Village Super Market(VLGEA) - 2026 Q2 - Quarterly Report

Sales Performance - Sales for the 13 weeks ended January 24, 2026, were $640,959, an increase of 6.9% compared to the same period in 2025, driven by a 4.8% increase in same store sales and the opening of a new store [69]. - For the 26 weeks ended January 24, 2026, sales reached $1,223,552, reflecting a 5.7% increase compared to the prior year, with same store sales up by 3.7% [70]. Profitability - Gross profit as a percentage of sales decreased by 0.29% in the 13 weeks ended January 24, 2026, primarily due to lower patronage dividends and increased promotional spending [71]. - Net income for the 13 weeks ended January 24, 2026, was $17,872, compared to $16,896 for the same period in 2025, while net income for the 26 weeks was $29,873, up from $29,697 [78]. - The effective income tax rate was 30.7% for the 13 weeks ended January 24, 2026, down from 31.1% in the same period in 2025 [77]. Expenses Management - Operating and administrative expenses as a percentage of sales decreased by 0.15% in the 13 weeks ended January 24, 2026, attributed to lower employee and advertising costs [73]. - Adjusted operating and administrative expenses as a percentage of sales were 23.62% for the 26 weeks ended January 24, 2026, compared to 23.91% in the prior year [67]. Capital Expenditures and Investments - Capital expenditures for the 26 weeks ended January 24, 2026, totaled $17,709, primarily for the construction of replacement stores and various upgrades [84]. - The company revised its budgeted capital expenditures for fiscal 2026 to approximately $65,000 due to project delays, including new store constructions and upgrades [88]. Cash Flow and Liquidity - Net cash provided by operating activities increased to $78,780 for the 26 weeks ended January 24, 2026, up from $60,952 in the prior year, reflecting a net increase of $17,828 [81]. - Net cash used in investing activities decreased to $21,798 in the 26 weeks ended January 24, 2026, compared to $32,185 in the same period last year, a reduction of $10,387 [83]. - As of January 24, 2026, the company had $65,979 available under its unsecured revolving line of credit [91]. - The company believes its cash, operating cash flows, and credit facility will be sufficient to meet liquidity needs for the foreseeable future [92]. Store Operations - The company operates a centralized commissary to enhance production efficiency and product quality across its stores [62]. - The company opened a new 72,000 square foot ShopRite store in Watchung, NJ, on April 9, 2025, replacing a smaller 44,000 square foot store [64]. - The company expects same store sales growth to range from 1.0% to 3.0% in fiscal 2026 [96]. - The company plans to continue paying quarterly dividends at the rate of $0.25 per Class A and $0.1625 per Class B share in fiscal 2026 [96]. Employee Relations and Risks - Approximately 91% of the company's employees are covered by collective bargaining agreements, which could lead to increased operating costs if health care and pension costs rise [99]. - The company may face increased contributions to underfunded multi-employer pension plans, impacting future operating costs [99]. - The company’s goodwill and indefinite-lived intangible assets are subject to impairment testing, which could result in charges if acquired businesses do not meet forecasted expectations [99]. - Any material interruption of the company's information systems could adversely impact its results of operations [99]. Interest Rate and Financial Instruments - The company is exposed to interest rate risk from its Credit Facility, which includes a maximum borrowing amount of $75 million at SOFR plus 1.25% [104]. - As of January 24, 2026, the company had five interest rate swaps with an aggregate initial notional value of $99,975 to hedge variable cash flows associated with variable-rate loans [106]. - The fair value of interest rate swaps recorded in other assets was $4,977 as of January 24, 2026 [107]. - The company holds variable rate notes receivable from Wakefern totaling $115,357, which earn interest at the prime rate plus 0.50% and SOFR plus 2.25% [108]. - Cash and cash equivalents included $129,427 in demand deposits invested at Wakefern at overnight money market rates as of January 24, 2026 [109]. - The effective income tax rate for fiscal 2026 is expected to be between 30.5% and 31.5% [96].