Village Super Market, Inc. Reports Results for the First Quarter Ended October 24, 2020
December 03 2020 - 8:00AM
Village Super Market, Inc. (NASDAQ:VLGEA) (the "Company" or
"Village") today reported its results of operations for the first
quarter ended October 24, 2020.
Net income was $3,360,000 in the 13 weeks ended
October 24, 2020 compared to $2,567,000 in the 13 weeks ended
October 26, 2019. The 13 weeks ended October 26, 2019
included pre-opening costs of the Stroudsburg, Pennsylvania
replacement store of $594,000 (net of tax) and store closure costs
and charges to write off the lease asset and related obligations
for the old Stroudsburg store of $191,000 (net of tax). Excluding
these items, net income was flat in the 13 weeks ended
October 24, 2020 compared to the prior year. Net income was
flat despite the increase in same store sales due to the impact of
lower sales volumes in Manhattan, higher costs as we transition and
integrate commissary operations into our business and increased
operating and administrative expenses.
Sales were $490,136,000 in the 13 weeks ended
October 24, 2020, an increase of 20.3% compared to the 13
weeks ended October 26, 2019. Sales increased due to the
Fairway acquisition on May 14, 2020, the opening of the Stroudsburg
replacement store on November 1, 2019 and a same store sales
increase of 6.6%. Same store sales increased due primarily to
increased customer demand across most stores due to the impact of
the COVID-19 pandemic. We continue to experience higher average
basket sizes and decreased transaction counts as customers
consolidate shopping trips. Digital sales growth accelerated
through both ShopRite from Home and partnerships with online
grocery picking and delivery services, increasing 172% in the 13
weeks ended October 24, 2020 compared to the 13 weeks ended
October 26, 2019. Demand remains high in most stores, however
sales at Fairway and Gourmet Garage locations in Manhattan have
been significantly negatively impacted due primarily to residential
population migration out of the city and less commuter and tourist
traffic during the COVID-19 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 28.15% in the 13 weeks ended October 24, 2020 compared to
27.87% in the 13 weeks ended October 26, 2019. Gross profit
increased due primarily to higher margins associated with Fairway
despite higher costs as we transition and integrate the commissary
operations into our business. Excluding the impact of Fairway,
gross profit as a percentage of sales decreased .39% due primarily
to decreased departmental gross margin percentages (.70%),
decreased patronage dividends and rebates received from Wakefern
(.10%) and an unfavorable change in product mix (.10%) partially
offset by lower promotional spending (.35%) and increased leverage
on warehouse assessment charges from Wakefern (.16%).
Departmental gross profits, excluding the impact
of Fairway, decreased in the 13 weeks ended October 24, 2020
compared to the 13 weeks ended October 26, 2019 due primarily
to price investments resulting from ShopRite's Right Price Promise
pricing strategy introduced in October 2019. Both product mix and
departmental gross margin percentages were also impacted by
limitations in service departments and product availability as a
result of the COVID-19 pandemic.
Operating and administrative expense as a
percentage of sales increased to 25.37% in the 13 weeks ended
October 24, 2020 compared to 25.32% in the 13 weeks ended
October 26, 2019. The 13 weeks ended October 26, 2019
included pre-opening costs of the Stroudsburg, Pennsylvania
replacement store (.21%) and store closure costs and charges to
write off the lease asset and related obligations for the old
Stroudsburg store (.07%). Excluding these items, operating and
administrative expense as a percentage of sales increased .33% in
the 13 weeks ended October 24, 2020 compared to the 13 weeks
ended October 26, 2019 due primarily to incremental costs
related to COVID-19, including enhanced wages and benefits and
expanded safety and sanitation protocols (.24%), increased
occupancy costs due primarily to the acquisitions of Fairway
(.79%), increased costs associated with digital sales (.40%)
partially offset by decreased payroll (.75%) and workers'
compensation and other fringe benefits (.25%). Payroll decreased
primarily due to leverage from higher sales and reductions in
service department offerings partially offset by the addition of
Fairway and growth of ShopRite from Home.
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 |
|
October 24,2020 |
|
October 26,2019 |
|
|
|
|
Sales |
$ |
490,136 |
|
|
$ |
407,402 |
|
|
|
|
|
Cost of sales |
352,173 |
|
|
293,856 |
|
|
|
|
|
Gross profit |
137,963 |
|
|
113,546 |
|
|
|
|
|
Operating and administrative
expense |
124,363 |
|
|
103,140 |
|
|
|
|
|
Depreciation and
amortization |
8,714 |
|
|
7,438 |
|
|
|
|
|
Operating income |
4,886 |
|
|
2,968 |
|
|
|
|
|
Interest expense |
(987 |
) |
|
(567 |
) |
|
|
|
|
Interest income |
891 |
|
|
1,259 |
|
|
|
|
|
Income before income
taxes |
4,790 |
|
|
3,660 |
|
|
|
|
|
Income taxes |
1,430 |
|
|
1,093 |
|
|
|
|
|
Net income |
$ |
3,360 |
|
|
$ |
2,567 |
|
|
|
|
|
Net income per
share: |
|
|
Class A common stock: |
|
|
|
Basic |
$ |
0.26 |
|
|
$ |
0.20 |
|
Diluted |
$ |
0.23 |
|
|
$ |
0.18 |
|
|
|
|
|
Class B common stock: |
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.13 |
|
Diluted |
$ |
0.17 |
|
|
$ |
0.13 |
|
|
|
|
|
Gross profit as a % of
sales |
28.15 |
% |
|
27.87 |
% |
Operating and administrative
expense as a % of sales |
25.37 |
% |
|
25.32 |
% |
|
|
|
|
|
|
Contact: |
|
John Van Orden, CFO(973)
467-2200villageinvestorrelations@wakefern.com |
|
|
|
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