EX-99.2 7 village10q042608ex99-2.htm SECOND QUARTER REPORT TO SHAREHOLDERS DATED MARCH 17, 2008 village10q042608ex99-2.htm

733 Mountain Avenue
Springfield, New Jersey 07081
Phone:  (973) 467-2200
Fax:  (973) 467-6582

To Our Shareholders:

Net income was $6,439,000 in the second quarter of fiscal 2008, an increase of 27% from the second quarter of the prior year.  Net income improved primarily due to improved sales and gross profit percentages.

Sales were $292,829,000 in the second quarter of fiscal 2008, an increase of 8.3% from the second quarter of the prior year.  Sales increased due to the opening of new stores in Galloway, New Jersey on October 3, 2007 and Franklin Township, New Jersey on November 7, 2007, and a 2.3% increase in same store sales.  Same store sales   increased due to improved sales in one store due to the closing of a store by a competitor, higher sales in the Somers Point replacement store and food inflation.  These improvements were partially offset by reduced sales in five stores due to three competitive store openings and cannibalization from the opening of the Galloway and Franklin stores.  We expect same store sales in the third quarter of fiscal 2008 of    -1% to +1% based on our February sales, as consumers appear to be more cautious due to concerns about the economy and rising fuel and food prices.

Gross profit as a percentage of sales increased .65% in the second quarter of fiscal 2008 compared to the second quarter of the prior year primarily due to improved departmental gross margin percentages (.34%), reduced warehouse assessment charges from Wakefern (.17%), improved product mix (.11%), and reduced promotional spending (.09%).  Gross profit was favorably impacted by receipt of patronage dividends from Wakefern greater than amounts accrued in the second quarter of both fiscal 2008 (.17%) and 2007 (.20%).

Operating and administrative expense decreased .04% as a percentage of sales in the second quarter of fiscal 2008 compared to the second quarter of the prior year primarily due to refunds of property and liability insurance premiums (.16%) in the current year and the benefit of sales for the Franklin store without any rent expense as that lease is accounted for as a financing lease (.10%).  These decreases were partially offset by pre-opening expenses associated with the new Franklin store (.09%) and increased utility costs (.14%).

Net income was $10,737,000 in the six-month period of fiscal 2008, an increase of 16% from the prior year.  Sales for the six-month period of fiscal 2008 were $556,388,000 an increase of 6.6% from the prior year.  Same store sales increased 2.9%.

On March 14, 2008, the Board of Directors of Village Super Market, Inc. declared a special dividend of $3.00 per Class A common share and $1.95 per Class B common share.  The cash dividends will be payable on April 24, 2008 to shareholders of record at the close of business on April 4, 2008.

Village Super Market operates a chain of 25 supermarkets under the ShopRite name in New Jersey and Eastern Pennsylvania.

James Sumas
Chairman of the Board


March 17, 2008
All statements, other than statements of historical fact, included in this report are or may be considered forward- looking statements within the meaning of federal securities law.  The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from future results, whether expressed, suggested or implied by such forward-looking statements.  The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof. The following are among the principal factors that could cause actual results to differ from the forward-looking statements: local economic conditions; competitive pressures from the Company’s operating environment; the ability of the Company to maintain and improve its sales and margins; the ability to attract and retain qualified associates; the availability of new store locations; the availability of capital; the liquidity of the Company; the success of operating initiatives; consumer spending patterns; the impact of higher energy prices; increased cost of goods sold, including increased costs from the Company’s principal supplier, Wakefern; results of ongoing litigation; the results of tax examinations; the results of union contract negotiations; competitive store openings; the rate of return on pension assets; and other factors detailed herein and in the Company’s filings with the SEC.

(in Thousands except Per Share Amounts)
13 Wks. Ended
13 Wks. Ended
26 Wks. Ended
26 Wks. Ended
Jan. 26, 2008
Jan. 27, 2007
Jan. 26, 2008
Jan. 27, 2007
  $ 292,829     $ 270,396     $ 556,388     $ 521,865  
Cost of sales
    213,416       198,824       406,760       382,915  
Gross profit
    79,413       71,572       149,628       138,950  
Operating and administrative  expense
    64,793       59,933       124,713       117,115  
Depreciation and  amortization
    3,437       3,088       6,626       6,075  
Operating income
    11,183       8,551       18,289       15,760   
Interest expense
    (832 )     (667 )     (1,439 )     (1,381 )
Interest income
    770       830       1,758       1,599  
Income before income taxes
    11,121       8,714       18,608       15,978  
Income taxes
    4,682       3,651       7,871       6,695  
Net income
  $ 6,439     $ 5,063     $ 10,737     $ 9,283  
Net income per share 1:
Class A Common Stock
  $ 1.22     $ .96     $ 2.03     $ 1.77  
  $ .98     $ .78     $ 1.63     $ 1.43  
Class B Common Stock:
  $ .79     $ .63     $ 1.32     $ 1.15  
  $ .77     $ .61     $ 1.29     $ 1.12  
Gross profit as a % of sales
    27.1 %     26.5 %     26.9 %     26.6 %
Operating and Administrative expense as a % of sales
    22.1 %     22.2 %     22.4 %     22.4 %
1 Net income per share is computed utilizing the two-class method.  The two-class method is an earnings allocation formula that calculates net income per share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings.  Net income per share for the prior period has been revised to reflect the two-class method.