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Village Super Market posts flat sales for third quarter.

SPRINGFIELD, N.J. -- With prior-year results bolstered by a big tax credit, Village Super Market Inc. saw earnings tumble more than 50% for the 13 weeks ended April 23. Adjusted earnings, meanwhile, were down nearly 10% on flat sales.

Reported net income at the New Jersey-based ShopRite operator slid 55.5% to $5.88 million during fiscal 2016's third quarter as sales inched up 0.2% to $387.9 million.

Earnings for the most recent period include a $545,000 after-tax gain from the recovery of insurance receivables related to Superstorm Sandy, while the 2015 quarter's results were buoyed by a $7.3 million tax benefit due to a settlement with the New Jersey Division of Taxation.

Excluding these items from both periods, adjusted earnings slipped 9.7% to $5.3 million, with management pointing to a reduced gross margin, higher operating expenses and the adverse effect of winter storm Jonas on sales in the first week of the 2016 quarter.

Same-store sales also rose at a 0.2% pace, due primarily to the closing of two competitor locations and continued sales growth in one store that was expanded and another that relocated. Those benefits were partially offset by the impact of Jonas and six new competitor store openings --including locations formerly operated by A&P. Management expects same-store sales for the full fiscal 2016 year to range from a 0.5% to a 1.5% increase.

Gross margin fell 15 basis points to 27.52%, while operating and administrative (O&A) expense inched down 5 basis points to 23.42% of sales--aided by the aforementioned gain from Superstorm Sandy insurance proceeds. Excluding that gain, O&A expenses increased slightly, as higher health care costs were partially offset by lower payroll costs.

After further including a 2.6% increase in depreciation and amortization expense to $5.8 million, operating income receded 4.8% to $5.9 million.

With interest expense dipping 1% to $1.1 million and interest income rising 9.3% to $659,000, pretax income for the quarter declined 4.4% to $9.6 million.

For the nine months, net income tumbled 29.9% to $16.6 million as sales rose 1.7% to $1.20 billion.

Earnings for the fiscal 2016 span reflect the aforementioned $545,000 gain, while the prior-year period included a $1.3 million after-tax charge to write off all remaining insurance receivables related to Superstorm Sandy, offset by a $6.5 million tax benefit from the settlement of the New Jersey tax dispute, net of interest and penalties accrued in fiscal 2015 prior to settlement.

Excluding these items from both periods, adjusted earnings slid 13.6% to $16.1 million, due primarily to a lower gross margin and higher adjusted operating and administrative expense.

Gross margin for the nine months declined 12 basis points to 27.13%, while reported O&A expense rose 5 basis points to 23.17% of sales. Including a 1.5% increase in depreciation and amortization to $17.8 million, operating income decreased 4.7% to $29.7 million.

After factoring in a 0.9% decline in interest expense to $3.38 million and a 2.2% decrease in interest income to $1.8 million, pretax income slipped 5% to $28.1 million.

Village Super Market ended the quarter with 29 ShopRite supermarkets New Jersey, Maryland and northeastern Pennsylvania.

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Title Annotation:MONEY
Article Type:Financial report
Geographic Code:1U2NJ
Date:Aug 1, 2016
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