Village's Q1 Earnings Down Y/Y Due to Margin Woes, Sales Growth Aids

Core Insights - Village Super Market, Inc. (VLGEA) reported a decline in earnings per share for Q1 2026, with a figure of 81 cents compared to 86 cents in the prior year [1] - The company's stock has seen a 0.3% dip since the earnings report, contrasting with a 0.9% increase in the S&P 500 index during the same period [1] Financial Performance - Sales increased by 4.5% to $582.6 million from $557.7 million year-over-year, driven by a 2.5% rise in same-store sales and a new store opening in Watchung, NJ [2] - Net income fell by 6% to $12 million from $12.8 million a year ago, while adjusted net income declined by 2% to $12.5 million [2] Profitability and Margins - Gross profit slightly improved to $165 million from $161.9 million, but gross margin decreased to 28.3% from 29% due to lower patronage dividends and weaker departmental margins [3] - Operating and administrative expenses rose to $141.4 million from $137.5 million, but as a percentage of sales, they improved to 24.3% from 24.7% [4] Cost Management - Depreciation and amortization expenses increased to $8.4 million, reflecting capital investments, while interest expenses decreased due to lower outstanding debt [5] - The effective tax rate rose to 31.4% from 31.2% in the previous year, and operating income fell to $15.1 million from $16 million [6] Digital Sales and Market Position - Same-store digital sales grew by 14% year-over-year, contributing positively to overall performance despite competitive pressures from new store openings [7] - The company plans to open a new replacement ShopRite store in East Orange, NJ, in the second half of the fiscal year, with pre-opening costs of $0.4 million [9] Other Developments - A pension settlement charge of $0.3 million was recorded in the quarter due to the termination of a retirement plan, which was excluded from adjusted net income calculations [8]