Village Super Market, Inc. (NSD-VLGEA) today reported its results
of operations for the fourth quarter ended July 31, 2021.
Fourth Quarter Highlights
- Net income of $9.5
million, an increase of 3% compared to $9.2 million in the fourth
quarter of the prior year
- Adjusted net income
of $8.7 million, an increase of 50% compared to $5.8 million in the
fourth quarter of the prior year
- Same store sales
increased 0.1%; on a two-year stacked basis same store sales
increased 7.4%
- Same store digital
sales decreased 22%; on a two-year stacked basis same store digital
sales increased 172%
Fiscal 2021 Highlights
- Net income of $20.0
million, a decrease of 20% compared to $24.9 million in fiscal
2020
- Adjusted net income
of $18.9 million, a decrease of 18% compared to $23.1 million in
fiscal 2020
- Same store sales
increased 1.8%; on a two-year stacked basis same store sales
increased 7.5%
- Same store digital
sales increased 68%; on a two-year stacked basis same store digital
sales increased 219%
Fourth Quarter of Fiscal 2021
Results
Sales were $536.3 million in the 14 weeks ended
July 31, 2021 compared to $501.3 million in the 13 weeks ended July
25, 2020. Sales increased $35.4 million, or 7.1%, due to fiscal
2021 containing 53 weeks, with the additional week included in the
fourth quarter. Excluding the impact of the 53rd week, sales
decreased 0.1% due to the closure of the Silver Spring, Maryland
store in February 2020 partially offset by the Fairway acquisition
completed on May 14, 2020 and a 0.1% increase in same store
sales.
Average basket sizes decreased, transaction
counts increased and same store digital sales decreased as we
cycled against the initial months following the COVID-19 outbreak
in our trade area. Additionally, food inflation and increased
Supplemental Nutrition Assistance Program ("SNAP") benefits
positively impacted sales. Sales levels in Manhattan continue to be
negatively impacted by residential population migration out of the
city and less commuter and tourist traffic.
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 decreased
to 28.31% in the 14 weeks ended July 31, 2021 compared to 28.91% in
the 13 weeks ended July 25, 2020 due primarily to decreased
departmental gross margin percentages (.29%) and increased
warehouse assessment charges from Wakefern (.75%), partially offset
by a favorable change in product mix (.21%) and lower promotional
spending (.22%).
Operating and administrative expense as a
percentage of sales decreased to 23.65% in the 14 weeks ended July
31, 2021 compared to 25.29% in the 13 weeks ended July 25, 2020.
Adjusted operating and administrative expenses decreased to 24.29%
in the 14 weeks ended July 31, 2021 compared to 25.65% in the 13
weeks ended July 25, 2020. The decrease in Adjusted operating and
administrative expenses is due primarily to decreased costs related
to COVID-19, including enhanced wages and benefits, security and
outside sanitation services (1.45%) and lower payroll costs (.19%).
Payroll costs decreased due to productivity initiatives and labor
shortages despite minimum wage and demand driven pay rate
increases.
Impairment of assets in the 14 weeks ended July
31, 2021 includes non-cash charges related to the Fairway trade
name of $2.4 million and the long-lived assets of one Gourmet
Garage store of $0.5 million due primarily to the uncertainty
regarding the duration and extent of the impact of the COVID-19
pandemic on Manhattan.
The Company’s effective income tax rate was
31.2% in the 14 weeks ended July 31, 2021 compared to 4.1% in the
13 weeks ended July 25, 2020. The 13 weeks ended July 25, 2020
includes a $2.5 million benefit from a federal net operating loss
carryback at a rate higher than the current statutory tax rate.
Excluding the impact of this adjustment, the effective income tax
rate was 31.5% in the 13 weeks ended July 25, 2020.
Net income was $9.5 million in the 14 weeks
ended July 31, 2021 compared to $9.2 million in the 13 weeks ended
July 25, 2020. Adjusted net income was $8.7 million in the 14 weeks
ended July 31, 2021 compared to $5.8 million in the 13 weeks ended
July 25, 2020.
Fiscal 2021 Results
Sales were $2.03 billion in fiscal 2021 compared
to $1.80 billion in fiscal 2020. Sales increased $35.4 million, or
2.0%, due to fiscal 2021 containing 53 weeks. Excluding the impact
of the 53rd week, Sales increased due to the Fairway acquisition
completed on May 14, 2020, the opening of the Stroudsburg
replacement store on November 1, 2019 and a same store sales
increase of 1.8%. Excluding the impact of the 53rd week, same store
sales increased 7.5% in fiscal 2021 on a two-year stacked basis
compared to fiscal 2019.
Since the beginning of the COVID-19 pandemic, we
have experienced higher average basket sizes and decreased
transaction counts as customers have consolidated shopping trips.
Additionally, both food inflation and increased Supplemental
Nutrition Assistance Program ("SNAP") benefits positively impacted
sales. Same store digital sales growth accelerated through both
ShopRite from Home and partnerships with online grocery picking and
delivery services, increasing 68% in fiscal 2021 compared to fiscal
2020 and 219% on a two-year stacked basis. During the COVID-19
pandemic, fiscal 2021 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.
Gross profit as a percentage of sales decreased
to 27.83% in fiscal 2021 compared to 28.07% in fiscal 2020. Higher
margins associated with Fairway increased gross profit (.22%)
despite higher costs as we transition and integrate commissary
operations into our business. Excluding the impact of Fairway,
gross profit as a percentage of sales decreased .46% due primarily
to decreased departmental gross margin percentages (.48%) and
increased warehouse assessment charges from Wakefern (.34%)
partially offset by a favorable change in product mix (.17%), lower
promotional spending (.16%) and increased patronage dividends and
rebates received from Wakefern (.03%). Departmental gross profits
decreased due partly to price investments.
Operating and administrative expense as a
percentage of sales decreased to 24.57% in fiscal 2021 compared to
24.65% in fiscal 2020. Adjusted operating and administrative
expense as a percentage of sales increased to 24.76% in fiscal 2021
compared to 24.63% in fiscal 2020. Adjusted operating and
administrative expense increased due primarily to increased
occupancy costs due primarily to the Fairway acquisition (.56%) and
increased external fees and transportation costs associated with
digital sales (.42%), partially offset by decreased costs related
to COVID-19, including enhanced wages and benefits, security and
outside sanitation services (.62%) and lower payroll and fringe
benefit costs (.24%). Payroll and fringe benefits decreased
primarily due to leverage from higher sales, reductions in service
department offerings, labor shortages and productivity initiatives
partially offset by the addition of Fairway, growth of ShopRite
from Home and minimum wage and demand driven pay rate
increases.
Depreciation and amortization expense was $34.2
million in fiscal 2021 compared to $31.4 million in fiscal 2020.
Depreciation and amortization expense increased in fiscal 2021
compared to the prior year due to depreciation related to assets
acquired as part of the Fairway acquisition.
Impairment of assets includes non-cash charges
related to the Fairway trade name of $2.4 million and the
long-lived assets of one Gourmet Garage store of $0.5 million due
primarily to the uncertainty regarding the duration and extent of
the impact of the COVID-19 pandemic on Manhattan.
Interest expense was $3.9 million in fiscal 2021
compared to $2.6 million in fiscal 2020. Interest expense increased
in fiscal 2021 compared to fiscal 2020 due primarily to interest
expense related to the credit agreement entered into on May 6,
2020.
Interest income was $3.6 million in fiscal 2021
compared to $4.1 million in fiscal 2020. Interest income decreased
in fiscal 2021 compared to fiscal 2020 due primarily to lower
interest rates for amounts invested in variable rate notes
receivable from Wakefern and demand deposits invested at
Wakefern.
The Company’s effective income tax rate was
30.7% in fiscal 2021 compared to 21.4% in fiscal 2020. Fiscal 2020
includes a $2.5 million benefit from a federal net operating loss
carryback at a rate higher than the current statutory tax rate.
Excluding the impact of this adjustment, the effective income tax
rate was 29.3% in fiscal 2020. The increase in the effective tax
rate in fiscal 2021 is due primarily to favorable return to
provision adjustments in fiscal 2020 and increased state taxable
income in higher tax rate jurisdictions.
Net income was $20.0 million in fiscal 2021
compared to $24.9 million in fiscal 2020. Adjusted net income was
$18.9 million in fiscal 2021 compared to $23.1 million in fiscal
2020.
Village Super Market operates a chain of 34
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 and Non-GAAP
Measures
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.
We provide non-GAAP measures, including Adjusted
net income and Adjusted operating and administrative expense, that
we believe are useful to analysts and investors to evaluate the
Company's ongoing results of operations. These non-GAAP financial
measures should not be considered as an alternative to GAAP
measures such as net income, operating income, operating and
administrative expense or any other GAAP measure of performance.
These measures should not be reviewed in isolation or considered as
a substitute for our financial results as reported in accordance
with GAAP. We believe Adjusted net income and Adjusted operating
and administrative expense are useful metrics to investors and
analysts because they present more accurate year-over-year
comparisons of our net income and operating and administrative
expense because adjusted items are not the result of our normal
operations. Other companies may have different definitions of
Non-GAAP Measures and provide for different adjustments, and
comparability to the Company's results of operations may be
impacted by such differences. The Company's presentation of
Non-GAAP Measures should not be construed as an implication that
its future results will be unaffected by unusual or non-recurring
items.
VILLAGE SUPER MARKET, INC.CONSOLIDATED STATEMENTS
OF OPERATIONS(In thousands, except per share amounts)
(Unaudited)
|
14 Weeks Ended |
|
13 Weeks Ended |
|
53 Weeks Ended |
|
52 Weeks Ended |
|
July 31,2021 |
|
July 25,2020 |
|
July 31,2021 |
|
July 25,2020 |
|
|
|
|
|
|
|
|
Sales |
$ |
536,283 |
|
|
|
$ |
501,302 |
|
|
|
$ |
2,030,330 |
|
|
|
$ |
1,804,594 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
384,469 |
|
|
|
356,397 |
|
|
|
1,465,286 |
|
|
|
1,298,119 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
151,814 |
|
|
|
144,905 |
|
|
|
565,044 |
|
|
|
506,475 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative
expense |
126,820 |
|
|
|
126,781 |
|
|
|
498,786 |
|
|
|
444,833 |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
8,271 |
|
|
|
8,444 |
|
|
|
34,195 |
|
|
|
31,358 |
|
|
|
|
|
|
|
|
|
|
Impairment of assets |
2,900 |
|
|
|
— |
|
|
|
2,900 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Operating income |
13,823 |
|
|
|
9,680 |
|
|
|
29,163 |
|
|
|
30,284 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
(980 |
) |
|
|
(913 |
) |
|
|
(3,943 |
) |
|
|
(2,611 |
) |
|
|
|
|
|
|
|
|
|
Interest income |
963 |
|
|
|
861 |
|
|
|
3,633 |
|
|
|
4,060 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
13,806 |
|
|
|
9,628 |
|
|
|
28,853 |
|
|
|
31,733 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
4,306 |
|
|
|
399 |
|
|
|
8,859 |
|
|
|
6,794 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
9,500 |
|
|
|
$ |
9,229 |
|
|
|
$ |
19,994 |
|
|
|
$ |
24,939 |
|
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
Class A common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.73 |
|
|
|
$ |
0.71 |
|
|
|
$ |
1.53 |
|
|
|
$ |
1.93 |
|
|
Diluted |
$ |
0.65 |
|
|
|
$ |
0.63 |
|
|
|
$ |
1.37 |
|
|
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
|
Class B common stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.47 |
|
|
|
$ |
0.46 |
|
|
|
$ |
1.00 |
|
|
|
$ |
1.25 |
|
|
Diluted |
$ |
0.47 |
|
|
|
$ |
0.46 |
|
|
|
$ |
1.00 |
|
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
|
Gross profit as a % of
sales |
28.31 |
|
% |
|
28.91 |
|
% |
|
27.83 |
|
% |
|
28.07 |
|
% |
Operating and administrative
expense as a % of sales |
23.65 |
|
% |
|
25.29 |
|
% |
|
24.57 |
|
% |
|
24.65 |
|
% |
VILLAGE SUPER MARKET, INC.RECONCILIATION OF
NON-GAAP MEASURE(In thousands) (Unaudited)
The following tables reconciles Net income to Adjusted net
income and Operating and administrative expenses to Adjusted
operating and administrative expenses:
|
14 Weeks Ended |
|
13 Weeks Ended |
|
53 Weeks Ended |
|
52 Weeks Ended |
|
July 31,2021 |
|
July 25,2020 |
|
July 31,2021 |
|
July 25,2020 |
|
|
|
|
|
|
|
|
Net Income |
$ |
9,500 |
|
|
|
$ |
9,229 |
|
|
|
$ |
19,994 |
|
|
|
$ |
24,939 |
|
|
|
|
|
|
|
|
|
|
Adjustments to Gross
Profit: |
|
|
|
|
|
|
|
Amortization of acquisition
related inventory step up |
— |
|
|
|
507 |
|
|
|
— |
|
|
|
507 |
|
|
|
|
|
|
|
|
|
|
Adjustments to Operating and
administrative expense: |
|
|
|
|
|
|
|
Gain on sale of assets
(1) |
(4,044 |
) |
|
|
— |
|
|
|
(4,768 |
) |
|
|
(1,220 |
) |
|
Non-cash pension termination
and settlement charges |
587 |
|
|
|
241 |
|
|
|
587 |
|
|
|
1,604 |
|
|
Store closure costs (2) |
— |
|
|
|
— |
|
|
|
325 |
|
|
|
799 |
|
|
New store pre-opening costs
(3) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,274 |
|
|
Gain on Superstorm Sandy
insurance proceeds |
— |
|
|
|
(2,733 |
) |
|
|
— |
|
|
|
(2,733 |
) |
|
Fairway acquisition
transaction costs |
— |
|
|
|
2,701 |
|
|
|
— |
|
|
|
2,701 |
|
|
Break-up fee income (4) |
— |
|
|
|
(2,035 |
) |
|
|
— |
|
|
|
(2,035 |
) |
|
|
|
|
|
|
|
|
|
Other adjustments: |
|
|
|
|
|
|
|
Impairment of assets (5) |
2,900 |
|
|
|
— |
|
|
|
2,900 |
|
|
|
— |
|
|
Income from 53-week fiscal
year (6) |
(602 |
) |
|
|
— |
|
|
|
(602 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Adjustments to Income
taxes: |
|
|
|
|
|
|
|
Tax impact of adjustments |
356 |
|
|
|
403 |
|
|
|
478 |
|
|
|
(236 |
) |
|
Tax gain on federal net
operating loss carryback |
— |
|
|
|
(2,512 |
) |
|
|
— |
|
|
|
(2,512 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
$ |
8,697 |
|
|
|
$ |
5,801 |
|
|
|
$ |
18,914 |
|
|
|
$ |
23,088 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative
expense |
$ |
126,820 |
|
|
|
$ |
126,781 |
|
|
|
$ |
498,786 |
|
|
|
$ |
444,833 |
|
|
Total adjustments to operating
administrative expense |
3,457 |
|
|
|
1,826 |
|
|
|
3,856 |
|
|
|
(390 |
) |
|
Adjusted operating and
administrative expense |
$ |
130,277 |
|
|
|
$ |
128,607 |
|
|
|
$ |
502,642 |
|
|
|
$ |
444,443 |
|
|
Adjusted operating and
administrative expense as a % of sales |
24.29 |
|
% |
|
25.65 |
|
% |
|
24.76 |
|
% |
|
24.63 |
|
% |
(1) Fiscal 2021 includes a $4,044 gain on the
sale of the leasehold interest in a non-supermarket related parking
lot obtained as part of the Fairway acquisition and a $724 gain on
the sale of the pharmacy prescription list related to the Silver
Spring store. Fiscal 2020 includes a gain on the sale of the
pharmacy prescription lists related to three store pharmacies
closed in March 2020. (2) Fiscal 2021 includes costs associated
with the closure of the Silver Spring, Maryland store on February
22, 2021 and Fiscal 2020 includes charges to write off the lease
asset and related obligations for the old Stroudsburg store. (3)
Fiscal 2020 pre-opening costs relate to the Stroudsburg replacement
store opened on November 1, 2019. (4) Fiscal 2020 gain due to the
breakup of Village’s initial “stalking horse” bid under the January
20, 2020 Fairway Asset Purchase Agreement.(5) Fiscal 2021 non-cash
impairment charges for the Fairway trade name of $2,386 and the
long-lived assets for one Gourmet Garage store of $514. (6) Fiscal
2021 is a 53-week fiscal year, with the additional week included in
the fourth quarter.
Contact: |
John Van Orden, CFO |
|
(973) 467-2200 |
|
villageinvestorrelations@wakefern.com |
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