Written by Sally Kestin, Asheville Watchdog.
Ingles lost power in 80 of its 198 stores from Tropical Storm Helene, and all stores were unable to process credit or debit cards, requiring cash-only transactions “for various periods of time,” according to the company’s newly released annual report.
Power was out for up to 13 days at some stores. Four closed temporarily due to damage; one has reopened and the other three are expected to open in 2025, the report said.
Ingles’ distribution center and headquarters in Black Mountain was damaged, and the storm disrupted the company’s internet service. One distribution center employee, Gabriel Gonzalez, died when floodwaters swept him away.
Ingles estimated $14 million in lost sales as of Sept. 28, the day after the storm and the end of the company’s fiscal year.
Ingles’ annual net sales and gross profits were down compared to 2023, and more losses are expected to be documented in reports for the current fiscal year, said the annual report filed with the U.S. Securities and Exchange Commission.
But the losses in inventory caused by the storm, $30.4 million, and property, $4.5 million, were on the low end of projections the company announced in October. At the time, Ingles estimated $35 million to $55 million in property and inventory losses.
Insurance is expected to cover about $11.5 million of that total, the company said in its SEC filing.
More losses to come
The report provides the first detailed public account of the storm’s impact on one of western North Carolina’s largest employers. Ingles owns supermarkets in six Southeastern states, among the hardest hit by Helene, and a dairy facility that supplies its stores and other customers.
“During the first two weeks immediately following the storm, the Company’s headquarters experienced communication loss and some stores remained without power and communication,” the report said. “Four stores sustained damage that required that they be temporarily closed.”
The report did not identify those stores. Asheville Watchdog confirmed that all were in North Carolina: The store in Newland recently reopened, while the three that remained closed are in Swannanoa, Morganton, and Spruce Pine.
“The distribution center returned to full operation within two weeks following the storm,” the annual report said. “The internet connection outage was restored at the headquarters several days after the storm but remained inconsistent for our stores for approximately two weeks.”
Because of the internet disruption, “all of the Company’s stores were unable to process credit or debit cards and could only accept cash for various periods of time,” the report said.
The $14 million in lost sales – from just the first two days after the storm – is expected to grow this year.
“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,” the report said. “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.”
Sales, profits down
The storm contributed to a year that was less successful for Ingles by many measures:
- Net sales of $5.64 billion were down from $5.89 billion for the fiscal year ending Sept. 30, 2023. (The most recent fiscal year consisted of 52 weeks compared to 53 weeks for the previous year.)
- Gross profit decreased $105.1 million, or 7.5%, to $1.3 billion compared to $1.4 billion the previous year. The decrease was primarily a result of the $30.4 million in inventory losses from Helene, the report said.
- Net income was $105.5 million, down from $210.8 million the previous year. The company attributed the loss to “inflation in the cost of goods and increases in operating expenses due to increased labor market competition,” according to the report.
Robert P. Ingle II, the company’s board chair and son of the grocery chain’s founder, said in a news release, “After Hurricane Helene impacted our communities, I am proud of how not only our associates came together, but our entire region. We are truly thankful for all the volunteers and the outpouring of support for our region.”
The annual report noted that “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.”
Those consequences, the report said, “could more significantly and adversely impact the Company’s financial position, cash flow and results of operation.”
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Sally Kestin is a Pulitzer Prize-winning investigative reporter. Email [email protected]. The Watchdog’s reporting is made possible by donations from the community. To show your support for this vital public service go to avlwatchdog.org/support-our-publication/.