Village Super Market, Inc. Reports Results for the Fourth Quarter Ended July 28, 2018

Date : 10/08/2018 @ 1:00PM
Source : GlobeNewswire Inc.
Stock : Village Super Market Inc (VLGEA)
Quote : 25.6  0.0 (0.00%) @ 8:59AM

Village Super Market, Inc. Reports Results for the Fourth Quarter Ended July 28, 2018

Village Super Market (NASDAQ:VLGEA)
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Village Super Market, Inc. (NSD-VLGEA) today reported its results of operations for the fourth quarter ended July 28, 2018.

Net income was $6,011,000 in the fourth quarter of fiscal 2018 compared to $6,805,000 in the fourth quarter of fiscal 2017. The fourth quarter of fiscal 2018 includes a $822,000 (net of tax) non-recurring credit accrued related to multi-employer pension benefits, $671,000 (net of tax) in non-recurring assessments from Wakefern and $551,000 (net of tax) in pre-opening costs related to the Bronx, New York City store.  Excluding these items, net income decreased 6% in the fourth quarter of fiscal 2018 compared to the prior year primarily due to higher operating and administrative expenses partially offset by the favorable impact of a reduction in the fiscal 2018 effective tax rate to 33.7% as a result of the Tax Cuts and Jobs Act (the "Tax Act").

Sales were $413,551,000 in the fourth quarter of fiscal 2018 compared to $410,683,000 in the fourth quarter of fiscal 2017.  Sales increased due to the opening of the Bronx, New York City store on June 28, 2018 partially offset by a decrease in same store sales of 0.3%. Same store sales decreased due primarily to two competitor store openings.  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 27.56% in the fourth quarter of fiscal 2018 compared to 27.39% in the fourth quarter of fiscal 2017 due primarily to increased departmental gross margin percentages (.11%) and more favorable product mix (.03%).

Operating and administrative expense as a percentage of sales increased to 23.80% in the fourth quarter of fiscal 2018 compared to 22.99% in the fourth quarter of fiscal 2017.  Operating and administrative expense as a percentage of sales increased due primarily to payroll investments in service departments and training (.09%), internal payroll (.06%) and non-recurring external consulting fees (.18%) related to the launch of operational proficiency initiatives, pre-opening costs for the Bronx, New York store (.20%), non-recurring assessments from Wakefern (.23%) and increased worker compensation claim costs (.23%).   These increases were partially offset by a non-recurring credit accrued related to multi-employer pension benefits (.30%).

Net income was $25,080,000 in fiscal 2018 compared to $22,921,000 in fiscal 2017.  Fiscal 2018 includes a $3,300,000 reduction in deferred tax expense as a result of the Tax Act, an $822,000 (net of tax) non-recurring credit accrued related to multi-employer pension benefits, $877,000 (net of tax) in non-recurring assessments from Wakefern and $695,000 (net of tax) in pre-opening costs related to the Bronx, New York City store.  Excluding these items, net income decreased 2% in fiscal 2018 compared to the prior year primarily due to higher operating and administrative expenses partially offset by the favorable impact of a reduction in the fiscal 2018 effective tax rate to 33.7% as a result of the Tax Act.

Sales were $1,612,015,000 in fiscal 2018 compared to $1,604,574,000 in fiscal 2017.  Sales increased due to the opening of the Bronx, New York City store on June 28, 2018 and a same store sales increase of 0.2%. Same store sales increased due primarily to continued growth in recently remodeled and expanded stores, inflation and increased promotional spending.  These increases were offset primarily by two competitor store openings.

Gross profit as a percentage of sales of 27.23% in fiscal 2018 increased .01% compared to fiscal 2017.  Increased departmental gross margin percentages (.07%) and more favorable product mix (.09%) were offset by decreased patronage dividends (.04%) and higher promotional spending (.10%).

Operating and administrative expense as a percentage of sales increased to 23.61% in fiscal 2018 compared to 23.15% in fiscal 2017.  Operating and administrative expense as a percentage of sales increased due primarily to payroll investments in service departments and  training (.19%), internal payroll (.04%) and non-recurring external consulting fees (.09%) related to the launch of operational proficiency initiatives, pre-opening costs for the Bronx, New York store (.06%), non-recurring assessments from Wakefern (.08%) and increased occupancy costs including snow removal (.05%).   These increases were partially offset by a non-recurring credit accrued related to multi-employer pension benefits (.08%).

Village Super Market operates a chain of 30 supermarkets under the ShopRite name in New Jersey, Maryland, northeastern Pennsylvania and 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: 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; 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 28,  2018 July 29,  2017 July 28,  2018 July 29,  2017
        
Sales$413,551  $410,683  $1,612,015  $1,604,574 
        
Cost of sales299,590  298,194  1,173,013  1,167,863 
        
Gross profit113,961  112,489  439,002  436,711 
        
Operating and administrative expense98,412  94,435  380,550  371,495 
        
Depreciation and amortization6,295  6,124  24,999  24,482 
        
Operating income9,254  11,930  33,453  40,734 
        
Interest expense(1,119) (1,109) (4,460) (4,452)
        
Interest income1,069  778  3,845  2,841 
        
Income before income taxes9,204  11,599  32,838  39,123 
        
Income taxes3,193  4,794  7,758  16,202 
        
Net income$6,011  $6,805  $25,080  $22,921 
        
Net income per share:      
Class A common stock:       
Basic$0.47  $0.53  $1.95  $1.80 
Diluted$0.42  $0.47  $1.74  $1.60 
        
Class B common stock:       
Basic$0.30  $0.34  $1.27  $1.16 
Diluted$0.30  $0.34  $1.27  $1.16 
        
Gross profit as a % of sales27.56% 27.39% 27.23% 27.22%
Operating and administrative expense as a % of sales23.80% 22.99% 23.61% 23.15%
            

Contact:John Van Orden, CFO
 (973) 467-2200
 john.vanorden@wakefern.com

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