VILLAGE SUPER MARKET INC (VLGEA) SEC Filing 10-Q Quarterly report for the period ending Saturday, October 27, 2018

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Exhibit 99.1



VILLAGE SUPER MARKET, INC.
REPORTS RESULTS FOR THE FOURTH QUARTER ENDED
JULY 28, 2018
Contact:
John Van Orden, CFO
 
(973) 467-2200
 
john.vanorden@wakefern.com
Springfield, New Jersey – October 8, 2018 – 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%).




The following information was filed by VILLAGE SUPER MARKET INC on Wednesday, October 10, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18482874_44
    Financial - Earnings
    Excluding this item from the first quarter of fiscal 2019, net income increased 98% in the first quarter of fiscal 2019 compared to the prior year primarily due to increased same store sales, higher gross profit margins and the favorable impact of the Tax Act.
  • 18482874_92
    MA - Other
    Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.
  • 18482874_127
    Financial - Expense
    Any breach of these security measures and loss of confidential information, which could be undetected for a period of time, could damage our reputation with customers, vendors and associates, cause Wakefern and Village to incur significant costs to protect any customers, vendors and associates whose personal data was compromised, cause us to make changes to our information systems and could result in government enforcement actions and litigation against Wakefern and/or Village from outside parties.
  • 18482874_99
    Financial - Expense
    Any material change in Wakefern?s method of operation or a termination or material modification of Village?s relationship with Wakefern could have an adverse impact on the conduct of the Company?s business and could involve additional expense for Village.
  • 18482874_89
    Financial - Earnings
    These include: The supermarket business is highly competitive and characterized by narrow profit margins.
  • 18482874_85
    Financial - Expense
    We expect operating expenses will be affected by spends on operational proficiency initiatives and increased costs in certain areas, such as medical and other fringe benefit costs.
  • 18482874_35
    Financial - Income
    Interest income increased in the first quarter of fiscal 2019 compared to the corresponding period of the prior year due primarily to higher interest rates earned on notes receivable from Wakefern and demand deposits invested at Wakefern.
  • 18482874_6
    Other - Other
    The ShopRite Price Plus preferred customer program enables Village to offer continuity programs, focus on target marketing initiatives and to offer discounts and attach digital coupons directly to a customer's Price Plus card.
  • 18482874_3
    Financial - Earnings
    The supermarket industry is highly competitive and characterized by narrow profit margins.
  • 18482874_8
    Financial - Earnings
    These larger store sizes enable the Company?s stores to provide a "one-stop" shopping experience and to feature expanded higher margin specialty departments such as an on-site bakery, an expanded delicatessen, a variety of natural and organic foods, ethnic and international foods, prepared foods and pharmacies.
  • 18482874_43
    Other - Other
    The first quarter of fiscal 2019 includes a $290 (net of tax) gain for Superstorm Sandy insurance proceeds received.
  • 18482874_106
    Revenue - Product
    The real or perceived sale of contaminated food products by us could result in a loss of consumer confidence and product liability claims, which could have a material adverse effect on our sales and operations.
  • 18482874_9
    Financial - Earnings
    Many of our stores emphasize a Power Alley, which features high margin, fresh, convenience offerings in an area within the store that provides quick customer entry and exit for those customers shopping for today's lunch or dinner.
  • 18482874_100
    Financial - Expense
    The failure of any Wakefern member to fulfill its obligations to Wakefern or a member?s insolvency or withdrawal from Wakefern could result in increased costs to the Company.
  • 18482874_37
    Financial - Income
    The effective income tax rate was 30.2% in the first quarter of fiscal 2019 compared to 41.4% in the first quarter of the prior year.
  • 18482874_83
    Financial - Income
    We expect our effective income tax rate in fiscal 2019 to be in the range of 30% - 31%.
  • 18482874_28
    Other - Other
    As noted in Note 8 to the unaudited consolidated financial statements, the first quarter of fiscal 2019 includes a gain for Superstorm Sandy insurance proceeds received (.10%).
  • 18482874_39
    Other - Other
    The Tax Act made significant changes to the U.S tax code, including, but not limited to, reducing the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018 and bonus depreciation that will allow for full expensing of qualified property.
  • 18482874_139
    Other - Other
    This guidance is effective for fiscal years ending after December 15, 2020, and early adoption is permitted.
  • 18482874_117
    Financial - Cash Flow
    Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets.
  • 18482874_18
    Revenue - Product
    Sales increased 3.7% due to the opening of the Bronx, New York City store on June 28, 2018 and a same store sales increase of 1.3%.
  • 18482874_121
    Other - Other
    Any material interruption of our or Wakefern?s information systems could have a material adverse impact on our results of operations.
  • 18482874_133
    Other - Other
    This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with earlier adoption permitted.
  • 18482874_54
    Other - Other
    The decreased impact of working capital is due primarily to changes in timing of payments related to other assets and liabilities.
  • 18482874_126
    Other - Other
    It is possible that computer hackers, cyber terrorists and others may be able to defeat the security measures in place at the Company, Wakefern or those of third-party service providers.
  • 18482874_19
    Revenue - Product
    Same store sales increased due primarily to growth in recently remodeled and expanded stores partially offset by the impact of one competitor store opening.
  • 18482874_25
    Financial - Earnings
    Gross profit as a percentage of sales increased .87% in the first quarter of fiscal 2019 compared to the first quarter of the prior year primarily due to decreased promotional spending (.35%), increased departmental gross margin percentages (.31%), a favorable change in product mix (.09%), increased patronage dividends and other rebates from Wakefern (.05%) and decreased warehouse assessment charges from Wakefern (.05%).
  • 18482874_17
    Revenue - Product
    Sales were $401,550 in the first quarter of fiscal 2019, an increase of 3.7% compared to the first quarter of the prior year.
  • 18482874_70
    Financial - Earnings
    The credit agreement contains covenants that, among other conditions, require a maximum liabilities to tangible net worth ratio, a minimum fixed charge coverage ratio and a positive net income.
  • 18482874_75
    Revenue - Product
    Such statements relate to, for example: same store sales; economic conditions; expected pension plan contributions; projected capital expenditures; cash flow requirements; inflation expectations; and legal matters; and are indicated by words such as "will," "expect," "should," "intend," "anticipates," "believes" and similar words or phrases.
  • 18482874_5
    Other - Other
    Village competes by using low pricing, providing a superior customer service experience and a broad range of consistently available quality products, including ShopRite private labeled products.
  • 18482874_105
    Other - Other
    The Company could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain.
  • 18482874_20
    Revenue - Product
    The Company expects same store sales in fiscal 2019 to increase .5% to 2.5%.
  • 18482874_78
    Revenue - Product
    We expect same store sales to increase from .5% to 2.5% in fiscal 2019.
  • 18482874_27
    Financial - Expense
    Operating and administrative expense as a percentage of sales decreased .08% in the first quarter of fiscal 2019 compared to the first quarter of the prior year.
  • 18482874_38
    Other - Other
    The effective tax rate was impacted by the Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017.
  • 18482874_97
    Other - Other
    In addition, Wakefern provides the Company with support services in numerous areas including advertising, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services.

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Exhibit 32.1 - SECTION 1350 CERTIFICATION

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Exhibit 99.1 - ADDITIONAL EXHIBITS

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000103595-18-000019
  • Submitted to the SEC: Thursday, December 6, 2018 1:55:41 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Retail Grocery Stores