Shares of Village Super Market, Inc. VLGEA have gained 1.8% since it reported earnings for the second quarter of fiscal 2025 ended Jan. 25, 2025. This compares to the S&P 500 index’s 2.5% decline over the same time frame. Over the past month, the stock has lost 7.2% versus the S&P 500’s 5.9% fall.

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In the second quarter of fiscal 2025, Village Super Market reported earnings per share (EPS) of $1.14 for Class A common stock, growing from $0.97 in the prior-year quarter. 

Sales for the quarter were $599.7 million, rising 4.2% from $575.6 million in the prior-year period, driven by a 2.3% increase in same-store sales and contributions from the Old Bridge, NJ, replacement store that opened in March 2024.

The company reported net income of $16.9 million for the second quarter of fiscal 2025, reflecting a 17% increase from $14.5 million in the prior-year period.

Other Key Business Metrics

Same-store digital sales increased 9% year over year in the quarter, extending the company’s momentum in e-commerce. The gross profit margin declined to 28.35% from 28.40% due to higher promotional spending (0.16 percentage points), an unfavorable product mix shift (0.14 percentage points), and reduced patronage dividends and rebates from Wakefern (0.02 percentage points).

However, these headwinds were partially offset by a higher departmental gross margin (0.17 percentage points), lower warehouse assessment charges from Wakefern (0.06 percentage points) and reduced LIFO charges (0.04 percentage points).

Operating and administrative expenses as a percentage of sales improved to 23.22% from 23.71%, benefiting from lower facility insurance costs, decreased legal and consulting fees, and sales leverage on occupancy and facility costs.

Management Commentary

The company attributed its sales growth to increased customer engagement in its remodeled stores, higher pharmacy sales, and inflationary price trends in the meat and dairy segments. Management also highlighted disciplined cost-control efforts, which contributed to lower expenses as a percentage of sales.

However, gross-margin pressures from promotions and product mix changes remain a consideration.

Factors Influencing Performance

Lower interest expenses helped boost net income, as Village Super Market reported a decline in interest expenses for the quarter due to reduced outstanding debt balances. However, interest income also declined, led by lower interest rates on variable-rate notes receivable from Wakefern and a decrease in demand deposits invested at Wakefern.

The company's effective tax rate stood at 31.1%, slightly down from 31.5% a year earlier, providing a modest benefit to net earnings.

Other Developments

Village Super Market operates 34 supermarkets under the ShopRite and Fairway banners, along with three Gourmet Garage specialty markets in New York City. 

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This article originally published on Zacks Investment Research (zacks.com).

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