What changed in this filing

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Item 1. Business

2024-12-27 compared with 2023-11-29 · 50 added, 31 removed, 184 unchanged (31% of the section changed)

Ingles Markets, Incorporated, a North Carolina corporation (collectively with its subsidiaries, “Ingles,” or the “Company,” “we,” “us” or “our”), is a leading supermarket chain in the southeast United States and operates a total of 198 supermarkets in North Carolina (75), Georgia (65), South Carolina (35), Tennessee (21), Virginia (1) and Alabama (1).

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.

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.

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.

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.

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.

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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 also offers quality private label items, organic 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.

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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 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.

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.

The Company offers online ordering of its products for pickup at its stores.

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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.

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.

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.

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.

The Company owns 167 of its supermarkets, either in free-standing stores or as the anchor tenant in an owned shopping center.

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.

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.

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.

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.

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, 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

stock held by the Company’s Investment/Profit Sharing Plan and Trust of which Mr.

Ingle II serves as one of the trustees).

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 was incorporated in 1965 under the laws of the State of North Carolina.

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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 operates one primary business segment, retail grocery.

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.

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.

Information 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

Fiscal Years Ended

(dollars in millions)

September 28, 2024

September 30, 2023

September 24, 2022

Revenues from unaffiliated customers:

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Interest expense

Loss on early extinguishment of debt

Income before income taxes

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Percentage of Total

Net Sales for Fiscal

Year Ended September

at Fiscal Year Ended

Net Sales for Fiscal Years Ended

September 28,

September 30,

September 24,

September 28,

September 30,

September 24,

North Carolina

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Selected statistics on the Company’s supermarket operations are presented below:

Fiscal Year Ended September

Fiscal Year Ended

September 28,

September 30,

September 24,

September 25,

September 26,

Weighted Average Sales Per Store (000’s) (1)

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The order is picked by store associates and loaded into the customer’s vehicle.

This service is currently offered at 129 of the Company’s stores, with additional stores expected to be added each month.

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.

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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 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.

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.

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.

Inflation impacts product costs, labor costs and the cost of other goods used by the Company, which could negatively impact our results of Operations.

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.

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The construction of new stores by independent contractors is closely monitored and controlled by the Company.

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.

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.

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.

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The Company may elect to relocate, rather than remodel, certain stores where relocation provides a more convenient location for its customers.

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:

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:

Number of Stores:

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The degree of competition the Company’s stores encounter varies by location, primarily based on the size of the community in which the store is located and its proximity to other communities.

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.

The Company’s principal competitors are, in alphabetical order, Aldi, Inc., Earth Fare, Inc, Food City (K-VA-T Food Stores, Inc.), Food Lion (Koninlijke Ahold Delhaize America N.V.), The Fresh Market, Inc., Harris Teeter (owned by The Kroger Co.), The Kroger Co., Lidl (Lidl Stiftung & Co.

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.

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.

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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.

Company values its associates and believes that associate loyalty and enthusiasm are key elements of its operating performance.

The Company has responded to the tight labor market by increasing resources devoted to associate recruitment and retention, and by expanding the ways in which it markets itself to prospective associates;

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The Company employs various trademarks and service marks in its business, the most important of which are its own “Laura Lynn” and “Harvest Farms” private label trademarks, “The Ingles Advantage” service mark, and the “Ingles” service mark.

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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business