Village Super Market, Inc. (NSD-VLGEA) today reported its results
of operations for the fourth quarter ended July 25, 2020.
Net income was $9,229,000 in the fourth quarter
of fiscal 2020 compared to $6,729,000 in the fourth quarter of
fiscal 2019. The fourth quarter of
fiscal 2020 includes a $1,911,000 (net of tax) gain for
Superstorm Sandy insurance proceeds received, a $2,512,000 benefit
from a federal net operating loss carryback at a rate higher than
the current statutory tax rate, a $1,423,000 (net of tax) gain
arising from the breakup of Village’s initial “stalking horse” bid
under the January 20, 2020 Fairway Asset Purchase Agreement,
transaction costs incurred for the Fairway acquisition of
$1,888,000 (net of tax) and amortization of acquisition related
inventory step-up of $355,000 (net of tax). Fiscal 2019 includes a
tax benefit of $777,000 related to the favorable settlement of a
tax audit with the New Jersey Division of Taxation. Excluding these
items from both periods, net income decreased 6% in fiscal 2020
compared to the prior year.
Sales were $501,478,000 in the fourth quarter of
fiscal 2020 compared to $418,366,000 in the fourth quarter of
fiscal 2019. Sales increased due to the Fairway acquisition on May
14, 2020, the opening of the Stroudsburg replacement store on
November 1, 2019, the Gourmet Garage acquisition on June 24, 2019
and a same store sales increase of 7.5%. Same store sales increased
due primarily to increased customer demand across most stores as a
result of the continued impact of the COVID-19 pandemic. Following
the outbreak, average basket sizes increased and transaction counts
decreased as customers consolidated shopping trips. Digital sales
growth accelerated through both ShopRite from Home and 3rd party
online grocery pickup and delivery services, increasing 240% in the
4th quarter of fiscal 2020 compared to the 4th quarter of fiscal
2019. Sales in Gourmet Garage and Fairway have declined
significantly compared to historical levels due primarily to
population migration out of Manhattan during the pandemic. New
stores and replacement stores are included in same store sales in
the quarter after the store has been in operation for four full
quarters. Store renovations and expansions are included
in same store sales immediately.
Gross profit as a percentage of sales increased
to 28.93% in the fourth quarter of fiscal 2020 compared to 27.79%
in the fourth quarter of fiscal 2019 due primarily to the
acquisitions of Gourmet Garage and Fairway, net of amortization of
acquisition related inventory step-up (.10%). Excluding the impact
of acquired stores, gross profit as a percentage of sales decreased
.04% due primarily to decreased departmental gross margin
percentages (.19%), decreased patronage dividends and rebates
received from Wakefern (.11%) and an unfavorable change in product
mix (.19%) partially offset by lower promotional spending (.21%)
and increased leverage on warehouse assessment charges from
Wakefern (.24%). Departmental gross profits decreased due primarily
to price investments, including the ShopRite's Right Price Promise
pricing strategy, a commitment to everyday low prices on the items
customers purchase most frequently, introduced in October 2019.
Both product mix and departmental gross margin percentages were
also impacted by limitations in product availability and scaled
down service department offerings due to safety measures
implemented as a result of the COVID-19 pandemic.
Operating and administrative expense as a
percentage of sales increased to 25.32% in the fourth quarter of
fiscal 2020 compared to 24.16% in the fourth quarter of fiscal
2019. The fourth quarter of fiscal 2020 includes a gain for
Superstorm Sandy insurance proceeds received (.54%), a gain arising
from the breakup of Village’s initial “stalking horse” bid under
the January 20, 2020 Fairway Asset Purchase Agreement (.41%),
transaction costs incurred for the Fairway acquisition (.54%) and
lease costs reclassified from depreciation and amortization and
interest expense to operating and administrative expense (.12%) as
a result of the adoption of ASU 2016-02, “Leases”. Excluding these
items from both periods, operating and administrative expense as a
percentage of sales increased 1.45% in fiscal 2020 compared to
fiscal 2019 due primarily to incremental costs related to COVID-19,
including enhanced wages and benefits and expanded safety and
sanitation protocols (1.65%), increased occupancy costs due
primarily to the acquisitions of Fairway (1.03%) partially offset
by reduced workers compensation expense (.59%) and increased
leverage from higher sales.
Net income was $24,939,000 in fiscal 2020
compared to $25,539,000 in fiscal 2019. Fiscal 2020
includes a $1,911,000 (net of tax) gain for Superstorm Sandy
insurance proceeds received, an $854,000 (net of tax) gain on the
sale of pharmacy prescription lists related to three store
pharmacies closed in March 2020, a $2,512,000 benefit from a
federal net operating loss carryback at a rate higher than the
current statutory tax rate, a $1,423,000 (net of tax) gain arising
from the breakup of Village’s initial “stalking horse” bid under
the January 20, 2020 Fairway Asset Purchase Agreement, transaction
costs incurred for the Fairway acquisition of $1,888,000 (net of
tax), amortization of acquisition related inventory step-up of
$355,000 (net of tax), a non-cash pension charge related to the
termination of a company-sponsored pension plan and other pension
settlement charges of $954,000 (net of tax), pre-opening costs
related to the Stroudsburg, Pennsylvania replacement store of
$891,000 (net of tax) and store closure costs and charges to write
off the lease asset and related obligations for the old Stroudsburg
store of $557,000 (net of tax). Fiscal 2019 includes a $290,000
(net of tax) gain for Superstorm Sandy insurance proceeds received,
a tax benefit of $777,000 related to the favorable settlement of a
tax audit with the New Jersey Division of Taxation and pension
settlement charges of $302,000 (net of tax). Excluding these items
from both periods, net income decreased 8% in fiscal 2020 compared
to the prior year.
Sales were $1,804,594,000 in fiscal 2020
compared to $1,643,502,000 in fiscal 2019. Sales increased due to
the Fairway acquisition on May 14, 2020, the opening of the
Stroudsburg replacement store on November 1, 2019, the Gourmet
Garage acquisition on June 24, 2019 and a same store sales increase
of 5.3%. Same store sales increased due primarily to increased
customer demand across most stores due to the impact of the
COVID-19 pandemic, most significantly in March where sales reached
unprecedented levels. Following the outbreak, average basket sizes
increased and transaction counts decreased as customers
consolidated shopping trips. Digital sales growth accelerated
through both ShopRite from Home and 3rd party online grocery pickup
and delivery services, increasing 83% in fiscal 2020 compared to
fiscal 2019. Sales in Gourmet Garage and Fairway have declined
significantly compared to historical levels due primarily to
population migration out of Manhattan during the pandemic.
Gross profit as a percentage of sales of 28.07%
in fiscal 2020 increased .28% compared to fiscal 2019. Gross profit
increased due primarily to higher margins associated with the
acquisitions of Gourmet Garage and Fairway, net of amortization of
acquisition related inventory step-up (.03%). Excluding the impact
of acquired stores, gross profit as a percentage of sales decreased
.23% due primarily to decreased departmental gross margin
percentages (.31%), decreased patronage dividends and rebates
received from Wakefern (.08%) and an unfavorable change in product
mix (.12%) partially offset by lower promotional spending (.15%)
and increased leverage on warehouse assessment charges from
Wakefern (.13%).
Operating and administrative expense as a
percentage of sales increased to 24.65% in fiscal 2020 compared to
24.02% in fiscal 2019. Fiscal 2020 includes a gain on the sale of
pharmacy prescription lists related to three store pharmacies
closed in March 2020 (.07%), a gain for Superstorm Sandy insurance
proceeds received (.15%), a gain arising from the breakup of
Village’s initial “stalking horse” bid under the January 20, 2020
Fairway Asset Purchase Agreement (.11%), transaction costs incurred
for the Fairway acquisition (.15%), a non-cash pension charge
related to the termination of a company-sponsored pension plan and
other pension settlement charges (.09%), pre-opening costs of the
Stroudsburg, Pennsylvania replacement store (.07%), store closure
costs and charges to write off the lease asset and related
obligations for the old Stroudsburg store (.04%) and lease costs
reclassified from depreciation and amortization and interest
expense to operating and administrative expense (.14%) as a result
of the adoption of ASU 2016-02, “Leases”. Fiscal 2019 includes a
gain for Superstorm Sandy insurance proceeds received (.03%) and
pension settlement charges (.03%). Excluding these items from both
periods, operating and administrative expense as a percentage of
sales increased .47% in fiscal 2020 compared to fiscal 2019 due
primarily to incremental costs related to COVID-19, including
enhanced wages and benefits and expanded safety and sanitation
protocols (.76%), increased occupancy costs due primarily to the
acquisitions of Fairway and Gourmet Garage (.33%) partially offset
by reduced workers compensation expense (.23%) and increased
leverage from higher sales.
Village Super Market operates a chain of 35
supermarkets in New Jersey, New York, Maryland and Pennsylvania
under the ShopRite and Fairway banners and three Gourmet Garage
specialty markets in New York City.
Forward Looking Statements
All statements, other than statements of
historical fact, included in this Press Release are or may be
considered forward-looking statements within the meaning of federal
securities law. The Company cautions the reader that there is no
assurance that actual results or business conditions will not
differ materially from future results, whether expressed, suggested
or implied by such forward-looking statements. The Company
undertakes no obligation to update forward-looking statements to
reflect developments or information obtained after the date hereof.
The following are among the principal factors that could cause
actual results to differ from the forward-looking statements: risks
and uncertainties related to the COVID-19 pandemic, including among
others, the duration and severity of the pandemic, shifts in
customers buying patterns, disruptions to supply chains, inability
of the workforce to work due to illness, quarantine or government
mandates, including travel restrictions and stay at home orders,
the effectiveness and duration of COVID-19 stimulus packages;
general economic conditions; competitive pressures from the
Company’s operating environment; the ability of the Company to
maintain and improve its sales and margins; the ability to attract
and retain qualified associates; the availability of new store
locations; risks, uncertainties and challenges associated with the
Fairway acquisition, including under-performance relative to our
expectations, additional capital requirements, unforeseen expenses
or delays, imprecise assumptions or our inability to achieve
projected cost savings or other synergies, competitive factors in
the marketplace and difficulties integrating the business,
including merging company cultures, cultivating brand strategy,
expansion of food production and conforming the acquired company's
technology, standards, processes, procedures and controls; the
availability of capital; the liquidity of the Company; the success
of operating initiatives; consumer spending patterns; the impact of
changing energy prices; increased cost of goods sold, including
increased costs from the Company’s principal supplier, Wakefern;
disruptions or changes in Wakefern's operations; the results of
litigation; the results of tax examinations; the results of union
contract negotiations; competitive store openings and closings; the
rate of return on pension assets; and other factors detailed herein
and in the Company’s filings with the SEC.
VILLAGE SUPER MARKET, INC.CONSOLIDATED STATEMENTS
OF OPERATIONS(In thousands, except per share amounts)
(Unaudited)
|
13 Weeks Ended |
|
13 Weeks Ended |
|
52 Weeks Ended |
|
52 Weeks Ended |
|
July 25,2020 |
|
July 27,2019 |
|
July 25,2020 |
|
July 27,2019 |
|
|
|
|
|
|
|
|
|
Sales |
$ |
501,478 |
|
|
$ |
418,366 |
|
|
$ |
1,804,594 |
|
|
$ |
1,643,502 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
356,397 |
|
|
302,110 |
|
|
1,298,119 |
|
|
1,186,786 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
145,081 |
|
|
116,256 |
|
|
506,475 |
|
|
456,716 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative
expense |
126,957 |
|
|
101,069 |
|
|
444,833 |
|
|
394,750 |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
8,444 |
|
|
6,809 |
|
|
31,358 |
|
|
27,290 |
|
|
|
|
|
|
|
|
|
|
Operating income |
9,680 |
|
|
8,378 |
|
|
30,284 |
|
|
34,676 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
(913) |
|
|
(1,102) |
|
|
(2,611) |
|
|
(4,436) |
|
|
|
|
|
|
|
|
|
|
Interest income |
861 |
|
|
1,397 |
|
|
4,060 |
|
|
5,283 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
9,628 |
|
|
8,673 |
|
|
31,733 |
|
|
35,523 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
399 |
|
|
1,944 |
|
|
6,794 |
|
|
9,984 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
9,229 |
|
|
$ |
6,729 |
|
|
$ |
24,939 |
|
|
$ |
25,539 |
|
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
Class A common stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.71 |
|
|
$ |
0.52 |
|
|
$ |
1.93 |
|
|
$ |
1.98 |
|
Diluted |
$ |
0.63 |
|
|
$ |
0.47 |
|
|
$ |
1.72 |
|
|
$ |
1.77 |
|
|
|
|
|
|
|
|
|
|
Class B common stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
1.25 |
|
|
$ |
1.29 |
|
Diluted |
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
1.25 |
|
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
|
Gross profit as a % of
sales |
28.93 |
% |
|
27.79 |
% |
|
28.07 |
% |
|
27.79 |
% |
Operating and administrative
expense as a % of sales |
25.32 |
% |
|
24.16 |
% |
|
24.65 |
% |
|
24.02 |
% |
Contact: |
John Van
Orden, CFO |
|
(973) 467-2200 |
|
villageinvestorrelations@wakefern.com |
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