Village Super Market Posts Plummeting Q1 Net Income

Village Super Market, Inc., which operates 26 ShopRite supermarkets in New Jersey and eastern Pennsylvania today reported for its first quarter of 2010 ended Oct. 24, 2009, net income of $4.5 million, a plunge of 29 percent from the year-ago period. The Springfield, N.J.-based company attributed the precipitous decline primarily to low same-store sales growth, decreased gross profit as a percentage of sales and increased operating expense as a percentage of sales.

Sales for the first quarter, however, were $302.8 million, an increase of 4.1 percent over last year, which Village said was mainly due to the opening of a new store in Marmora, N.J., in May. Same-store sales grew 0.6 percent as increased transaction counts at most of the operator’s locations were offset by a decrease in the average transaction size and cannibalization from the opening of the Marmora store. This result was comparable to the same-store sales increase of 4.2 percent in the first quarter of the prior year, the company noted.

According to Village, the low same-store sales growth is because of food price deflation and changing consumer behavior in light of the weak economy, which has led to higher coupon usage, sale item penetration and trading down. The company said it anticipated that same-store sales for all of fiscal 2010 would increase by 1 percent to 2 percent.

Gross profit as a percentage of sales at the chain was 26.6 percent in the first quarter of fiscal 2010, vs. 27.3 percent in year-ago period, mainly due to lower departmental gross margin percentages, higher promotional spending and a changed product mix, Village noted.

Operating and administrative expense as a percentage of sales edged up to 22.6 percent in the quarter, compared with 22.3 percent last year, primarily as a result of higher medical, worker’s compensation insurance and pension costs, the company said.
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