VILLAGE SUPER MARKET INC (VLGEA)·Q4 2019 Earnings Summary

Executive Summary

• Q4 2019 sales grew 1.1% year over year to $418.37M, driven by the Bronx store opening (June 2018) and the June 2019 Gourmet Garage acquisition; comps declined 0.9% due to three competitor openings .
• Gross margin expanded 3 bps to 27.79% on higher Wakefern patronage dividends, lower promo spend, and favorable mix, while operating and admin expense (O&A) rose 15 bps to 24.16%, reflecting higher payroll and self-insured workers’ comp costs .
• Operating income declined to $8.38M from $9.25M; net income increased to $6.73M vs. $6.01M on a $0.78M New Jersey tax audit settlement benefit; excluding items, management said net income fell 7% due to higher operating/admin expenses .
• No Q4 earnings call transcript was available; S&P Global consensus estimates were not retrievable in our environment, so beat/miss cannot be assessed at this time (see Estimates Context) .

What Went Well and What Went Wrong

What Went Well

• Product profitability held up: “Gross profit as a percentage of sales increased to 27.79%... due primarily to increased patronage dividends and other rebates from Wakefern, lower promotional spending, and more favorable product mix” .
• Strategic footprint broadened: acquired Gourmet Garage (3 specialty markets in Manhattan) for $5.27M, adding an urban specialty format to the portfolio .
• YoY net income up on one-time item: Q4 net income of $6.73M benefited from a $0.78M tax audit settlement with NJ, helping offset operating pressure .

What Went Wrong

• Negative comps persisted: same store sales declined 0.9%, primarily due to “three competitor store openings” (a recurring headwind through FY19) .
• Expense deleverage: O&A rose to 24.16% (+15 bps YoY), with drivers including “increased payroll costs” (+43 bps) and “higher self-insured workers compensation claim costs” (+22 bps), only partially offset by lower legal/consulting spend and non-union pension expense .
• Core profitability down excluding items: management noted Q4 net income decreased 7% excluding non-recurring items, reflecting cost pressure despite gross margin gains .

Financial Results

KPIs and Operating Drivers

Notes:

• Q4 net income includes a $0.78M tax benefit from a NJ audit settlement .
• Management stated that excluding non-recurring items, Q4 net income decreased 7% YoY due to higher O&A .

Guidance Changes

Earnings Call Themes & Trends

No Q4 2019 earnings call transcript was available; themes below reflect evolving commentary across Q2–Q4 disclosures.

Management Commentary

• “Sales increased due to the opening of the Bronx, New York City store on June 28, 2018 and the acquisition of Gourmet Garage on June 24, 2019 partially offset by a decrease in same store sales of 0.9%.”
• “Same store sales decreased due primarily to three competitor store openings.”
• “Gross profit as a percentage of sales increased to 27.79%... due primarily to increased patronage dividends and other rebates from Wakefern, lower promotional spending, [and] more favorable product mix.”
• “Operating and administrative expense as a percentage of sales increased... due primarily to increased payroll costs... and higher self-insured workers compensation claim costs...”
• “Excluding [non-recurring] items... net income decreased 7%... due primarily to increased operating and administrative expenses partially offset by the favorable impact of the Tax Act.”

Q&A Highlights

• No Q4 2019 earnings call transcript was available in our dataset; therefore, we could not review live Q&A or additional guidance clarifications for the quarter [ListDocuments result showing none].
• Notable clarifications from filings: Q4 net income included a $0.78M tax audit settlement benefit; excluding items, profitability declined 7% YoY due to cost pressures .

Estimates Context

• Wall Street consensus estimates (EPS, revenue) for Q4 2019 via S&P Global were not retrievable due to API request limit constraints during this analysis window. As a result, we cannot determine beat/miss vs. consensus at this time. We will update once access is restored.
• Given limited small-cap coverage, estimate dispersion may be thin; we recommend reassessing consensus and revising expectations for FY2020 post-integration of Gourmet Garage and against ongoing comp pressure.

Key Takeaways for Investors

• Near-term: gross margin resilience continues to offset some topline pressure, but elevated payroll and workers’ comp costs are compressing operating leverage; watch for expense discipline as comps remain negative .
• Medium-term: the Gourmet Garage acquisition adds NYC specialty exposure and potential mix benefits, while capex discipline (cut from $40M to $30M) protects cash flow amid a competitive backdrop .
• Competitive intensity is the central narrative for comps; Q4 comps (-0.9%) improved vs. Q3 (-2.4%) but remain negative—monitor competitor activity and any pricing/promo escalation .
• Tax rate framework remains stable (30–31%) with a discrete Q4 benefit; no change to dividend policy ($0.25/$0.1625 per quarter) supports income investors .
• Execution focus: continued self-checkout and operational proficiency investments should enhance customer experience but may keep O&A elevated in the near term; successful cost control is a key catalyst. References to higher payroll and workers’ comp warrant scrutiny in FY2020 .
• Without confirmed estimate benchmarks this quarter, trading set-ups hinge on narrative shifts—improving comps trajectory and cost containment vs. ongoing competitive headwinds.

Supporting Details and Sources

• Q4 2019 8-K and Press Release, including detailed income statement and commentary .
• Q3 2019 10-Q and press release excerpts for trend analysis .
• Q2 2019 10-Q and press release excerpts for trend analysis and prior guidance .