Village's Q1 Earnings Down Y/Y Due to Margin Woes, Sales Growth Aids

Shares of Village Super Market, Inc. VLGEA have dipped 0.3% since the company reported its earnings for the quarter ended Oct. 25, 2025. This compares to the S&P 500 index’s 0.9% growth over the same time frame. Over the past month, the stock has gained 5% compared with the S&P 500’s 1.2% growth.

Village reported first-quarter 2026 earnings per share of 81 cents for Class A stock, which declined from 86 cents in the prior-year quarter. 

Sales of $582.6 million marked a 4.5% increase compared to $557.7 million in the same quarter of the prior year. This growth was attributed to a 2.5% rise in same-store sales and the benefit of a new replacement store in Watchung, NJ, which opened in April 2025. 

Despite the top-line growth, net income fell 6% to $12 million from $12.8 million a year ago. On an adjusted basis, net income declined more modestly, down 2% to $12.5 million.

Village Super Market, Inc. Price, Consensus and EPS Surprise

Village Super Market, Inc. price-consensus-eps-surprise-chart | Village Super Market, Inc. Quote

Margin Pressures Temper Profitability

Village’s gross profit improved slightly to $165 million from $161.9 million. However, gross margin declined to 28.3% from 29% a year earlier. This decrease was primarily driven by lower patronage dividends and other rebates received from Wakefern, which shaved 0.28 percentage points off the margin. In addition, the company faced a 0.27 percentage point decline due to weaker departmental margins, a 0.10 percentage point loss from an unfavorable product mix shift, and a 0.06 percentage point impact from heightened promotional activity.

On the cost side, operating and administrative expenses grew in absolute terms to $141.4 million from $137.5 million. However, as a percentage of sales, these expenses improved to 24.3% from 24.7%. After adjusting for one-time items, the figure dropped further to 24.2%. The improvement was mainly due to lower employee-related costs, increased short-term rental income, and cost savings on supplies and advertising. These benefits were partially offset by increases in professional fees and repair and maintenance spending.

Financial and Operational Trends

Depreciation and amortization expenses rose slightly to $8.4 million, reflecting capital investments made by the company. Interest expense declined year over year due to lower average outstanding debt balances, while interest income fell as a result of lower yields on variable-rate notes receivable from Wakefern and lower interest rates on invested demand deposits.

The company’s effective tax rate stood at 31.4%, up slightly from 31.2% in the year-ago quarter. Operating income came in at $15.1 million, down from $16 million last year, reflecting the mixed impact of revenue gains and margin compression.

Digital sales continued to provide a strong tailwind, with same-store digital sales increasing 14% year over year. This strength, combined with continued momentum in recently remodeled or replaced stores and improved pharmacy and fresh category performance, helped offset some of the competitive pressures from new store openings by rivals and self-cannibalization from the new Watchung location.

Other Developments

Village recorded a $0.3 million pension settlement charge in the quarter related to the termination of a company-sponsored retirement plan. These costs, along with the pre-opening expenses for the East Orange store, were excluded in the company’s adjusted net income calculation. 

Management confirmed that it expects to open a new replacement ShopRite store in East Orange, NJ, in the second half of the fiscal year. The project is part of Village’s ongoing effort to modernize its store base and enhance customer experience. Pre-opening costs associated with this location amounted to $0.4 million in the first quarter.

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