Financial Performance Overview

Village Super Market, Inc. (the “Company” or “Village”) reported strong financial results for the 13 and 26 weeks ended January 25, 2025. Key highlights include:

• Sales increased 4.2% in the 13 weeks and 4.1% in the 26 weeks ended January 25, 2025 compared to the prior year periods, driven by same-store sales growth of 2.3% and 2.4% respectively.

• Gross profit as a percentage of sales decreased slightly by 0.05% in the 13 weeks but increased 0.23% in the 26 weeks, due to factors like higher promotional spending, product mix changes, and changes in patronage dividends and rebates.

• Operating and administrative expenses as a percentage of sales decreased 0.49% in the 13 weeks and 0.08% in the 26 weeks, primarily due to lower facility insurance costs, decreased legal and consulting fees, and sales leverage on occupancy and facility costs.

• Net income increased to $16,896 in the 13 weeks and $29,697 in the 26 weeks, up from $14,480 and $26,066 in the respective prior year periods.

Revenue and Profit Trends

Village’s sales growth was driven by a combination of increased same-store sales and the opening of a new replacement store in Old Bridge, NJ. The same-store sales increases were attributed to strong digital sales, continued growth in recently remodeled stores, higher pharmacy sales, and inflation in the meat and dairy departments.

Gross profit margins were relatively stable, with the slight decrease in the 13-week period offset by an increase in the 26-week period. Factors impacting gross profit included higher promotional spending, unfavorable product mix changes, and changes in patronage dividends and rebates received from Wakefern, the Company’s cooperative.

Operating expenses declined as a percentage of sales, reflecting cost savings in areas like facility insurance, legal and consulting fees, and sales leverage on occupancy costs. This helped drive the increase in net income for both the 13-week and 26-week periods.

Strengths and Weaknesses

Village’s key strengths include:

• Solid same-store sales growth driven by digital, pharmacy, and inflation-related factors
• Ability to leverage operating expenses and maintain stable gross margins
• Strong cash flow generation and liquidity position

Potential weaknesses or risks include:

• Competitive pressures in the supermarket industry, including from national, regional, and local chains as well as other retail formats
• Concentration of stores in the Northeast, making the Company vulnerable to economic conditions in that region
• Reliance on Wakefern for merchandise, support services, and financial arrangements, which could be disrupted
• Potential labor issues with a largely unionized workforce
• Exposure to food safety, cybersecurity, and other operational risks

Outlook

Village provided the following outlook for fiscal 2025:

• Expects same-store sales growth of 1.0% to 3.0%
• Budgeted $75 million in capital expenditures for store replacements, remodels, and technology/equipment upgrades
• Plans to continue quarterly dividend payments at the current rate
• Anticipates an effective income tax rate of 31.0% to 32.0%

The Company believes its cash, operating cash flow, and available credit facility will be sufficient to meet its liquidity needs for the foreseeable future. However, it highlighted various uncertainties and risks that could impact its future performance, including competitive pressures, economic conditions, labor issues, and operational risks.