Village Super Market’s Q2 Net Income Plunges
For its second quarter of fiscal 2010 ended Jan. 23, ShopRite operator Village Super Market, Inc. posted net income of $6,737,000, a decline of 15 percent from the year-ago period. The Springfield, N.J.-based company attributed the drop to such factors as lower same-store sales and higher operating expenses as a percentage of sales, partially offset by increased gross profit as a percentage of sales.
Sales for the quarter edged up 0.8 percent from last year, to $315,309,000, which Village said was due to the opening of its Marmora, N.J., store in May 2009. Same-store sales fell 1.7 percent, compared with a same-store sales increase of 5.9 percent in the year-ago period. According to the company, same-store sales decreased because of cannibalization from the opening of the Marmora store, reduced sales in three stores due to competitive store openings, and a decline in average transaction size. Village believes the smaller transaction size is due to food price deflation and changing consumer behavior during the poor economy, which has led to higher coupon usage, sale item penetration and trading down. The company expects same-store sales for all of fiscal 2010 to range from -0.5 percent to +1.0 percent.
Gross profit as a percentage of sales rose to 27.3 percent in the second quarter, vs. 27.2 percent last year, because of higher patronage dividends and lower LIFO charges, Village said, adding that these improvements were partially offset by increased warehouse assessment charges from ShopRite corporate and distribution arm Wakefern Food Corp. and higher promotional spending. Gross profit was favorably affected by receipt of patronage dividends from Wakefern that were higher than estimated amounts accrued in both the second quarter of fiscal 2010 and 2009.
Operating and administrative expense went up to 22.3 percent of sales in the quarter, compared with 21.6 percent of last year, which the company attributed primarily to increased fringe benefit, payroll and occupancy costs. Fringe benefit costs rose mainly because of higher medical, worker’s compensation insurance and pension costs, while payroll costs increased due to the loss of operating leverage from the 1.7 percent same-store sale decline noted above, according to Village. Occupancy costs grew mostly because of increased snow removal, real estate taxes and insurance costs, the operator added.
For the six-month period of fiscal 2010, net income plummeted 21 percent from the prior year, to $11,279,000. Sales for the six-month period were $618,093,000, a rise of 2.4 percent from the same period last year, although same-store sales dipped 0.6 percent.
Additionally, Village, which operates 26 ShopRite supermarkets in New Jersey and eastern Pennsylvania, opened a replacement store in Washington, N.J., last month.
Sales for the quarter edged up 0.8 percent from last year, to $315,309,000, which Village said was due to the opening of its Marmora, N.J., store in May 2009. Same-store sales fell 1.7 percent, compared with a same-store sales increase of 5.9 percent in the year-ago period. According to the company, same-store sales decreased because of cannibalization from the opening of the Marmora store, reduced sales in three stores due to competitive store openings, and a decline in average transaction size. Village believes the smaller transaction size is due to food price deflation and changing consumer behavior during the poor economy, which has led to higher coupon usage, sale item penetration and trading down. The company expects same-store sales for all of fiscal 2010 to range from -0.5 percent to +1.0 percent.
Gross profit as a percentage of sales rose to 27.3 percent in the second quarter, vs. 27.2 percent last year, because of higher patronage dividends and lower LIFO charges, Village said, adding that these improvements were partially offset by increased warehouse assessment charges from ShopRite corporate and distribution arm Wakefern Food Corp. and higher promotional spending. Gross profit was favorably affected by receipt of patronage dividends from Wakefern that were higher than estimated amounts accrued in both the second quarter of fiscal 2010 and 2009.
Operating and administrative expense went up to 22.3 percent of sales in the quarter, compared with 21.6 percent of last year, which the company attributed primarily to increased fringe benefit, payroll and occupancy costs. Fringe benefit costs rose mainly because of higher medical, worker’s compensation insurance and pension costs, while payroll costs increased due to the loss of operating leverage from the 1.7 percent same-store sale decline noted above, according to Village. Occupancy costs grew mostly because of increased snow removal, real estate taxes and insurance costs, the operator added.
For the six-month period of fiscal 2010, net income plummeted 21 percent from the prior year, to $11,279,000. Sales for the six-month period were $618,093,000, a rise of 2.4 percent from the same period last year, although same-store sales dipped 0.6 percent.
Additionally, Village, which operates 26 ShopRite supermarkets in New Jersey and eastern Pennsylvania, opened a replacement store in Washington, N.J., last month.