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Village Super Market, Inc. Reports Results for the Fourth Quarter Ended July 29, 2017

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SPRINGFIELD, N.J., Oct. 06, 2017 (GLOBE NEWSWIRE) -- Village Super Market, Inc. (NASDAQ:VLGEA) today reported its results of operations for the fourth quarter ended July 29, 2017.

Net income was $6,805,000 in the fourth quarter of fiscal 2017 compared to $8,448,000 in the fourth quarter of fiscal 2016. Fiscal 2016 contained 53 weeks, with the additional week included in the fourth quarter. Excluding the $280,000 (net of tax) estimated benefit of the additional week in fiscal 2016, net income decreased 17% in the fourth quarter of fiscal 2017 compared to the fourth quarter of the prior year. Net income in the fourth quarter decreased due primarily to a lower gross profit percentage and higher operating and administrative expenses. 

Sales were $410,683,000 in the fourth quarter of fiscal 2017 compared to $437,300,000 in fiscal 2016. Same store sales, excluding the impact of the extra week in fiscal 2016, increased .6%. Same store sales increased due primarily to three competitor store closings and sales growth in recently remodeled and expanded stores in Stirling and Chester. These increases were partially offset by four competitor store openings.

Gross profit as a percentage of sales decreased to 27.39% in the fourth quarter of fiscal 2017 compared to 27.46% in the fourth quarter of fiscal 2016 due primarily to higher promotional spending (.07%).

Operating and administrative expense as a percentage of sales increased to 22.99% in the fourth quarter of fiscal 2017 compared to 22.68% in the fourth quarter of fiscal 2016. Operating and administrative expense as a percentage of sales increased (.31%) compared to the fourth quarter of the prior year due primarily to increased fringe benefit costs and increased payroll. Fringe benefit costs increased due primarily to a pension settlement charge (.23%). Payroll costs increased due primarily to reduced operating leverage as a result of low same store sales growth. 

Net income was $22,921,000 in fiscal 2017 compared to $25,044,000 in fiscal 2016. Fiscal 2017 includes a $465,000 (net of tax) non-recurring credit received related to multi-employer health and welfare benefits. Fiscal 2016 includes estimated net income of $280,000 due to the fiscal year including a 53rd week and a $545,000 (net of tax) gain due to the recovery of insurance receivables related to Superstorm Sandy. Excluding these items from both periods, net income decreased 7% in fiscal 2017 compared to fiscal 2016 due primarily to flat same store sales and increased operating expenses.

Sales were $1,604,574,000 in fiscal 2017 compared to $1,634,904,000 in fiscal 2016. Same store sales, excluding the impact of the 53rd week in fiscal 2016, were flat. Same store sales increased due primarily to three competitor store closings and sales growth in recently remodeled and expanded stores in Stirling and Chester. These increases were offset primarily by four competitor store openings and deflation, particularly in the meat, produce and dairy departments.

Gross profit as a percentage of sales of 27.22% was flat in fiscal 2017 compared to fiscal 2016. Increased departmental gross margin percentages (.09%) and more favorable product mix (.02%) were offset by decreased patronage dividends (.07%) and higher promotional spending (.04%). 

Operating and administrative expense as a percentage of sales increased .11% to 23.15% in fiscal 2017 compared to 23.04% in fiscal 2016. Fiscal 2017 includes a non-recurring credit received related to multi-employer health and welfare benefits (.05%) and fiscal 2016 includes a gain for Superstorm Sandy insurance proceeds received (.06%). Excluding these items from both periods, operating and administrative expense as a percentage of sales increased .10% compared to fiscal 2016 primarily due to higher payroll (.30%) partially offset by decreased fringe benefit costs (.11%). Payroll costs increased due primarily to reduced operating leverage as a result of flat same store sales and investments in service departments, including the newly remodeled Chester store. Fringe benefit costs decreased due primarily to lower non-union pension expense (.15%) and lower healthcare costs (.08%).

Village Super Market operates a chain of 29 supermarkets under the ShopRite name in New Jersey, Maryland and northeastern Pennsylvania.

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; the success of establishing ShopRite's presence in the Maryland market; 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   14 Weeks Ended   52 Weeks Ended   53 Weeks Ended
    July 29,
 2017
  July 30,
 2016
  July 29,
 2017
  July 30,
 2016
                 
Sales   $ 410,683     $ 437,300     $ 1,604,574     $ 1,634,904  
                 
Cost of sales   298,194     317,221     1,167,863     1,189,874  
                 
Gross profit   112,489     120,079     436,711     445,030  
                 
Operating and administrative expense   94,435     99,170     371,495     376,601  
                 
Depreciation and amortization   6,124     6,259     24,482     24,101  
                 
Operating income   11,930     14,650     40,734     44,328  
                 
Interest expense   (1,109 )   (1,121 )   (4,452 )   (4,495 )
                 
Interest income   778     718     2,841     2,506  
                 
Income before income taxes   11,599     14,247     39,123     42,339  
                 
Income taxes   4,794     5,799     16,202     17,295  
                 
Net income   $ 6,805     $ 8,448     $ 22,921     $ 25,044  
                 
Net income per share:            
Class A common stock:                
Basic   $ 0.53     $ 0.67     $ 1.80     $ 1.98  
Diluted   $ 0.47     $ 0.60     $ 1.60     $ 1.77  
                 
Class B common stock:                
Basic   $ 0.34     $ 0.43     $ 1.16     $ 1.29  
Diluted   $ 0.34     $ 0.43     $ 1.16     $ 1.29  
                 
Gross profit as a % of sales   27.39 %   27.46 %   27.22 %   27.22 %
Operating and administrative expense as a % of sales   22.99 %   22.68 %   23.15 %   23.04 %
 

Contact:
John Van Orden, CFO
(973) 467-2200
john.vanorden@wakefern.com

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