ShopRite operator Village Super Market reported continued strong sales momentum, fueled mainly by pandemic-driven consumer demand, for its fiscal 2021 first quarter, with net earnings rising over 30%.
For the quarter ended Oct. 24, the Springfield, N.J.-based Wakefern Food cooperative member and operator of 35 ShopRite stores saw sales rise 20.3% to $490.1 million from $407.4 million a year earlier. The company noted that the growth reflects a 6.6% same-store sales gain in the quarter, the purchase of five Fairway Market stores in May and the opening of a replacement ShopRite store in Stroudsburg, Pa., in November 2019.
“Same-store sales increased due primarily to increased customer demand across most stores due to the impact of the COVID-19 pandemic,” Village Super Market said in a statement. “We continue to experience higher average basket sizes and decreased transaction counts as customers consolidate shopping trips.”
Digital sales jumped 172% year over year in the first quarter. Village Super Market’s online grocery business includes the ShopRite from Home and third-party delivery and pickup services.
“Demand remains high in most stores,” Village Super Market said. “However, sales at Fairway and Gourmet Garage locations in Manhattan have been significantly negatively impacted due primarily to residential population migration out of the city and less commuter and tourist traffic during the COVID-19 pandemic.”
At the bottom line, net income totaled nearly $3.4 million in the first quarter, up 31% from almost $2.6 million a year ago. The result reflects $594,000 in pre-opening costs of for the Stroudsburg replacement store as well as $191,000 in costs and charges to write off the lease asset and related obligations for the old Stroudsburg store. Excluding those items, net earnings were flat for the quarter, according to the company.
“Net income was flat despite the increase in same-store sales, due to the impact of lower sales volumes in Manhattan, higher costs as we transition and integrate commissary operations into our business, and increased operating and administrative expenses,” Village Super Market said.
Reported earnings per share for the quarter were 26 cents for Class A common stock and 17 cents for Class B common stock, compared with 20 cents and 13 cents, respectively, a year earlier. Diluted share earnings were 23 cents for Class A and 17 cents for Class B stock versus 18 cents and 13 cents, respectively, in the year-ago period.
Though gross profit as a percentage of sales in the first quarter increased to 28.15% from 27.87%, mainly from higher margins related to Fairway, departmental gross profits (excluding Fairway) decreased primarily because of price investments from ShopRite’s “Right Price Promise” pricing strategy, introduced in October 2019, Village Super Market reported. “Both product mix and departmental gross margin percentages were also impacted by limitations in service departments and product availability as a result of the COVID-19 pandemic,” the company said.
Overall, Village Super Market owns and operates 35 supermarkets under the ShopRite and Fairway banners in New Jersey, Maryland, New York and Pennsylvania plus three Gourmet Garage specialty markets in New York City.