Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Ingles Markets An Okay Supermarket, Sweetened With Real Estate

On the whole, food retailing is not a particularly attractive business in developed markets like the U.S.. Same-store sales growth is typically lackluster, competition is fierce, and margins are thin. New concepts can certainly distinguish themselves, but it is all in all a tough business in which to earn strong returns on capital.

Ingles Markets (NASDAQ:IMKTA) is not exactly a tremendous exception. While the company's sales per square foot and margins hold up pretty well relative to the likes Harris Teeter, they definite lag those of Kroger (NYSE:KR) (which now owns Harris Teeter) or Safeway (NYSE:SWY), same-store sales growth has been sluggish, and the company's free cash flow generation is not all that...

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