Village Super Market, Inc. Reports Results for the Fourth Quarter Ended July 27, 2019
October 03 2019 - 8:00AM
Village Super Market, Inc. (NSD-VLGEA) today reported its results
of operations for the fourth quarter ended July 27, 2019.
Net income was $6,729,000 in the fourth quarter
of fiscal 2019 compared to $6,011,000 in the fourth quarter of
fiscal 2018. The fourth quarter of
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. Fiscal 2018 includes an $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 from both
periods, net income decreased 7% in fiscal 2019 compared
to the prior year primarily due to increased operating and
administrative expenses partially offset by the favorable impact of
the Tax Act.
Sales were $418,366,000 in the fourth quarter of
fiscal 2019 compared to $413,999,000 in the fourth quarter of
fiscal 2018. Sales increased due to the opening of the Bronx, New
York City store on June 28, 2018 and the acquisition of Gourmet
Garage on June 24, 2019 partially offset by a decrease in same
store sales of 0.9%. Same store sales decreased due primarily to
three competitor store openings. Village acquired the assets and
certain liabilities of Gourmet Garage for $5,267,000. Gourmet
Garage operates three small format specialty markets in Manhattan,
New York City. 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 27.79% in the fourth quarter of fiscal 2019 compared to 27.76%
in the fourth quarter of fiscal 2018. Gross profit increased due
primarily to increased patronage dividends and other rebates from
Wakefern (.06%), lower promotional spending (.06%), more favorable
product mix (.05%) partially offset by decreased departmental gross
margin percentages (.14%).
Operating and administrative expense as a
percentage of sales increased to 24.16% in the fourth quarter of
fiscal 2019 compared to 24.01% in the fourth quarter of fiscal
2018. The fourth quarter of fiscal 2018 included non-recurring
assessments from Wakefern (.24%), pre-opening costs related to the
Bronx, NY store (.20%) and credits received related to
multi-employer pension benefits (.30%). Excluding these items,
operating and administrative expense as a percentage of sales
increased .29% in the fourth quarter of fiscal 2019 compared to the
fourth quarter of fiscal 2018 due primarily to increased payroll
costs (.43%) and higher self-insured workers compensation claim
costs (.22%) partially offset by decreased legal and consulting
fees (.26%) and lower non-union pension expense (.18%). Payroll
costs increased due primarily to reduced operating leverage as a
result of the decrease in same store sales, increased investments
in training, operational proficiency and other strategic
initiatives.
Net income was $25,539,000 in fiscal 2019
compared to $25,080,000 in fiscal 2018. Fiscal 2019 includes a
$290,000 (net of tax) gain for Superstorm Sandy insurance proceeds
received and a tax benefit of $777,000 related to the favorable
settlement of a tax audit with the New Jersey Division of Taxation.
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 from both periods, net
income increased 9% in fiscal 2019 compared to the prior
year primarily due to higher gross profit margins and the favorable
impact of the Tax Act.
Sales were $1,643,502,000 in fiscal 2019
compared to $1,615,045,000 in fiscal 2018. Sales increased due to
the opening of the Bronx, New York City store on June 28, 2018 and
the acquisition of Gourmet Garage on June 24, 2019 partially offset
by a same store sales decrease of 0.5%. Same store sales decreased
due primarily to the impact of three competitor store openings
partially offset by continued sales growth in recently replaced and
remodeled stores. 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 of 27.79%
in fiscal 2019 increased .36% compared to fiscal 2018. Gross profit
increased due primarily to increased patronage dividends and other
rebates from Wakefern (.11%), lower promotional spending (.10%),
more favorable product mix (.06%) and increased departmental gross
margin percentages (.09%).
Operating and administrative expense as a
percentage of sales increased to 24.02% in fiscal 2019 compared to
23.81% in fiscal 2018. Fiscal 2019 includes a gain for Superstorm
Sandy insurance proceeds received (.03%) and fiscal 2018 included
non-recurring assessments from Wakefern (.08%), pre-opening costs
related to the Bronx, NY store (.06%) and credits received related
to multi-employer pension benefits (.08%). Excluding these items,
operating and administrative expense as a percentage of sales
increased .30% in fiscal 2019 compared to fiscal 2018 due primarily
to increased payroll and fringe benefit costs (.32%) and
self-insured workers compensation claim costs (.08%) partially
offset by decreased legal and consulting fees (.12%). Payroll costs
increased due primarily to reduced operating leverage as a result
of the decrease in same store sales, increased training costs and
investments in operational proficiency and other strategic
initiatives.
Village Super Market operates a chain of 30
supermarkets under the ShopRite name in New Jersey, Maryland, New
York City and eastern Pennsylvania and three specialty markets
under the Gourmet Garage name 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:
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 27,2019 |
|
July 28,2018 |
|
July 27,2019 |
|
July 28,2018 |
|
|
|
|
|
|
|
|
Sales |
$ |
418,366 |
|
|
$ |
413,999 |
|
|
$ |
1,643,502 |
|
|
$ |
1,615,045 |
|
|
|
|
|
|
|
|
|
Cost of sales |
302,109 |
|
|
299,058 |
|
|
1,186,786 |
|
|
1,172,016 |
|
|
|
|
|
|
|
|
|
Gross profit |
116,257 |
|
|
114,941 |
|
|
456,716 |
|
|
443,029 |
|
|
|
|
|
|
|
|
|
Operating and administrative
expense |
101,070 |
|
|
99,392 |
|
|
394,750 |
|
|
384,577 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
6,809 |
|
|
6,295 |
|
|
27,290 |
|
|
24,999 |
|
|
|
|
|
|
|
|
|
Operating income |
8,378 |
|
|
9,254 |
|
|
34,676 |
|
|
33,453 |
|
|
|
|
|
|
|
|
|
Interest expense |
(1,102 |
) |
|
(1,119 |
) |
|
(4,436 |
) |
|
(4,460 |
) |
|
|
|
|
|
|
|
|
Interest income |
1,397 |
|
|
1,069 |
|
|
5,283 |
|
|
3,845 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
8,673 |
|
|
9,204 |
|
|
35,523 |
|
|
32,838 |
|
|
|
|
|
|
|
|
|
Income taxes |
1,944 |
|
|
3,193 |
|
|
9,984 |
|
|
7,758 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
6,729 |
|
|
$ |
6,011 |
|
|
$ |
25,539 |
|
|
$ |
25,080 |
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
Class A common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.52 |
|
|
$ |
0.47 |
|
|
$ |
1.98 |
|
|
$ |
1.95 |
|
Diluted |
$ |
0.47 |
|
|
$ |
0.42 |
|
|
$ |
1.77 |
|
|
$ |
1.74 |
|
|
|
|
|
|
|
|
|
Class B common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.34 |
|
|
$ |
0.30 |
|
|
$ |
1.29 |
|
|
$ |
1.27 |
|
Diluted |
$ |
0.34 |
|
|
$ |
0.30 |
|
|
$ |
1.29 |
|
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
Gross profit as a % of
sales |
27.79 |
% |
|
27.76 |
% |
|
27.79 |
% |
|
27.43 |
% |
Operating and administrative
expense as a % of sales |
24.16 |
% |
|
24.01 |
% |
|
24.02 |
% |
|
23.81 |
% |
|
(1) The Company adopted ASU No. 2014-09, “Revenue from Contracts
with Customers (Topic 606),” using the full retrospective approach
in fiscal 2019. As a result of the adoption of the
standard, $982 and $4,027 of certain other income
streams, including commissions for gift card and lottery sales and
service fees for ShopRite From Home, that were previously presented
as a reduction in Operating expenses were reclassified to sales for
the 13 and 52 week periods ended July 28,
2018, respectively. Additionally, $534 and $997 of
pharmacy fees previously recorded as Cost of sales were
reclassified as a reduction of sales for
the 13 and 52 week periods ended July 28, 2018,
respectively. |
Contact: |
|
John Van Orden, CFO |
|
|
(973) 467-2200 |
|
|
villageinvestorrelations@wakefern.com |
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