Executive Summary

Q4 2023 delivered solid top-line and margin expansion: sales grew 5.0% to $553.8M, gross margin expanded 97 bps to 29.08%, and net income rose 21% to $15.3M; adjusted net income increased 27% to $15.6M .
Comp momentum improved: same-store sales rose 3.2% (price inflation-driven) and same-store digital sales accelerated to 12% in Q4, following 3.4% comps and 4.8% digital in Q3, and 3.2% comps and 0.5% digital in Q2 .
Margin drivers were favorable departmental margin mix and higher Wakefern patronage dividends/rebates; headwinds included higher warehouse assessments, increased self-insured claims, maintenance and technology costs; interest income continued to benefit from higher rates and larger Wakefern note balances and deposits .
No formal Q4 guidance was issued; prior quarter commentary pointed to FY23 SSS of 3.0–4.0% and continued quarterly dividends of $0.25 (Class A)/$0.1625 (Class B) (no update in Q4 press release) .

What Went Well and What Went Wrong

What Went Well
- Gross margin expanded 97 bps YoY to 29.08% on improved departmental gross margins (+51 bps), higher patronage dividends/rebates (+37 bps), lower LIFO (+24 bps), and reduced promotional spend (+14 bps) .
- Same-store sales +3.2% (inflation-led) and same-store digital sales +12%, demonstrating improving traffic/engagement in digital channels .
- Interest income rose on higher rates and increased balances in Wakefern-related notes and demand deposits, supporting below-the-line earnings leverage .
What Went Wrong
- Operating and administrative expense rate increased 78 bps YoY to 23.92%, with adjusted O&A up 61 bps to 23.84% on higher self-insured claims, facility repairs/maintenance, security, technology initiatives, and legal/consulting fees .
- Warehouse assessment charges from Wakefern pressured gross margin by 24 bps (also headwinds in prior quarters), indicating persistent cost friction in the supply chain .
- Effective tax rate increased to 32.7% in Q4 (vs 30.8% prior-year quarter), providing less net income carry-through than otherwise would be implied by operating leverage .

Financial Results

Quarterly trends (sequential: Q2 → Q3 → Q4 FY23)

Metric	Q2 2023	Q3 2023	Q4 2023
Sales ($M)	$563.9	$529.3	$553.8
Gross Margin %	27.47%	28.57%	29.08%
Operating & Admin Exp %	23.07%	24.33%	23.92%
Operating Income ($M)	$16.1	$14.0	$20.2
Net Income ($M)	$12.3	$11.0	$15.3
Diluted EPS (Class A)	$0.85	$0.75	$1.03
Effective Tax Rate	30.9%	31.6%	32.7%

Year-over-year comparison (Q4 FY22 → Q4 FY23)

Metric	Q4 2022	Q4 2023
Sales ($M)	$527.5	$553.8
Gross Margin %	28.11%	29.08%
Operating & Admin Exp %	23.14%	23.92%
Operating Income ($M)	$18.0	$20.2
Net Income ($M)	$12.6	$15.3
Diluted EPS (Class A)	$0.87	$1.03

KPIs

KPI	Q2 2023	Q3 2023	Q4 2023
Same-Store Sales (YoY)	+3.2%	+3.4%	+3.2%
Same-Store Digital Sales (YoY)	+0.5%	+4.8%	+12%
Adjusted Net Income ($M)	n/a	$10.2	$15.6
Adjusted O&A % of Sales	n/a	24.56%	23.84%

Non-GAAP notes: Q4 adjusted net income excludes a $0.4M loss on non-operating equity investments and includes related tax effects; prior-year adjustments included pension settlement charges (FY22) .

Estimates vs. Actuals

S&P Global consensus EPS and revenue for Q4, Q3, and Q2 2023 were unavailable at time of query due to vendor limits; we therefore cannot provide a beat/miss analysis for this quarter. Estimates from S&P Global were unavailable at query time (daily request limit reached).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (Q4 release)	Change
Same-Store Sales (FY23)	FY2023	2.0%–4.0% (Q2 10-Q)	3.0%–4.0% (reiterated in Q3 10-Q)	Raised (at Q3); no Q4 update
Dividend (quarterly)	Calendar 2023	Intend to continue $0.25 (Class A) / $0.1625 (Class B) per quarter (Q2 & Q3 10-Q)	No update in Q4 press release	Maintained (no change disclosed in Q4)

Note: The Q4 press release did not provide new/out-year quantitative guidance; prior-quarter commentary shown for continuity .

Earnings Call Themes & Trends

No Q4 FY23 earnings call transcript was available to review; themes are synthesized from the Q4 press release and Q2–Q3 filings/press releases.

Topic	Q2 2023 (Jan 28)	Q3 2023 (Apr 29)	Q4 2023 (Jul 29)	Trend
Gross margin drivers	GM down YoY on higher LIFO, warehouse assessments; departmental mix partly offsetting	GM up YoY on departmental margin; lower LIFO; warehouse assessments still a drag	GM up 97 bps YoY; departmental margin, higher patronage/rebates, lower LIFO; lower promo; warehouse assessments -24 bps	Improving overall; supply chain assessments remain a headwind
Operating expense discipline	O&A % down YoY on labor and supplies leverage	O&A adj. % down YoY; labor productivity gains	O&A % up YoY on self-insured claims, facility R&M, security, tech, legal/consulting	Mixed: leverage earlier, cost pressure in Q4
Digital	SSS digital +0.5%	SSS digital +4.8%	SSS digital +12%	Improving acceleration
Demand/Comps	SSS +3.2% (inflation-led)	SSS +3.4% (inflation-led)	SSS +3.2% (inflation-led)	Stable low-single-digit comps
Wakefern/interest income	Interest income up on higher rates, larger Wakefern notes and deposits	Continued benefit from rates/notes	Interest income higher; same drivers	Positive tailwind persists
Fairway/Manhattan recovery	Underperformance risks highlighted post-COVID in Manhattan	Manhattan underperformance cited as risk	Not specifically discussed in Q4 release	Stable risk backdrop

Management Commentary

Margin expansion drivers: “Gross profit as a percentage of sales increased to 29.08%… due primarily to increased departmental gross margin percentages (0.51%), increased patronage dividends and rebates received from Wakefern (0.37%), less promotional spending (0.14%) and lower LIFO charges (0.24%) partially offset by increased warehouse assessment charges from Wakefern (0.24%) and an unfavorable change in product mix (0.05%).”
Operating expense dynamics: Adjusted O&A expense rate rose on “increases in self-insured claim costs (0.22%), facility repair and maintenance costs (0.17%), security (0.05%), technology initiatives (0.05%) and legal and consulting fees (0.05%).”
Financing/other income: “Interest income increased… due primarily to higher interest rates and larger amounts invested in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.”

Q&A Highlights

No Q4 FY23 earnings call transcript was available in our document corpus for VLGEA; as a result, Q&A themes and any clarifications from management could not be reviewed.

Estimates Context

S&P Global (Capital IQ) consensus for Q4 FY23 (EPS and revenue) was unavailable at time of query due to vendor daily request limits; therefore, we cannot assess beat/miss versus Wall Street this quarter. Estimates from S&P Global were unavailable at query time (daily request limit reached).

Key Takeaways for Investors

Margin quality improved materially in Q4 on structural levers (departmental margin improvements, patronage/rebates, lower LIFO, reduced promotions) despite persistent warehouse assessment headwinds; watch sustainability into FY24 as inflation normalizes .
Digital growth is inflecting (Q2 +0.5% → Q3 +4.8% → Q4 +12%), suggesting improved omnichannel execution and customer adoption; continued traction could support share gains and basket growth .
Cost control bears monitoring: Q4’s higher O&A rate was driven by self-insured claims and facility/tech/security spend; investors should track the cadence of these costs and any normalization in claims frequency/severity .
Interest income tailwind from Wakefern-related notes/deposits enhances earnings resilience amid rate environment; a pivot in rates or cash balances would moderate this benefit .
No new Q4 guidance; prior quarter indicated FY23 SSS 3–4% and maintained quarterly dividends ($0.25 Class A / $0.1625 Class B); absent new guidance, focus shifts to FY24 store projects, remodel ROI, and Fairway/Manhattan trajectory .
Supply chain/assessment fees remain a structural headwind; any improvements at Wakefern or cooperative-level efficiencies could unlock further margin gains over time .
Tactical setup: Near-term narrative support comes from demonstrated margin execution and digital acceleration; key watch items include OpEx normalization, comps durability as inflation abates, and clarity on FY24 capex and store pipeline returns .

Sources:

Q4 2023 8-K and press release with consolidated statements and non-GAAP reconciliations .
Q3 2023 10-Q and press release (for trends and KPIs) .
Q2 2023 10-Q and press release (for trends and KPIs) .

Earnings call transcript: not found for Q4 FY23 in available sources.

VILLAGE SUPER MARKET INC (VLGEA)·Q4 2023 Earnings Summary