 30, 2025. Each registration may be renewed for an additional ten-year term prior to its expiration.
The current expiration dates for significant trade and service marks are as follows: “Ingles” – December 9, 2025; “Laura Lynn” – March 13, 2034; “Harvest Farms Organic” – August 21, 2028; and “The Ingles Advantage” – August 30, 2025. Each registration may be renewed for an additional ten-year term prior to its expiration.
Supermarket Operations At September 30, 2023, the Company operated 189 supermarkets under the name “Ingles,” and nine supermarkets under the name “Sav-Mor” with locations in western North Carolina, western South Carolina, northern Georgia, eastern Tennessee, southwestern Virginia and northeastern Alabama.
Supermarket Operations At September 28, 2024, the Company operated 189 supermarkets under the name “Ingles,” and nine supermarkets under the name “Sav-Mor” with locations in western North Carolina, western South Carolina, northern Georgia, eastern Tennessee, southwestern Virginia and northeastern Alabama.
At September 30, 2023, the Company operated 114 pharmacies and 108 fuel stations, in each case at the Company’s grocery store locations. The Company plans to continue to incorporate these departments in substantially all future new and remodeled stores. The Company trains its associates to provide friendly service and to actively address the needs of customers.
At September 28, 2024, the Company operated 115 pharmacies and 108 fuel stations, in each case at the Company’s grocery store locations. The Company plans to continue to incorporate these departments in substantially all future new and remodeled stores. The Company trains its associates to provide friendly service and to actively address the needs of customers.
The Company’s fluid dairy operations have a slight seasonal variation to the extent of its sales into the grocery industry. The Company’s real estate operations are not subject to seasonal variations. Human Capital At September 30, 2023, the Company had approximately 26,420 associates, of which 93% were supermarket personnel. Approximately 56% of supermarket personnel work on a part-time basis.
The Company’s fluid dairy operations have a slight seasonal variation to the extent of its sales into the grocery industry. The Company’s real estate operations are not subject to seasonal variations. Human Capital At September 28, 2024, the Company had approximately 26,360 associates, of which 92% were supermarket personnel. Approximately 58% of supermarket personnel work on a part-time basis.
The Company also operates truck servicing and fuel storage facilities at its warehouse and distribution facilities. The Company reduces its overall distribution costs by capitalizing on back-haul opportunities (contracting with third parties to transport their merchandise on our trucks that would otherwise be empty).
The Company also operates truck servicing and fuel storage facilities at its warehouse and distribution facilities. The Company reduces its overall distribution costs by capitalizing on back-haul opportunities (contracting with third parties to transport their merchandise on our trucks that would otherwise be empty). The Company receives product recall information from various subscription, government and vendor sources.
Visitors to our website can also register to receive financial information press releases. Information contained on, or accessible through, our website is not a part of and is not incorporated by reference into this Annual Report on Form 10-K. 5 Business The Company operates one primary business segment, retail grocery.
Visitors to our website can also register to receive financial information press releases. Information contained on, or accessible through, our website is not a part of and is not incorporated by reference into this Annual Report on Form 10-K.
The Company was incorporated in 1965 under the laws of the State of North Carolina. Its principal mailing address is P.O. Box 6676, Asheville, North Carolina 28816, and its telephone number is 828-669-2941. The Company’s website is www.ingles-markets.com .
Beneficial ownership is calculated in accordance with Rule 13d-3 promulgated under the Exchange Act. The Company was incorporated in 1965 under the laws of the State of North Carolina. Its principal mailing address is P.O. Box 6676, Asheville, North Carolina 28816, and its telephone number is 828-669-2941. The Company’s website is www.ingles-markets.com .
These associates reinforce the Company’s distinctive service-oriented image. 6 Selected statistics on the Company’s supermarket operations are presented below: Fiscal Year Ended September 2023 2022 2021 2020 2019 Weighted Average Sales Per Store (000’s) (1) $ 28,565 $ 27,622 $ 23,926 $ 22,215 $ 20,189 Total Square Feet at End of Year (000’s) 11,403 11,342 11,342 11,256 11,247 Average Total Square Feet per Store 57,589 57,281 57,281 57,138 56,806 Average Square Feet of Selling Space per Store (2) 40,313 40,097 40,097 39,997 39,765 Weighted Average Sales per Square Foot of ‎ Selling Space (1) (2) 709 689 609 568 516 (1) Weighted average sales per store include the effects of increases in square footage due to the opening of replacement stores and the expansion of stores through remodeling during the periods indicated, and fuel sales.
Selected statistics on the Company’s supermarket operations are presented below: Fiscal Year Ended September 28, September 30, September 24, September 25, September 26, 2024 2023 2022 2021 2020 Weighted Average Sales Per Store (000’s) (1) $ 27,341 $ 28,565 $ 27,622 $ 23,926 $ 22,215 Total Square Feet at End of Year (000’s) 11,405 11,403 11,342 11,342 11,256 Average Total Square Feet per Store 57,602 57,589 57,281 57,281 57,138 Average Square Feet of Selling Space per Store (2) 40,322 40,313 40,097 40,097 39,997 Weighted Average Sales per Square Foot of ‎ Selling Space (1) (2) 676 709 689 609 568 (1) Weighted average sales per store include the effects of increases in square footage due to the opening of replacement stores and the expansion of stores through remodeling during the periods indicated, and fuel sales.
The following table sets forth, for the fiscal years indicated, the Company’s new store development and store remodeling activities and the effect this program has had on the average size of its stores: 2023 2022 2021 2020 2019 Number of Stores: Opened — — 2 — 1 Closed — — 1 1 3 Stores open at end of period 198 198 198 197 198 Size of Stores: Less than 42,000 sq. ft. 45 46 46 46 48 42,000 up to 51,999 sq. ft. 22 22 22 22 22 52,000 up to 61,999 sq. ft. 47 47 47 47 47 At least 62,000 sq. ft. 84 83 83 82 81 Average store size (sq. ft.) 57,589 57,281 57,281 57,138 56,806 8 The Company’s ability to open new stores is subject to many factors, including the acquisition of satisfactory sites, as well as zoning limitations and other government regulations.
The Company may elect to relocate, rather than remodel, certain stores where relocation provides a more convenient location for its customers. 8 The following table sets forth, for the fiscal years indicated, the Company’s new store development, including the effect of the Company’s store remodeling activities, which has generally increased the average square footage of its stores: 2024 2023 2022 2021 2020 Number of Stores: Opened — — — 2 — Closed — — — 1 1 Stores open at end of period 198 198 198 198 197 Size of Stores: Less than 42,000 sq. ft. 45 45 46 46 46 42,000 up to 51,999 sq. ft. 22 22 22 22 22 52,000 up to 61,999 sq. ft. 46 47 47 47 47 At least 62,000 sq. ft. 85 84 83 83 82 Average store size (sq. ft.) 57,602 57,589 57,281 57,281 57,138 The Company’s ability to open new stores is subject to many factors, including the acquisition of satisfactory sites, as well as zoning limitations and other government regulations.
The remaining 43% is purchased from third parties and is generally delivered directly to the stores. The close proximity of the Company’s purchasing and distribution operations to its stores facilitates the timely distribution of consistently high quality perishable and non-perishable items.
These facilities supply the Company’s supermarkets with approximately 58% of the goods the Company sells. The remaining 42% is purchased from third parties and is generally delivered directly to the stores. The close proximity of the Company’s purchasing and distribution operations to its stores facilitates the timely distribution of consistently high quality perishable and non-perishable items.
Supermarket chains generally compete based on location, quality of products, service, price, convenience, product variety, online ordering/delivery capabilities, and store condition. The Company believes its competitive advantages include convenient locations, the quality of service it provides its customers, competitive pricing, product variety, quality and a pleasant shopping environment, which is enhanced by its ongoing modernization program.
The Company believes its competitive advantages include convenient locations, the quality of service it provides its customers, competitive pricing, product variety, quality and a pleasant shopping environment, which is enhanced by its ongoing modernization program.
From time to time, the Company engages in advance purchasing on high-turnover inventory items to take advantage of special prices offered by manufacturers for limited periods, or to ensure adequate product supply during tight distribution market conditions. 7 The remaining 43% of the Company’s inventory requirements, primarily beverages, pharmacy, fuel, bread and snack foods, are supplied directly to the Company’s supermarkets by local distributors and manufacturers.
From time to time, the Company engages in advance purchasing on high-turnover inventory items to take advantage of special prices offered by manufacturers for limited periods, or to ensure adequate product supply during tight distribution market conditions.
Substantially all of the Company’s stores are located within 280 miles of the Company’s warehouse and distribution facilities, near Asheville, North Carolina. The Company operates 1.65 million square feet of warehouse and distribution facilities. These facilities supply the Company’s supermarkets with approximately 57% of the goods the Company sells.
The Company offers online ordering of its products for pickup at its stores. Substantially all of the Company’s stores are located within 280 miles of the Company’s warehouse and distribution facilities, near Asheville, North Carolina. The Company operates 1.65 million square feet of warehouse and distribution facilities.
The Company renovates and remodels stores in order to increase customer traffic and sales, respond to existing customer demand, compete effectively against new stores opened by competitors and support its quality image merchandising strategy. The Company decides to complete a remodel of an existing store based on its evaluation of the competitive landscape of the local marketplace.
During fiscal year 2024, the Company started construction on a new store and started remodeling projects on several stores. The Company renovates and remodels stores in order to increase customer traffic and sales, respond to existing customer demand, compete effectively against new stores opened by competitors and support its quality image merchandising strategy.
The Company has 1.65 million square feet of office, warehouse and distribution facilities at its headquarters near Asheville, North Carolina. The Company believes that its warehouse and distribution facilities contain sufficient capacity for the continued expansion of its store base for the foreseeable future.
The Company believes that its warehouse and distribution facilities contain sufficient capacity for the continued expansion of its store base for the foreseeable future.
In addition, the milk processing and packaging plant sells approximately 81% of its products to other retailers, food service distributors and grocery warehouses in 17 states, which provides the Company with an additional source of revenue. The Company owns 167 of its supermarkets, either in free-standing stores or as the anchor tenant in an owned shopping center.
The milk processing and packaging plant did not sustain physical damage as a result of Hurricane Helene. In addition, the milk processing and packaging plant sells approximately 82% of its products to other retailers, food service distributors and grocery warehouses in 17 states, which provides the Company with an additional source of revenue.
This service is currently offered at 129 of the Company’s stores, with additional stores expected to be added each month. Ingles’ private labels cover a broad range of products throughout the store, such as milk, bread, organic products, soft drinks and canned goods.
This service is currently offered at 134 of the Company’s stores. Ingles’ private labels cover a broad range of products throughout the store, such as milk, bread, organic products, soft drinks and canned goods. Ingles believes that private label sales help promote customer loyalty and provide a value-priced alternative to national brands.
The Company remodels, expands and relocates stores in these communities and builds stores in new locations to retain and grow its customer base while retaining a high level of customer service and convenience. Ingles supermarkets offer customers a wide variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables, and non-food products.
Overview The Company remodels, expands and relocates stores in these communities and builds stores in new locations to retain and grow its customer base while retaining a high level of customer service and convenience.
Design features of the Company’s modern stores focus on selling products in perishable departments featuring local organic and home meal replacement items, in-store pharmacies, on-premises fuel centers, and an expanded selection of food and non-food items. The Company offers online ordering of its products for pickup at its stores.
The Company’s new and remodeled supermarkets provide an enhanced level of customer convenience in order to accommodate the lifestyle of today’s shoppers. Design features of the Company’s modern stores focus on featuring local organic and home meal replacement items in the perishable departments, in-store pharmacies, on-premises fuel centers, and an expanded selection of food and non-food items throughout.
A remodel or expansion provides the quality of facilities and product offerings identical to that of a new store, capitalizing upon the existing customer base. The Company retains the existing customer base by keeping the store in operation during the entire remodeling process.
The Company decides to complete a remodel of an existing store based on its evaluation of the competitive landscape of the local marketplace. A remodel or expansion provides the quality of facilities and product offerings identical to that of a new store, capitalizing upon the existing customer base.
Ingles believes that private label sales help promote customer loyalty and provide a value-priced alternative to national brands. The Company seeks to maintain a reputation for providing friendly service, quality merchandise and customer value and for its commitment to locally-sourced products and community involvement.
The Company seeks to maintain a reputation for providing friendly service, quality merchandise and customer value and for its commitment to locally-sourced products and community involvement. The Company employs various advertising and promotional strategies to reinforce the quality and value of its products.
The Company also owns 29 undeveloped sites suitable for a free-standing store or development by the Company or a third party. The Company’s owned real estate is generally located in the same geographic region as its supermarkets. As of September 30, 2023, Mr. Robert P.
The Company owns the real property for 175 of its supermarkets, either in free-standing stores or as the anchor tenant in a Company-owned shopping center. The Company also owns 29 undeveloped sites suitable for a free-standing store or other development by the Company or a third party.
Beneficial ownership is calculated in accordance with Rule 13d-3 promulgated under the Exchange Act. The Company became publicly traded in September 1987. The Company’s Class A Common Stock is listed on The NASDAQ Global Select Market under the symbol “IMKTA.” The Company’s Class B Common Stock is not publicly listed or traded.
The Company’s Class A Common Stock is listed on The NASDAQ Global Select Market under the symbol “IMKTA.” The Company’s Class B Common Stock is not publicly listed or traded. As of September 28, 2024, Mr. Robert P.
The Ingles Advantage Card is designed to foster customer loyalty by providing information to better understand the Company’s customers’ shopping patterns. The Ingles Advantage Card provides customers with special discounts throughout the Company’s stores and fuel stations. Purchasing and Distribution The Company currently supplies approximately 57% of its supermarkets’ inventory requirements from its modern warehouse and distribution facilities.
The Company promotes these attributes using traditional advertising vehicles including radio, television, direct mail and newspapers, as well as electronic and social media. The Ingles Advantage Card is designed to foster customer loyalty by providing information to better understand the Company’s customers’ shopping patterns. The Ingles Advantage Card provides customers with special discounts throughout the Company’s stores and fuel stations.
KG), Publix Super Markets, Inc., Sprouts Farmers Market, Inc., Target Corporation, Whole Foods Market, and Wal-Mart Stores, Inc. Increasingly over the last few years, competition for consumers’ food dollars has intensified due to the addition of, or increase in, food sections by many types of retailers (physical and online) and by restaurants.
Additionally, competition for consumers’ food dollars has intensified in recent years due to the addition or expansion of food sections by many non-grocery retailers (physical and online) and by restaurants.
Non-food products include fuel centers, pharmacies, health and beauty care products and general merchandise. The Company also offers quality private label items and locally-sourced items throughout its market areas. The Company believes that customer service and convenience, modern stores and competitive prices on a broad selection of quality merchandise are essential to developing and retaining a loyal customer base.
Ingles supermarkets offer customers a wide variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables, and non-food products. Non-food products include fuel centers, pharmacies, health and beauty care products and general merchandise. The Company also offers quality private label items, organic and locally-sourced items throughout its market areas.
The Company has an ongoing renovation and expansion plan to add stores in its target markets and modernize the appearance and layout of its existing stores. The Company’s new and remodeled supermarkets provide an enhanced level of customer convenience in order to accommodate the lifestyle of today’s shoppers.
The Company believes that customer service and convenience, modern stores and competitive prices on a broad selection of quality merchandise are essential to developing and retaining a loyal customer base. The Company has an ongoing renovation and expansion plan to add stores in its target markets and modernize the appearance and layout of its existing stores.
Removed
The Company employs various advertising and promotional strategies to reinforce the quality and value of its products. The Company promotes these attributes using traditional advertising vehicles including radio, television, direct mail and newspapers, as well as electronic and social media.
Added
Impact of Hurricane Helene On September 27, 2024, Hurricane Helene severely impacted western North Carolina, including the area where the Company’s headquarters are located, resulting in catastrophic flooding and destruction, power and communication outages, water outages, major road closures, and loss of life.
Removed
The effects of the COVID-19 pandemic, which began in March 2020, have eased considerably over the fiscal year ended September 30, 2023, but the earlier portion of the pandemic substantially impacted supermarket operations, and some effects have continued through the fiscal year ended September 30, 2023.
Added
For the year ended September 28, 2024, the Company recognized an impairment loss of $30.4 million related to inventory damaged or destroyed by Hurricane Helene. Additionally, the Company recognized a property and equipment impairment loss of $4.5 million for the year ended September 28, 2024 pertaining to the same storm.
Removed
At the onset of the COVID-19 pandemic, the Company implemented several enhanced cleaning and social distancing protocols designed to keep our customers and our associates safe and continued to monitor and update its protocols as the pandemic evolved. Since March 2020, the Company’s stores have experienced increased customer traffic and occasional product shortages due to supply chain issues.
Added
These recorded losses do not include future repairs and rebuilds, nor do they account for revenue lost due to store closures or electronic payment disruptions. The Company’s properties, including its distribution center, were impacted; however, the distribution center returned to full operation within two weeks following the storm. Four stores sustained damage that required that they be temporarily closed.
Removed
The currently tight labor market has impacted the Company’s ability to attract and retain qualified store personnel, but these impacts have not materially affected our operations. The economy has continued to recover from the effects of the pandemic, which has included inflation not seen in decades.
Added
As of the date of this Annual Report on Form 10-K, one of the four stores has reopened and the three remaining stores are scheduled to reopen during 2025.
Removed
Inflation impacts product costs, labor costs and the cost of other goods used by the Company, which could negatively impact our results of Operations.
Added
Due to damage sustained at the distribution center from Hurricane Helene, including power outages and connectivity issues, water outages and road closures, the normal receiving and shipping activities were limited for approximately two weeks after the storm.
Removed
While the COVID-19 pandemic was officially declared to have ended in May 2023, at the present time, we cannot predict how long and to what extent the ongoing effects of the pandemic and inflation will impact our sales and financial performance. The Company receives product recall information from various subscription, government and vendor sources.
Added
The Company’s owned real estate, including undeveloped sites, is generally located in the same geographic region as its supermarkets. Common Stock and Corporate Information The Company has been publicly traded since September 1987.
Removed
During fiscal year 2023, the Company slowed some of its new store and remodeling plans due to inflation and supply chain issues in building materials and equipment, as well as due to the tight labor market conditions for construction labor.
Added
Business The Company operates one primary business segment, retail grocery, on a 52- or 53-week fiscal year ending on the last Saturday in September. The consolidated statements of income for the fiscal years ended September 28, 2024 and September 24, 2022 each consisted of 52 weeks of operations.
Removed
As described above, we cannot currently predict how long these conditions will persist, but the Company has continued to build and remodel stores albeit at what management believes will be a temporarily slower pace.
Added
The consolidated statements of income for the fiscal year ended September 30, 2023 had 53 weeks. Income from operations for the primary business segment, retail grocery sales, includes the charges for impairment losses from Hurricane Helene of $34.9 million.
Removed
The Company may elect to relocate, rather than remodel, certain stores where relocation provides a more convenient location for its customers.
Added
These associates reinforce the Company’s distinctive service-oriented image.
Added
Purchasing and Distribution The Company currently supplies approximately 58% of its supermarkets’ inventory requirements from its modern warehouse and distribution facilities. The Company has 1.65 million square feet of office, warehouse and distribution facilities at its headquarters near Asheville, North Carolina.
Added
The remaining 42% of the Company’s inventory requirements, primarily beverages, pharmacy, fuel, bread and snack foods, are supplied directly to the Company’s supermarkets by local distributors and manufacturers.
Added
The Company retains the existing customer base by keeping the store in operation during the entire remodeling process.
Added
KG), Publix Super Markets, Inc., Sprouts Farmers Market, Inc., Target Corporation, Wal-Mart Stores, Inc., and Whole Foods Market. Supermarket chains generally compete based on location, quality of products, service, price, convenience, product variety, online ordering/delivery capabilities, and store condition.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

10 edited+14 added−7 removed20 unchanged
Biggest changeThe Company is subject to risks related to information systems and data security. The Company’s business is dependent on information technology systems. These complex systems are an important part of ongoing operations. If the Company were to experience disruption in these systems, did not maintain existing systems properly, or did not implement new systems appropriately, operations could suffer.
Biggest changeIf the Company were to experience disruption in these systems, did not maintain existing systems properly, or did not 11 implement new systems appropriately, operations could suffer. The Company is currently undergoing a systematic program to enhance its information technology abilities. The Company has implemented procedures to protect its information technology systems and data necessary to conduct ongoing operations.
The estimates are based on data provided by the respective claims administrators and analyses performed by actuaries engaged by the Company. These estimates can fluctuate if historical trends are not predictive of the future. The majority of the Company’s properties are self-insured for casualty losses and business interruption; however, liability coverage is maintained.
The estimates are based on data provided by the respective claims administrators and analyses performed by actuaries engaged by the Company. These estimates can fluctuate if historical trends are not predictive of the future. The majority of the Company’s store properties are self-insured for casualty losses and business interruption; however, liability coverage is maintained.
Beneficial ownership is calculated in accordance with Rule 13d-3 promulgated under the Exchange Act. 12 The Company is a controlled company under NASDAQ Rules.
Beneficial ownership is calculated in accordance with Rule 13d-3 promulgated under the Exchange Act. The Company is a controlled company under NASDAQ Rules.
Ingle II, has the ability to elect a majority of the Company’s directors, appoint new members of management and approve many actions requiring stockholder approval. Mr. Ingle II’s beneficial ownership represented approximately 72.2% of the combined voting power of all classes of the Company’s capital stock as of September 30, 2023. As a result, Mr.
Ingle II, has the ability to elect a majority of the Company’s directors, appoint new members of management and approve many actions requiring stockholder approval. Mr. Ingle II’s beneficial ownership represented approximately 72.5% of the combined voting power of all classes of the Company’s capital stock as of September 28, 2024. As a result, Mr.
This trend places a higher reliance on effective and efficient information systems. 11 The Company is affected by the availability and wholesale price of fuel and retail fuel prices, all of which can fluctuate quickly and considerably. The Company operates fuel stations at 108 of its store locations.
In recent years, more industry transactions have been online for ordering and fulfillment. This trend places a higher reliance on effective and efficient information systems. The Company is affected by the availability and wholesale price of fuel and retail fuel prices, all of which can fluctuate quickly and considerably. The Company operates fuel stations at 108 of its store locations.
The Company’s compliance with these regulations may require additional capital expenditures and could adversely affect the Company’s ability to conduct the Company’s business as planned.
Various aspects of the Company’s business are subject to federal, state and local laws and various operating regulations. The Company’s compliance with these regulations may require additional capital expenditures and could adversely affect the Company’s ability to conduct the Company’s business as planned.
As a result, the Company’s business may be more susceptible to regional factors than the operations of more geographically diversified competitors. These factors include, among others, changes in the economy, weather conditions, demographics and population. 10 Various aspects of the Company’s business are subject to federal, state and local laws and various operating regulations.
As a result, the Company’s business has been and, in the future, may be, more susceptible to regional factors than the operations of more geographically diversified competitors. These factors include, among others, changes in the economy, weather conditions and natural disasters, demographics and population.
As a result, the Company is exempt from certain of NASDAQ’s corporate governance policies, including the requirements that the majority of Directors be independent (as defined in NASDAQ Rules), and that the Company have a nominating committee for Director candidates. Item 1B. UNRESOLVED STAFF COMMENTS None. Item 1C. CYBERSECURITY Not currently applicable.
As a result, the Company is exempt from certain of NASDAQ’s corporate governance policies, including the requirements that the majority of Directors be independent (as defined in NASDAQ Rules), and that the Company have a nominating committee for Director candidates. The market price and trading volume of our Class A Common Stock may be volatile and could decline significantly.
Compliance with tougher privacy and information security laws and standards, including protection of customer debit and credit card information, may result in higher investments in technology and changes to operational processes. In recent years, more industry transactions have been online for ordering and fulfillment.
The Company cannot, however, be certain that all these systems and data are entirely free from vulnerability to attack. Compliance with tougher privacy and information security laws and standards, including protection of customer debit and credit card information, may result in higher investments in technology and changes to operational processes.
Energy and utility costs have been volatile in recent years. The Company attempts to increase its energy efficiency during store construction and remodeling using energy-saving equipment and construction. Our business, financial condition and results of operations may be materially adversely affected by a resurgence of the COVID-19 pandemic.
Energy and utility costs have been volatile in recent years. The Company attempts to increase its energy efficiency during store construction and remodeling using energy-saving equipment and construction. The Company is subject to risks related to information systems and data security. The Company’s business is dependent on information technology systems. These complex systems are an important part of ongoing operations.
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The unprecedented global outbreak of the novel coronavirus (COVID-19) that began in the first quarter of 2020 has adversely impacted economic activity and conditions worldwide, including workforces, liquidity, capital markets, consumer behavior, supply chains and macroeconomic conditions.
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For example, on September 27, 2024, Hurricane Helene severely impacted western North Carolina, including where the Company’s headquarters are located, resulting in catastrophic flooding and destruction, power and communication outages, major road closures and loss of life.
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While the COVID-19 pandemic was officially declared to have ended in May 2023,and while the direct effects of the COVID-19 pandemic on our business have significantly lessened during the fiscal year ended September 30, 2023, some effects have continued through the fiscal year ended September 30, 2023, and we may continue to be impacted by the continuing effects of the COVID-19 pandemic, including resurgences and variants of COVID-19 or outbreaks of any new viruses or contagions.
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The storm caused damage to certain of the Company’s properties, including its distribution center and impacted the ability of the Company’s stores to report information to the Company’s headquarters.
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These impacts may include difficulties and delays in sourcing, transporting and stocking products: inabilities to staff our stores and warehouse and distribution facilities at adequate levels to conduct our operations, resulting in store closures or operating hour reductions; and incurring significant costs in support of our front-line store team members for enhanced benefits, safety measures and government-mandated wage increases.
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Although the Company largely returned to normal operations within a reasonably short period of time following Hurricane Helene, there can be no assurance that future storms impacting the region will not have more severe consequences with respect to the Company’s operations, which could more significantly and adversely impact the Company’s financial position, cash flow and results of operation.
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The extent to which a future COVID-19 outbreak could impact our business and operating results in the future depends on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants of the virus and the actions to contain or treat their impact, as well as the impact of any new federal, state and local mandates or other regulations associated with COVID-19.
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Twelve Months Ended September 28, September 30, 2024 2023 All items 2.4 % 3.7 % Food at home 1.3 % 2.4 % Energy (6.8) % (0.5) % If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease. 12 We believe our success depends, in substantial part, on our ability to:  anticipate, identify and react to fresh, natural and organic grocery and dietary supplement trends and changing consumer preferences and demographics in a timely manner;  translate market trends into appropriate, innovative, saleable product and service offerings in our stores before our competitors and effectively market these trends to our target customers; and  develop and maintain those relationships that provide us access to the newest on-trend merchandise and customer engagement options on reasonable terms.
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The Company is currently undergoing a systematic program to enhance its information technology abilities. The Company has implemented procedures to protect its information technology systems and data necessary to conduct ongoing operations. The Company cannot, however, be certain that all these systems and data are entirely free from vulnerability to attack.
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Consumer preferences often change rapidly and without warning, moving from one trend to another among many product or retail concepts.
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During fiscal year 2023, inflation reached its highest level in a number of years, impacting food costs, transportation costs, and labor costs.
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Our performance is impacted by trends regarding healthy lifestyles, product attributes, dietary preferences, convenient options, fresh, natural and organic products, meal solutions, ingredient transparency and sustainability, and vitamins and supplements, as well as new and evolving methods of engaging with and delivering our products to our customers.
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Twelve Months Ended September 30, September 24, 2023 2022 All items 3.7 % 8.2 % Food at home 2.4 % 13.0 % Energy (0.5) % 19.8 % Risk Related to Ownership of Our Common Stock The Company’s principal stockholder, Robert P.
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Consumer preferences might shift as a result of, among other things, economic conditions, food safety perceptions, scientific research or findings regarding the benefits or efficacy of such products, national media attention and the cost, attributes or sustainability of these products. A change in consumer preferences away from our offerings would have a material adverse effect on our business.
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Additionally, negative publicity over the safety, efficacy or benefits of any such items, may adversely affect demand for our products, and could result in lower customer traffic, sales, results of operations and cash flows.
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If we are unable to anticipate and satisfy consumer preferences with respect to product offerings and customer engagement options, our sales may decrease, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Risk Related to Ownership of Our Common Stock The Company’s principal stockholder, Robert P.
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The market price of our Class A Common Stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our Class A Common Stock regardless of our operating performance.
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The trading price of our Class A Common Stock may be adversely affected due to a number of factors, most of which we cannot predict or control, such as the following: • fluctuations in our operating results; • a decision by the Board of Directors to reduce or eliminate cash dividends on our common stock; • changes in recommendations or earnings estimates by securities analysts; • general market conditions in our industry or in the economy as a whole; • natural disasters, including the impact of severe weather; and • political instability, war or events of terrorism.
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The payment of dividends on our common stock is at the discretion of our Board of Directors and is not guaranteed. The amount of future dividends that we will pay, if any, will depend upon a number of factors.
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Future dividends will be declared and paid at the sole discretion of the Board of Directors and will depend upon such factors as cash flow generated by operations, profitability, financial condition, cash requirements, future prospects, and other factors deemed relevant by our Board of Directors.
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The right of our Board of Directors to declare dividends, however, is subject to the availability of sufficient funds under North Carolina law to pay dividends. Additionally, the payment of cash dividends is subject to restrictions contained in certain of our financing arrangements. 13 Item 1B. UNRESOLVED STAFF COMMENTS None.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe shopping centers owned by the Company contain an aggregate of 8.6 million square feet of leasable space, of which 4.1 million square feet is used by the Company’s supermarkets. The remainder of the leasable space in these shopping centers is leased or held for lease by the Company to third-party tenants.
Biggest changeThe remainder of the leasable space in these shopping centers is leased or held for lease by the Company to third-party tenants.
See Note 7, “Long-Term Debt” to the Consolidated Financial Statements of this Annual Report on Form 10-K for further details. Leased Properties The Company operates supermarkets at 31 locations leased from various unaffiliated third parties. The Company has six owned store buildings that are on ground leases.
See Note 7, “Long-Term Debt” to the Consolidated Financial Statements of this Annual Report on Form 10-K for further details. Leased Properties The Company operates supermarkets at 23 locations leased from various unaffiliated third parties. The Company has six owned store buildings that are on ground leases.
In addition to base rent, most leases contain provisions that require the Company to pay additional percentage rent (ranging from 0.75% to 1.50%) if sales exceed a specified amount. Rental rates generally range from $3.00 to $7.77 per square foot.
In addition to base rent, most leases contain provisions that require the Company to pay additional percentage rent (ranging from 0.75% to 1.50%) if sales exceed a specified amount. Rental rates generally range from $3.00 to $7.48 per square foot.
Item 2. PROPERTIES Owned Properties The Company owns 167 of its supermarkets either as free-standing locations or in shopping centers where it is the anchor tenant. The Company also owns 29 undeveloped sites which are suitable for a free-standing store or shopping center development.
Item 2. PROPERTIES Owned Properties The Company owns 175 of its supermarkets either as free-standing locations or in shopping centers owned by the Company where it is the anchor tenant. The Company also owns 29 undeveloped sites which are suitable for a free-standing store or shopping center development.
During fiscal 2023, 2022 and 2021, the Company paid cash supermarket rent of $9.4 million, $10.0 million and $10.3 million, respectively. These amounts exclude property taxes, utilities, insurance, repairs, other expenses, and non-cash rent adjustments.
During fiscal 2024, 2023 and 2022, the Company paid cash supermarket rent of $8.3 million, $9.4 million and $10.0 million, respectively. These amounts exclude property taxes, utilities, insurance, repairs, other expenses, and non-cash rent adjustments.
A breakdown by size of the shopping centers owned and operated by the Company is as follows: Size Number Less than 50,000 square feet 19 50,000 – 100,000 square feet 37 More than 100,000 square feet 37 Total 93 The Company owns a 1,649,000 square foot facility, which is strategically located between Interstate 40 and Highway 70 near Asheville, North Carolina, as well as the 119 acres of land on which it is situated.
A breakdown by size of the shopping centers owned and operated by the Company as of September 28, 2024 was as follows: Size Number Less than 50,000 square feet 20 50,000 – 100,000 square feet 40 More than 100,000 square feet 41 Total 101 The Company owns a 1,649,000 square foot facility, which is strategically located between Interstate 40 and Highway 70 near Asheville, North Carolina, as well as the 119 acres of land on which it is situated.
The following table summarizes lease expiration dates as of September 30, 2023, with respect to the initial and any renewal option terms of leased supermarkets properties: Year of Expiration Number of (Including Renewal Terms) Leases Expiring 2023-2034 5 2035-2049 1 2050 or after 26 Management believes that the long-term rent stability provided by these leases is a valuable asset of the Company. ‎ 13
The following table summarizes lease expiration dates as of September 28, 2024, with respect to the initial and any renewal option terms of leased supermarkets properties: Year of Expiration Number of (Including Renewal Terms) Leases Expiring 2024-2035 4 2036-2050 1 2051 or after 19 Management believes that the long-term rent stability provided by these leases is a valuable asset of the Company.
The Company owns numerous outparcels and other acreage located adjacent to the shopping centers and supermarkets it owns. Real estate owned by the Company is generally located in the same geographic regions as its supermarkets.
The Company additionally owns various outparcels and other acreage located adjacent to the shopping centers and supermarkets it owns. Real estate owned by the Company is generally located in the same geographic regions as its supermarkets. All of the Company’s shopping center rental operations are part of the Company’s “other” segment.
The Company’s milk processing and packaging subsidiary, Milkco, Inc., owns a 140,000 square foot manufacturing and storage facility in Asheville, North Carolina. In addition to the plant, the 20-acre property includes truck cleaning and fuel storage facilities. Certain long-term debt of the Company is secured by the owned properties.
The Company’s milk processing and packaging subsidiary, Milkco, Inc., which did not sustain physical damage as a result of Hurricane Helene, owns a 140,000 square foot manufacturing and storage facility in Asheville, North Carolina. In addition to the plant, the 20-acre property includes truck cleaning and fuel storage facilities.
Added
See Note 1 to the Consolidated Financial Statements contained in this Annual Report on Form 10-K. The shopping centers owned by the Company contain an aggregate of 9.3 million square feet of leasable space, of which 4.5 million square feet is used by the Company’s supermarkets.
Added
However, the water outage and ban on water usage, which was not lifted until November 2024, did impact operations and will have an impact on results for the first quarter of fiscal year 2025. Certain long-term debt of the Company is secured by the owned properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS Various legal proceedings and claims arising in the ordinary course of business are pending against the Company. In the opinion of management, the ultimate liability, if any, from all pending legal proceedings and claims would not materially affect the Company’s business, financial condition, results of operations or cash flows. Item 4. MINE SAFETY DISCLOSURES Not applicable.
Biggest changeItem 3. LEGAL PROCEEDING S Various legal proceedings and claims arising in the ordinary course of business are pending against the Company. In the opinion of management, the ultimate liability, if any, from all pending legal proceedings and claims would not materially affect the Company’s business, financial condition, results of operations or cash flows. 15 Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeReturns of the companies included in the peer group reflected below have been weighted according to each company’s stock market capitalization at the beginning of each section for which a return is presented.
Biggest changeThe comparisons cover the five-years ended September 28, 2024 and assume that $100 was invested after the close of the market on September 28, 2019, and that dividends were reinvested quarterly. Returns of the companies included in the peer group reflected below have been weighted according to each company’s stock market capitalization at the beginning of each year presented.
Repurchase of Equity Securities None. 14 Stock Performance Graph Set forth below are a graph and accompanying table comparing the five-year cumulative total stockholder return on the Class A Common Stock with the five-year cumulative total return of (i) the S&P 500 Comprehensive-Last Trading Day Index and (ii) a peer group of companies in the Company's line of business.
Repurchase of Equity Securities None. 16 Stock Performance Graph Set forth below are a graph and accompanying table comparing the five-year cumulative total stockholder return on the Class A Common Stock with the five-year cumulative total return of (i) the S&P 500 Comprehensive-Last Trading Day Index and (ii) a peer group of companies in the Company's line of business.
During both fiscal 2023 and fiscal 2022, the Company paid annual dividends totaling $0.66 per share of Class A Common Stock and $0.60 per share of Class B Common Stock, paid in quarterly installments of $0.165 and $0.15 per share, respectively.
During both fiscal 2024 and fiscal 2023, the Company paid annual dividends totaling $0.66 per share of Class A Common Stock and $0.60 per share of Class B Common Stock, paid in quarterly installments of $0.165 and $0.15 per share, respectively.
Dividends The Company has paid cash dividends on its Common Stock in each of the past 39 fiscal years, except for the 1984 fiscal year when the Company paid a 3% stock dividend.
Dividends The Company has paid cash dividends on its Common Stock in each of the past 40 fiscal years, except for the 1984 fiscal year when the Company paid a 3% stock dividend.
The 2023 peer group consists of the following companies: Koninklijke Ahold Delhaize N.V., Weis Markets, Inc., The Kroger Co., Supervalu Inc., SpartanNash Co., Sprouts Farmers Markets, Inc., and Village Super Market, Inc.
The 2024 peer group consists of the following companies: Koninklijke Ahold Delhaize N.V., Weis Markets, Inc., The Kroger Co., SpartanNash Co., Sprouts Farmers Markets, Inc., and Village Super Market, Inc.
The Company’s last dividend payment was made on October 19, 2023 to common stockholders of record on October 12, 2023. For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements of this Annual Report on Form 10-K.
The Company’s last dividend payment was made on October 17, 2024 to common stockholders of record on October 10, 2024. For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements of this Annual Report on Form 10-K.
As of November 27, 2023, there were approximately 315 holders of record of the Company’s Class A Common Stock and 90 holders of record of the Company’s Class B Common Stock.
As of December 24, 2024, there were approximately 307 holders of record of the Company’s Class A Common Stock and 85 holders of record of the Company’s Class B Common Stock.
INGLES MARKETS, INCORPORATED ‎ COMPARATIVE RETURN TO STOCKHOLDERS ‎ 15 INDEXED RETURNS OF INITIAL $100 INVESTMENT * Company/Index 2019 2020 2021 2022 2023 Ingles Markets, Incorporated Class A Common Stock $ 115.89 $ 110.67 $ 201.35 $ 253.47 $ 235.26 S&P 500 Comprehensive – Last Trading Day Index $ 104.25 $ 120.05 $ 156.07 $ 131.92 $ 160.44 Peer Group $ 100.62 $ 128.92 $ 152.76 $ 150.51 $ 168.35 *Assumes $100 invested in the Class A Common Stock of Ingles Markets, Incorporated after the close of the market on September 29, 2018.
INGLES MARKETS, INCORPORATED ‎ COMPARATIVE RETURN TO STOCKHOLDERS ‎ 17 INDEXED RETURNS OF INITIAL $100 INVESTMENT * Company/Index 2020 2021 2022 2023 2024 Ingles Markets, Incorporated Class A Common Stock $ 95.49 $ 173.74 $ 218.71 $ 203.00 $ 202.06 S&P 500 Comprehensive – Last Trading Day Index $ 115.15 $ 149.70 $ 126.54 $ 153.89 $ 209.84 Peer Group $ 128.12 $ 151.81 $ 149.57 $ 167.31 $ 215.67 *Assumes $100 invested in the Class A Common Stock of Ingles Markets, Incorporated after the close of the market on September 28, 2019.
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The comparisons cover the five-years ended September 30, 2023 and assume that $100 was invested after the close of the market on September 29, 2018, and that dividends were reinvested quarterly.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChanges in retail grocery sales for the fiscal year ended September 30, 2023 are summarized as follows (in thousands): Total retail grocery sales for the fiscal year ended September 24, 2022 $ 5,475,700 Comparable store sales increase 75,615 Effect of 53rd week 106,715 Sales growth from stores opened fiscal 2023 3,099 Other 2,807 Total retail grocery sales for the fiscal year ended September 30, 2023 $ 5,663,936 Increased sales for fiscal year 2023 were due to comparable store sales through enhanced loyalty programs and special offers, as well as the additional 53 rd week in fiscal year 2023.
Biggest changeThe “Perishables” category includes meat, produce, deli and bakery. 20 Changes in retail grocery sales for the fiscal year ended September 28, 2024 are summarized as follows (in thousands): Total retail grocery sales for the fiscal year ended September 30, 2023 $ 5,663,936 Comparable store sales decrease (130,873) Effect of 53rd week in fiscal year 2023 (106,715) Other (4,557) Total retail grocery sales for the fiscal year ended September 28, 2024 $ 5,421,791 Gross Profit.
The fair market value of the interest rate swaps is measured quarterly with adjustments recorded in other comprehensive income. The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under the Company’s Line, Bonds and 2031 Notes indenture in the event of default under any one instrument.
The fair market value of the interest rate swaps is measured quarterly with adjustments recorded in other comprehensive income. The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under the Company’s Line, Bonds and the Notes indenture in the event of default under any one instrument.
These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital 16 spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred.
These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred.
Liquidity and Capital Resources Capital Expenditures The Company believes that a key to its ability to continue to increase sales and develop a loyal customer base is providing conveniently located, clean and modern stores which provide customers with good service and an increasingly diverse selection of competitively priced products.
Liquidity and Capital Resources Capital Expenditures The Company believes that a key to its ability to continue to increase sales and develop a loyal customer base is providing conveniently located, clean and modern stores that provide customers with good service and an increasingly diverse selection of competitively priced products.
Quarterly Cash Dividends Since December 27, 1993, the Company has paid regular quarterly cash dividends of $0.165 per share on its Class A Common Stock and $0.15 per share on its Class B Common Stock for an annual rate of $0.66 and $0.60 per share, respectively. The Company expects to continue paying regular cash dividends on a quarterly basis.
Quarterly Cash Dividends Since December 27, 1993, the Company has paid regular quarterly cash dividends of $0.165 per share on its Class A Common Stock and $0.15 per share on its Class B Common Stock for an annual rate of $0.66 and $0.60 per share, respectively. 23 The Company expects to continue paying regular cash dividends on a quarterly basis.
In connection with this review, the Company assesses the trends present in the markets in which it competes. Generally, it is difficult to predict whether a trend will continue for a period of time and it is possible that new trends will develop which will affect an existing trend.
In connection with this review, the Company assesses the trends present in the markets in which it competes. Generally, it is difficult to predict whether a trend will continue for a sustained period of time and it is possible that new trends will develop that will affect an existing trend.
Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%. The interest rate swap effectively hedges floating rate debt in the same 20 amount as the current notional amount of the interest swap.
Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap.
The number of projects may also fluctuate due to the varying costs of the types of projects pursued including new stores, major store remodels/expansions, and build-out of tenant space under the long-term leases. The Company makes decisions on the allocation of capital expenditure dollars based on many factors including the competitive environment, other Company capital initiatives and its financial condition.
The number of projects may also fluctuate due to the types of projects pursued including new stores, major store remodels/expansions, and build-out of tenant space under the long-term leases. The Company makes decisions on the allocation of capital expenditure dollars based on many factors including the competitive environment, other Company capital initiatives, material costs and its financial condition.
Additional financing sources for capital expenditures could include borrowings under the Company’s $150 million of committed line of credit (described below), other borrowings that could be collateralized by unencumbered real property and equipment with a net book value of approximately $1.2 billion, and the public debt or equity markets.
Additional financing sources for capital expenditures could include borrowings under the Company’s $150 million committed line of credit (described below), other borrowings that could be collateralized by unencumbered real property and equipment with a net book value of approximately $1.5 billion, and the public debt or equity markets.
In September 2017, the Company refinanced approximately $60 million of secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate, which matures in October 2027. The Company has an interest rate swap agreement for a current notional amount of $24.5 million at a fixed rate of 3.962%.
In September 2017, the Company refinanced approximately $60 million of secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate, which matures in October 2027. The Company has an interest rate swap agreement for a current notional amount of $18.5 million at a fixed rate of 3.962%.
Economic conditions may affect purchasing patterns with regard to meal replacement items, private label purchases, promotions and product variety. The Company and its customers will continue to become more environmentally aware, evidenced by the Company’s increased recycled waste paper and pallets and customers’ increased usage of reusable shopping bags. Volatile petroleum costs will impact utility and distribution costs, plastic supplies cost and may change customer shopping and dining behavior. Retail fuel costs and retail prices will continue to be volatile, affecting the Company’s fuel sales and gross margin.
Economic conditions may affect purchasing patterns with regard to meal replacement items, private label purchases, promotions and product variety. The Company and its customers will continue to become more environmentally aware, evidenced by the Company’s transition to more energy efficient lighting and refrigerants, increased recycled waste paper and pallets, and customers’ increased usage of reusable shopping bags. Volatile petroleum costs will impact utility and distribution costs, plastic supplies cost and may change customer shopping and dining behavior. Retail fuel costs and retail prices will continue to be volatile, affecting the Company’s fuel sales and gross margin.
Ingles’ capital expenditure plans for fiscal year 2024 include investments of approximately $120 to $170 million. The Company currently plans to dedicate the majority of its fiscal 2024 capital expenditures to continued improvement of its store base, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment and improvements to the Company’s milk processing plant.
Ingles’ capital expenditure plans for fiscal year 2025 include investments of approximately $120 to $160 million. The Company currently plans to dedicate the majority of its fiscal 2025 capital expenditures to continued improvement of its store base, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment and improvements to the Company’s milk processing plant.
Major capital expenditures included the following: 2023 2022 New stores 0 0 Store sites/land parcels purchased 15 6 New fuel stations added 1 0 19 Capital expenditures include upgrading and replacing store equipment, technology investments, those related to the Company’s distribution operation and its milk processing plant, and expenditures for stores to open in subsequent fiscal years.
Major capital expenditures included the following: 2024 2023 New stores 0 0 Store sites/land parcels purchased 16 15 New fuel stations added 0 1 Capital expenditures include upgrading and replacing store equipment, technology investments, those related to the Company’s distribution operation and its milk processing plant, and expenditures for stores to open in subsequent fiscal years.
The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments, the amount of such dividends, and the form in which the dividends are paid (cash or stock) depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant.
The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments, the amount of such dividends, and the form in which the dividends are paid (cash or stock) depends upon the Company’s results of operations, and financial condition, as well as other factors that the Board of Directors deems relevant.
The Company has an interest rate swap agreement for a current notional amount of $124.6 million at a fixed rate of 2.998%. Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%.
The Company has an interest rate swap agreement for a current notional amount of $116.9 million at a fixed rate of 2.998%. Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%.
In addition, the Company focuses on selling products to its customers through the development of certified organic products, bakery departments and prepared foods including delicatessen sections. As of September 30, 2023, the Company operated 114 in-store pharmacies and 108 fuel stations. Ingles also operates a fluid dairy and earns shopping center rentals.
In addition, the Company focuses on selling products to its customers through the development of certified organic products, bakery departments and prepared foods including delicatessen sections. As of September 28, 2024, the Company operated 115 in-store pharmacies and 108 fuel stations. Ingles also operates a fluid dairy and earns shopping center rentals.
These amounts were inclusive of expected recoveries from excess cost insurance or other sources that are recorded as receivables of $4.3 million at September 30, 2023 and $4.0 million at September 24, 2022. Asset Impairments The Company accounts for the impairment of long-lived assets in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 360.
These amounts were inclusive of expected 18 recoveries from excess cost insurance or other sources that are recorded as receivables of $4.1 million at September 28, 2024 and $4.3 million at September 30, 2023. Asset Impairments The Company accounts for the impairment of long-lived assets in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 360.
Among other things, planned expenditures for any given future fiscal year will be affected by the availability of financing, which can affect both the number of projects pursued at any given time and the cost of those projects.
Among other things, planned expenditures for any given future fiscal year will be affected by the availability of financing, which can affect both the number of projects pursued at any given time and aggregate investment by the Company in those projects.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Ingles Annual Report on Form 10-K for the year ended September 24, 2022, filed with the SEC on November 23, 2022, for a discussion of the year ended September 24, 2022 as compared to September 25, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Ingles Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on November 29, 2023, for a discussion of the year ended September 30, 2023 as compared to September 24, 2022.
Vendor advertising allowances recorded as a reduction of advertising expense totaled $8.5 million, $7.1 million, and $8.1 million for the fiscal years ended September 30, 2023, September 24, 2022, and September 25, 2021, respectively.
Vendor advertising allowances recorded as a reduction of advertising expense totaled $8.9 million, $8.5 million, and $7.1 million for the fiscal years ended September 28, 2024, September 30, 2023, and September 24, 2022, respectively.
Comparisons of fiscal year 2023 to fiscal year 2022 are affected by the difference in the number of weeks in each year. Fiscal year 2023 had 53 weeks and fiscal year 2022 had 52 weeks. Net income as a percentage of sales was 3.6% for fiscal year 2023 compared with 4.8% for fiscal year 2022.
Comparisons of fiscal year 2024 to fiscal year 2023 are affected by the difference in the number of weeks in each year. Fiscal year 2024 had 52 weeks and fiscal year 2023 had 53 weeks. Net income as a percentage of sales was 1.9% for fiscal year 2024 compared with 3.6% for fiscal year 2023.
These factors may include, among others, resurgence of the COVID-19 pandemic virus, increased competition, changing regional and national economic conditions, adverse climatic conditions affecting food production and delivery and changing demographics as well as the additional factors discussed above and elsewhere under “Item 1A.
These factors may include, among others, increased competition, changing regional and national economic conditions, adverse climatic conditions affecting food production and delivery and changing demographics as well as the additional factors discussed above and elsewhere under “Item 1A.
Fiscal Year Ended September 2023 2022 2021 Net sales 100.0% 100.0% 100.0% Gross profit 23.8 24.9 26.1 Operating and administrative expenses 18.9 18.3 19.3 Gain from sale or disposal of assets 0.1 — 0.2 Income from operations 5.0 6.6 7.0 Other income, net 0.2 — 0.1 Interest expense 0.4 0.4 0.5 Income before income taxes 4.8 6.4 6.6 Income tax expense 1.2 1.6 1.6 Net income 3.6 4.8 5.0 17 Fiscal Year Ended September 30, 2023 Compared to the Fiscal Year Ended September 24, 2022 Net income for the fiscal year ended September 30, 2023 was $210.8 million, compared with net income of $272.8 million for the fiscal year ended September 24, 2022.
Fiscal Year Ended September September 28, September 30, September 24, 2024 2023 2022 Net sales 100.0% 100.0% 100.0% Gross profit 23.0 23.8 24.9 Operating and administrative expenses 20.6 18.9 18.3 Gain from sale or disposal of assets 0.2 0.1 — Income from operations 2.6 5.0 6.6 Other income, net 0.3 0.2 — Interest expense 0.4 0.4 0.4 Income before income taxes 2.5 4.8 6.4 Income tax expense 0.6 1.2 1.6 Net income 1.9 3.6 4.8 Fiscal Year Ended September 28, 2024 Compared to the Fiscal Year Ended September 30, 2023 Net income for the fiscal year ended September 28, 2024 was $105.5 million, compared with net income of $210.8 million for the fiscal year ended September 30, 2023.
Capital expenditures totaled $173.6 million and $119.6 million for fiscal years 2023 and 2022, respectively, with the increase driven primarily by the purchase of new sites and land parcels.
Capital expenditures totaled $210.9 million and $173.6 million for fiscal years 2024 and 2023, respectively, with the increase driven primarily by the purchase of new sites and land parcels.
Inflation in the cost of goods and increases in operating expenses due to the competition in the labor market contributed to this decrease. Net Sales . Net sales for the fiscal year ended September 30, 2023 totaled $5.89 billion, compared with $5.68 billion for the fiscal year ended September 24, 2022.
Inflation in the cost of goods and increases in operating expenses due to increased labor market competition contributed to this decrease. Net Sales . Net sales for the fiscal year ended September 28, 2024 totaled $5.64 billion, compared with $5.89 billion for the fiscal year ended September 30, 2023.
Vendor allowances applied as a reduction of merchandise costs totaled $128.9 million, $110.6 million and $116.3 million for the fiscal years ended September 30, 2023, September 24, 2022, and September 25, 2021, respectively.
Vendor allowances applied as a reduction of merchandise costs totaled $146.9 million, $128.9 million and $110.6 million for the fiscal years ended September 28, 2024, September 30, 2023, and September 24, 2022, respectively.
The Company believes that the following trends are likely to continue for at least the next fiscal year: The supermarket industry will remain highly competitive and will be characterized by industry consolidation, fragmented food retail platforms, and continued competition from super centers and other non-supermarket operators. Traditional supermarket products will be acquired by customers in new and diverse ways, including online ordering, home delivery and pre-picked for customer pickup. Economic conditions will continue to affect customer behavior.
The Company believes that the following trends are likely to continue for at least the next fiscal year: The impact of Hurricane Helene due to physical damage to stores, water outage and ban and connectivity issues, will impact the 2025 first quarter and fiscal year 2025 results. The supermarket industry will remain highly competitive and will be characterized by industry consolidation, fragmented food retail platforms, and continued competition from super centers and other non-supermarket operators. Traditional supermarket products will be acquired by customers in new and diverse ways, including online ordering, home delivery and pre-picked for customer pickup. Economic conditions will continue to affect customer behavior.
Basic and diluted earnings per share for Class B Common Stock were each $10.32 for the fiscal year ended September 30, 2023 compared with $13.35 of basic and diluted earnings per share for the fiscal year ended September 24, 2022. Fiscal Year Ended September 24, 2022 Compared to the Fiscal Year Ended September 25, 2021 See “Item 7.
Basic and diluted earnings per share for Class B Common Stock were each $5.16 for the fiscal year ended September 28, 2024 compared with $10.32 of basic and diluted earnings per share for the fiscal year ended September 30, 2023. 21 Fiscal Year Ended September 30, 2023 Compared to the Fiscal Year Ended September 24, 2022 See “Item 7.
The Company’s self-insurance reserves totaled $32.9 million and $31.0 million for employee group insurance, workers’ compensation insurance and general liability insurance at September 30, 2023 and September 24, 2022, respectively.
The Company’s self-insurance reserves totaled $35.9 million and $32.9 million for employee group insurance, workers’ compensation insurance and general liability insurance at September 28, 2024 and September 30, 2023, respectively.
The “Non-foods” category includes alcoholic beverages, tobacco, pharmacy, and health/beauty/cosmetic products. The “Perishables” category includes meat, produce, deli and bakery.
The “Non-foods” category includes alcoholic beverages, tobacco, pharmacy, and health/beauty/cosmetic products.
Basic and diluted earnings per share for Class A Common Stock were $11.35 and $11.10, respectively, for the fiscal year ended September 30, 2023 compared with $14.69 and $14.36, respectively, for the fiscal year ended September 24, 2022.
Basic and diluted earnings per share for Class A Common Stock were $5.68 and $5.56, respectively, for the fiscal year ended September 28, 2024 compared with $11.35 and $11.10, respectively, for the fiscal year ended September 30, 2023.
As of September 30, 2023, the Company was in compliance with these covenants. Under the most restrictive of these covenants, the Company would have been permitted to incur approximately $1.8 billion of additional borrowings (including borrowings under the Line) as of September 30, 2023.
As of September 28, 2024, the Company was in compliance with these covenants. Under the most restrictive of these covenants, the Company would have been permitted to incur approximately $945.5 million of additional borrowings (including borrowings under the Line) as of September 28, 2024.
The number of transactions (excluding fuel) increased 2.9% while the average transaction size (excluding fuel) increased by 0.9%. Comparing fiscal 2023 with 2022, fuel gallons sold decreased 0.4% and per gallon fuel prices decreased 10.2%.
The number of transactions (excluding fuel) decreased 0.3% while the average transaction size (excluding fuel) decreased by 1.4%. Comparing fiscal year 2024 with 2023, fuel gallons sold decreased 5.5% and per gallon fuel prices decreased 3.3%.
In December 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for the construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036.
At September 28, 2024, the Company had no borrowings outstanding under the Line. In December 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for the construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”).
Sales by product category for the fiscal years ended September 30, 2023 and September 24, 2022 were as follows: Fiscal Year Ended September (dollars in thousands) 2023 2022 Grocery $ 2,062,416 $ 1,940,414 Non-foods 1,326,907 1,204,443 Perishables 1,482,089 1,445,042 Fuel 792,524 885,801 Total retail grocery $ 5,663,936 $ 5,475,700 The “Grocery” category includes grocery, dairy and frozen foods.
Sales by product category for the fiscal years ended September 28, 2024 and September 30, 2023 were as follows: (dollars in thousands) 2024 2023 Grocery $ 1,983,198 $ 2,062,416 Non-foods 1,273,324 1,326,907 Perishables 1,441,039 1,482,089 Fuel 724,230 792,524 Total retail grocery $ 5,421,791 $ 5,663,936 The “Grocery” category includes grocery, dairy and frozen foods.
The purpose of these incentives and allowances is generally to help defray the costs incurred by the Company for stocking, advertising, promoting and selling the applicable vendor’s products. These allowances generally relate to short term arrangements with vendors, often relating to a period of one month or less and are negotiated on a purchase-by-purchase or transaction-by-transaction basis.
These allowances generally relate to short term arrangements with vendors, often relating to a period of one month or less and are negotiated on a purchase-by-purchase or transaction-by-transaction basis.
In fiscal years with 53 weeks, such as 2023, management analyzes comparable stores sales for the 53 weeks of the year with the corresponding 52 calendar weeks of the previous year plus one additional week. On this basis, retail grocery comparable store sales excluding fuel increased 4.0% for fiscal 2023 compared with 2022.
Management analyzes comparable stores sales for the 52 weeks of fiscal year 2024 with the corresponding 52 calendar weeks of the 53 week fiscal year 2023. On this basis, retail grocery comparable store sales excluding fuel decreased 1.7% for fiscal year 2024 compared to fiscal year 2023.
The Company’s cash used by net financing activities totaled $35.0 million and $30.6 million for fiscal years 2023 and 2022, respectively. The U.S. Dollar LIBOR panel ceased following June 30, 2023, and the Company’s debt agreements and interest rate swaps that utilized LIBOR discontinued the use of LIBOR and adopted the Secured Overnight Financing Rate (“SOFR”).
Dollar LIBOR panel ceased following June 30, 2023, and the Company’s debt agreements and interest rate swaps that utilized LIBOR discontinued the use of LIBOR and adopted the Secured Overnight Financing Rate (“SOFR”).
Excluding fuel, which does not have significant direct operating expenses, the ratio of operating expenses to sales was 21.7% for fiscal year 2023 compared with 21.5% for fiscal year 2022. 18 A breakdown of the major increases and (decreases) in operating and administrative expenses is as follows.
As a percentage of sales, operating and administrative expenses were 20.6% and 18.9% for fiscal years 2024 and 2023, respectively. Excluding fuel, which does not have significant direct operating expenses, the ratio of operating expenses to sales was 23.4% for fiscal year 2024 compared with 21.7% for fiscal year 2023.
Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, such financial institutions hold the Bonds until December 2029, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014.
The Project was completed in 2012, and the final maturity date of the Bonds is January 1, 2036. Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, such financial institutions hold the Bonds until December 2029, subject to certain events.
The outstanding aggregate principal amount of the Bonds was $54.4 million at September 30, 2023. The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.
Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014. The outstanding aggregate principal amount of the Bonds was $49.9 million at September 28, 2024. The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.
The Company has an ongoing renovation and expansion plan to modernize the appearance and layout of its existing stores. Sales from replacement stores, major remodels and the addition of fuel stations to existing stores are included in the comparable store sales calculation from the date of completion of the replacement, remodel or addition.
Sales from replacement stores, major remodels and the addition of fuel stations to existing stores are included in the comparable store sales calculation from the date of completion of the replacement, remodel or addition. A replacement store is a newly opened store that replaces an existing nearby store that is closed.
The Line allows the Company to issue up to $10.0 million in letters of credit, of which none were issued at September 30, 2023. The Company is not required to maintain compensating balances in connection with the Line. At September 30, 2023, the Company had no borrowings outstanding under the Line.
The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which none were issued at September 28, 2024. The Company is not required to maintain compensating balances in connection with the Line.
The consolidated statements of income for the fiscal year ended September 30, 2023 had 53 weeks. The consolidated statements of income for fiscal years September 24, 2022, and September 25, 2021 each consisted of 52 weeks of operations. Comparable Store Sales Comparable store sales are defined as sales by grocery stores in operation for five full fiscal quarters.
The consolidated statements of income for the fiscal years ended September 28, 2024 and September 24, 2022 each consisted of 52 weeks of operations. The consolidated statements of income for the fiscal year ended September 30, 2023 consisted of 53 weeks.
As a percentage of sales, gross profit totaled 23.8% for the fiscal year ended September 30, 2023 as compared to 24.9% for the fiscal year ended September 24, 2022. Retail grocery gross profit as a percentage of total sales (excluding fuel) decreased 182 basis points in fiscal year 2023 compared with fiscal year 2022.
The decrease in gross profit resulted primarily from the $30.4 million in inventory loss due to Hurricane Helene. Retail grocery gross profit as a percentage of total sales (excluding fuel) decreased 0.9 basis points in fiscal year 2024, compared with fiscal year 2023.
Comparable store sales for the fiscal year ended September 30, 2023, included 198 stores and, for the fiscal year ended September 24, 2022, comparable store sales included 197 stores. The following table sets forth, for the periods indicated, selected financial information as a percentage of net sales.
The following table sets forth, for the periods indicated, selected financial information as a percentage of net sales.
This compares with an income tax expense totaling $88.5 million and an effective tax rate of 24.5% for fiscal year 2022. Net Income. Net income totaled $210.8 million for the fiscal year ended September 30, 2023 compared with net income of $272.8 million for the fiscal year ended September 24, 2022.
Net income totaled $105.5 million for the fiscal year ended September 28, 2024 compared with net income of $210.8 million for the fiscal year ended September 30, 2023.
Construction commitments at September 30, 2023 totaled $3.0 million. Liquidity The Company generated $266.4 million of cash from operations in fiscal 2023 compared with $339.5 million for fiscal year 2022. The decrease resulted primarily from a $61.9 million decrease in net income for fiscal year 2023 compared with fiscal 2022.
Construction commitments at September 28, 2024 totaled $6.2 million. Liquidity The Company generated $262.5 million of cash from operations in fiscal 2024 compared with $266.4 million for fiscal year 2023. Cash used by investing activities for fiscal year 2024 totaled $206.2 million compared with $170.1 million for fiscal year 2023.
Gain from Sale or Disposal of Assets. Gains on sale or disposal of assets totaled $2.8 million for fiscal year 2023 and $1.4 million for fiscal year 2022. Other Income, Net. Other income, net totaled $8.3 million and $5.8 million for the fiscal years ended September 30, 2023 and September 24, 2022, respectively.
Gain from Sale or Disposal of Assets. Gains on sale or disposal of assets totaled $9.1 million for fiscal year 2024 and $2.8 million for fiscal year 2023. The increase was primarily related to the swap of shopping center properties that occurred in January 2024. Other Income, Net.
Total debt was $550.2 million at the end of fiscal year 2023 compared with $571.9 million at the end of fiscal year 2022. Income Taxes. Income tax expense totaled $67.7 million for fiscal year 2023, reflecting an effective tax rate of 24.3%.
Interest expense totaled $21.9 million for the fiscal year ended September 28, 2024 and $22.1 million for the fiscal year ended September 30, 2023. Total debt was $532.6 million at the end of fiscal year 2024 compared with $550.2 million at the end of fiscal year 2023. Income Taxes.
New Accounting Pronouncements For new accounting pronouncements, see Note 1 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. Outlook and Trends in the Company’s Markets The COVID-19 pandemic that began in March 2020 substantially impacted supermarket operations during fiscal years 2020, 2021 and 2022.
New Accounting Pronouncements For new accounting pronouncements, see Note 1 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. Outlook and Trends in the Company’s Markets The Company continually assesses and modifies its business model to meet the changing needs and expectations of its customers.
In June 2021, the Company issued at par $350.0 million aggregate principal amount of 4.00% senior notes due 2031 (the “2031 Notes”) and used a portion of the proceeds to redeem the remaining outstanding $295.0 million principal amount of the Company’s 5.75% senior notes due.
In June 2021, the Company issued at par $350.0 million aggregate principal amount of 4.00% senior notes due 2031 (the “Notes”). 22 The Company has a $150.0 million unsecured senior line of credit (the “Line”) that matures in June 2026.
Gross Profit. Gross profit for the fiscal year ended September 30, 2023 decreased $10.9 million, or 0.77%, to $1.40 billion compared with $1.42 billion for the fiscal year ended September 24, 2022.
Gross profit for the fiscal year ended September 28, 2024 decreased $105.1 million, or 7.5%, to $1.3 billion compared with $1.4 billion for the fiscal year ended September 30, 2023. As a percentage of sales, gross profit totaled 23.0% for the fiscal year ended September 28, 2024 as compared to 23.8% for the fiscal year ended September 30, 2023.
Cash used by investing activities for fiscal year 2023 totaled $170.1 million compared with $112.0 million for fiscal year 2022. The Company’s most significant investing activity is capital expenditures, which increased in fiscal year 2023 as compared to fiscal year 2022.
The increase in cash used in investing activities was primarily due to capital expenditures, which increased by $37.3 in fiscal year 2024 as compared to fiscal year 2023. The Company’s cash used by net financing activities totaled $31.2 million and $35.0 million for fiscal years 2024 and 2023, respectively. The U.S.
Operating and administrative expenses increased $75.2 million, or 7.2%, to $1.1 billion for the fiscal year ended September 30, 2023, from $1.0 billion for the fiscal year ended September 24, 2022. As a percentage of sales, operating and administrative expenses were 18.9% and 18.3% for fiscal years 2023 and 2022, respectively.
The gross margin decrease was primarily due to the inventory impairment loss of $30.4 million as a result of Hurricane Helene. Operating and Administrative Expenses. Operating and administrative expenses increased $46.4 million, or 4.2%, to $1.2 billion for the fiscal year ended September 28, 2024 from $1.1 billion for the fiscal year ended September 30, 2023.
Vendor Allowances The Company receives funds for a variety of merchandising activities from the many vendors whose products the Company buys for resale in its stores. These incentives and allowances are primarily composed of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts.
For the year ended September 28, 2024, the Company recognized a property and equipment impairment loss of $4.5 million pertaining to Hurricane Helene. Vendor Allowances The Company receives funds for a variety of merchandising activities from the many vendors whose products the Company buys for resale in its stores.
A replacement store is a newly opened store that replaces an existing nearby store that is closed. A major remodel entails substantial remodeling of an existing store and may include additional retail square footage.
A major remodel entails substantial remodeling of an existing store and may include additional retail square footage. Comparable store sales for the fiscal years ended September 28, 2024 and September 30, 2023 included 198 stores.
Other income consists primarily of interest earned and sales of waste paper and packaging. Interest Expense. Interest expense totaled $22.1 million for the fiscal year ended September 30, 2023 and $21.5 million for the fiscal year ended September 24, 2022.
Other income, net totaled $14.2 million and $8.3 million for the fiscal years ended September 28, 2024 and September 30, 2023, respectively. Other income consists primarily of interest earned, which increased for the 2024 fiscal year due to a combination of higher deposits in interest bearing accounts and higher rates of interest earned on the Company’s cash balances. Interest Expense.
Removed
The gross margin decrease was primarily due to inflation and supply chain factors that impacted prices and mix of products sold.
Added
Recent Developments On September 27, 2024, Hurricane Helene severely impacted western North Carolina, including where the Company’s headquarters are located, resulting in catastrophic flooding and destruction, power and communication outages, water outages and ban on usage, major road closures and loss of life.
Removed
In addition to the direct product cost, the cost of goods sold line item for the grocery segment includes inbound freight charges, which generally increased in fiscal year 2023 as compared to fiscal year 2022, and increased costs related to the Company’s distribution network, including the impact of higher diesel prices. Operating and Administrative Expenses.
Added
The storm caused damage to certain of the Company’s properties and temporarily impacted the ability of the Company’s stores to report information to the Company’s headquarters. The distribution center sustained damage but returned to full operation within two weeks following the storm.
Removed
Increase Increase (decrease) (decrease) as a % of (in millions) sales Salaries and wages $ 55.2 0.94 % Repairs and maintenance $ 11.6 0.20 % Advertising and promotion $ (6.3) (0.11) % Store supplies $ 5.7 0.10 % Salaries and wages increased due to increased competition in the labor market in the Company’s market area, in addition to the extra week of expense for the 53 rd week.
Added
During the first two weeks immediately following the storm, the Company’s headquarters experienced communication loss and some stores remained without power and communication. Four stores sustained damage that required that they be temporarily closed. One store has now reopened and the Company expects the remaining three stores will reopen in 2025.
Removed
Repairs and maintenance increased due to higher refrigerant costs and the cost of other supply items, as well as increased wear and tear on equipment to accommodate sales volume, in addition to the extra week of expense for the 53 rd week.
Added
Among other impacts from the storm, the Company sustained approximately $30.4 million in lost inventory, of which approximately $10 million is expected to be covered by insurance. Real property and equipment damage was approximately $4.5 million. Real property and equipment repair expenses at the distribution center, including anticipated future expenses, of approximately $1.5 million were insured.
Removed
Advertising and promotion costs decreased due to absorbing some of the activity in-house and moving towards lower-cost types of advertising. Store supplies, which include customer packaging containers, increased as a result of increased sales, market costs of certain supplies, and supply chain issues for certain raw materials, in addition to the extra week of expense for the 53 rd week.
Added
These incentives and allowances are primarily composed of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts. The purpose of these incentives and allowances is generally to help defray the costs incurred by the Company for stocking, advertising, promoting and selling the applicable vendor’s products.
Removed
The Company has a $150.0 million unsecured senior line of credit (the “Line”) that matures in June 2026. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR.
Added
The period-to-period comparisons of our results of operations contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operation have been prepared using the Company’s audited consolidated financial statements and the notes thereto, and the following discussion should be read in conjunction with such audited annual consolidated financial statements and related notes contained elsewhere in this Annual Report on Form 10-K.
Removed
While the effects of the pandemic on the Company have eased considerably over the fiscal year ended September 30, 2023, some effects have continued through the year ended September 30, 2023, and we do not know how long and to what extent COVID-19 will impact our markets in fiscal year 2024. 21 The Company continually assesses and modifies its business model to meet the changing needs and expectations of its customers.
Added
Comparable Store Sales Comparable store sales are defined as sales by grocery stores in operation for five full fiscal quarters. The Company has an ongoing renovation and expansion plan to modernize the appearance and layout of its existing stores.
Added
Since the impacts 19 of Hurricane Helene occurred during the last two days of the fiscal year ended September 28, 2024, comparable store sales included all 198 stores.
Added
During the last two days of the fiscal year ended September 28, 2024, Hurricane Helene caused power outages at approximately 80 stores, some of which were without power for only several hours, and others were without power for up to 13 days.
Added
Due to the disruption of internet connectivity at the headquarters and the Western North Carolina area, all of the Company’s stores were unable to process credit or debit cards and could only accept cash for various periods of time.
Added
The internet connection outage was restored at the headquarters several days after the storm but remained inconsistent for our stores for approximately two weeks. Due to the foregoing disruptions, the Company estimates that it lost approximately $14.0 million in sales for the last two days of the fiscal year ended September 28, 2024.
Added
The disruptions to internet connectivity and water continued into quarter one of fiscal year 2025. Stores that were closed during the last two days of the fiscal year ended September 28, 2024 as a result of Hurricane Helene were included in comparable store sales.
Added
In addition to the stores closed due to damage and power outages caused by Hurricane Helene, the Company’s headquarters lost connectivity to the internet which disrupted the Company’s ability to accept credit and debit cards.
Added
As described above under “Comparable Store Sales”, the Company estimates that it lost approximately $14.0 million in sales for the last two days of the fiscal year ended September 28, 2024 due to the disruptions caused by Hurricane Helene.
Added
Store closures and power outages as a result of Hurricane Helene will have an impact on net sales for the first quarter and full fiscal year of 2025. In addition, the lack of water and subsequent ban on water usage, will have an impact on the fluid dairy operations for the first quarter of fiscal year 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe table below presents principal amounts and related weighted average rates by year of maturity for the Company’s debt obligations at September 30, 2023 and September 24, 2022, respectively (in thousands): September 30, 2023 2024 2025 2026 2027 2028 Thereafter Total Fair ‎ Value Line of credit $ — $ — $ — $ — $ — $ — $ — $ — Average variable interest rate — % — % — % — % — % — % — % Long-term debt, variable interest rate (1)(2) $ 13,750 $ 13,750 $ 13,750 $ 13,750 $ 8,237 $ 87,833 $ 151,070 $ 151,070 Average interest rate 6.99 % 6.99 % 6.99 % 6.99 % 6.94 % 6.93 % 6.95 % Recovery Zone Bonds, variable interest rate $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 31,790 $ 54,440 $ 54,440 Average year-end interest rate 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % Senior Notes, fixed interest rate $ — $ — $ — $ — $ — $ 350,000 $ 350,000 $ 287,875 Average interest rate — % — % — % — % — % 4.00 % 4.00 % September 24, 2022 2023 2024 2025 2026 2027 Thereafter Total Fair ‎ Value Line of credit $ — $ — $ — $ — $ — $ — $ — $ — Average variable interest rate — % — % — % — % — % — % — % Long-term debt, variable interest rate (1)(2) $ 13,750 $ 13,750 $ 13,750 $ 13,750 $ 13,750 $ 96,083 $ 164,833 $ 164,833 Average year-end interest rate (1)(2) 4.13 % 4.13 % 4.13 % 4.13 % 4.13 % 4.06 % 4.09 % Long-term debt, fixed interest rate $ 91 $ 95 $ 4,002 $ — $ — $ — $ 4,188 $ 4,185 Average interest rate 4.40 % 4.40 % 4.40 % — % — % — % 4.40 % Recovery Zone Bonds, variable interest rate $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 36,320 $ 58,970 $ 58,970 Average year-end interest rate 2.94 % 2.94 % 2.94 % 2.94 % 2.94 % 2.94 % 2.94 % Senior Notes, fixed interest rate $ — $ — $ — $ — $ — $ 350,000 $ 350,000 $ 292,250 Average interest rate — % — % — % — % — % 4.00 % 4.00 % (1) Excludes interest rate swap that fixes at 3.962% the interest rate on $24.5 million of variable interest rate debt.
Biggest changeThe definitive extent of the Company’s interest rate risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements, but the Company does not believe such risk is material. 24 The table below presents principal amounts and related weighted average interest rates by year of maturity for the Company’s debt obligations at September 28, 2024 and September 30, 2023, respectively (in thousands): September 28, 2024 2025 2026 2027 2028 2029 Thereafter Total Fair ‎ Value Line of credit $ — $ — $ — $ — $ — $ — $ — $ — Average variable interest rate — % — % — % — % — % — % — % Long-term debt, variable interest rate (1)(2) $ 13,750 $ 13,750 $ 13,750 $ 8,237 $ 7,750 $ 80,083 $ 137,320 $ 137,320 Average interest rate 6.93 % 6.93 % 6.93 % 6.82 % 6.80 % 6.80 % 6.84 % Recovery Zone Bonds, variable interest rate $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 27,260 $ 49,910 $ 49,910 Average year-end interest rate 5.10 % 5.10 % 5.10 % 5.10 % 5.10 % 5.10 % 5.10 % Senior Notes, fixed interest rate $ — $ — $ — $ — $ — $ 350,000 $ 350,000 $ 317,625 Average interest rate — % — % — % — % — % 4.00 % 4.00 % September 30, 2023 2024 2025 2026 2027 2028 Thereafter Total Fair ‎ Value Line of credit $ — $ — $ — $ — $ — $ — $ — $ — Average variable interest rate — % — % — % — % — % — % — % Long-term debt, variable interest rate (1)(2) $ 13,750 $ 13,750 $ 13,750 $ 13,750 $ 8,237 $ 87,833 $ 151,070 $ 151,070 Average year-end interest rate (1)(2) 6.99 % 6.99 % 6.99 % 6.99 % 6.94 % 6.93 % 6.95 % Recovery Zone Bonds, variable interest rate $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 4,530 $ 31,790 $ 54,440 $ 54,440 Average year-end interest rate 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % 5.20 % Senior Notes, fixed interest rate $ — $ — $ — $ — $ — $ 350,000 $ 350,000 $ 287,875 Average interest rate — % — % — % — % — % 4.00 % 4.00 % (1) Excludes interest rate swap that fixes at 3.962% the interest rate on $18.5 million of variable interest rate debt.
The 2031 Notes bear a fixed rate of interest and do not expose us to interest rate risk. The nature and amount of the Company’s debt may vary as a result of future business requirements, market conditions and other factors.
The Notes bear a fixed rate of interest and do not expose us to interest rate risk. The nature and amount of the Company’s debt may vary as a result of future business requirements, market conditions and other factors.
(2) Excludes interest rate swap that fixes at 2.998% the interest rate on $124.6 million of variable interest rate debt. The Company will occasionally utilize financial or derivative instruments for interest rate risk management but has typically not utilized highly leveraged financial instruments.
(2) Excludes interest rate swap that fixes at 2.998% the interest rate on $116.9 million of variable interest rate debt. The Company will occasionally utilize financial or derivative instruments for interest rate risk management but has typically not utilized highly leveraged financial instruments.
On the basis of the fair value of the Company’s market sensitive instruments at September 30, 2023, the Company does not consider the potential near-term losses in future earnings, fair values and cash flows from reasonably possible near-term changes in interest rates and exchange rates to be material.
On the basis of the fair value of the Company’s market sensitive instruments at September 28, 2024, the Company does not anticipate that near-term changes in interest and exchange rates will result in material near-term losses in future earnings, fair values or cash flows.
Removed
The definitive extent of the Company’s interest rate risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements, but the Company does not believe such risk is material.

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