SPRINGFIELD, N.J. — First-quarter net income for Village Super Market here fell by 29%, the retailer said last week, citing low same-store sales growth, tightening margins, product price deflation and increased internal expenses.
Village, which operates 26 stores under the ShopRite banner in New Jersey and Pennsylvania, said it expected comparable-store sales of between 1% and 2% for the fiscal year. It said it expected to drastically reduce capital spending compared with fiscal 2009. Village spent $30 million in fiscal 2009 and has budgeted $17,000 for 2010.
Planned expenditures include the completion of construction and equipment for a replacement store in Washington, N.J., and several small remodels. The company expected it would fund the expenditures through cash on hand and generated cash flow during the fiscal year. Expenses in fiscal 2009 included construction for the Washington store and a new location in Mamora, N.J., which opened in late May.
Village said its 0.6% increase in same-store sales for the fiscal first quarter, which ended Oct. 24, was impacted by deflation and changing consumer behavior due to economic weakness, resulting in increased coupon usage, higher sale-item penetration and customers trading down. The company posted a 4.2% same-store sales increase in the same period last year.
Gross profit as a percentage of sales decreased by 0.7% in the quarter due to a combination of decreased departmental gross margin percentages, higher promotional spending and a changed product mix, the company added.
For the quarter, Village posted net income of $4.5 million on sales of $302.8 million. Overall sales were up 4.1% compared with the same period last year, due mainly to the opening of the Mamora store. Sales were offset some by cannibalization of existing stores the Mamora opening caused, the company added.
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