VILLAGE SUPER MARKET INC

VILLAGE SUPER MARKET INC Annual Report - Investor Summary

Let’s break down how Village Super Market (ShopRite’s parent company in the Northeast) performed this year and whether it’s worth considering for your portfolio.

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1. What They Do & This Year’s Snapshot

They operate 37 ShopRite supermarkets across New Jersey, Maryland, and Pennsylvania. As part of Wakefern Food Corp (the largest retailer-owned grocery co-op in the U.S.), they benefit from bulk buying power and popular store brands like "ShopRite Essentials," which now make up 18% of total sales. This year was stable but challenging: sales grew slightly, but inflation squeezed profits.

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2. Financial Performance: Growth or Slowdown?

• Revenue: $2.1 billion (up 3% from last year).
• Profit: $50 million (down 5% due to rising labor, supply, and inventory costs).
• Dividends: Maintained $1.20 per share payout—reliable for income-focused investors.
• Investments: Committed $75 million to store upgrades, including two new/replacement stores (East Orange, NJ, in 2026 and another in 2027) and tech improvements.

In short: Sales grew, but profits dipped. They’re investing in future growth while managing costs.

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3. Wins & Challenges

Wins:

• Opened 2 stores (including a remodeled Watchung, NJ, location).
• Online grocery sales jumped 15% (convenience is king!).
• Store brands gained traction as budget-conscious shoppers sought cheaper alternatives.

Challenges:

• Inflation drove up food and labor costs.
• Competition from Walmart, Amazon Fresh, and discount chains intensified.
• A warehouse fire disrupted supply chains temporarily.

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4. Financial Health Check

• Cash: $85 million (down from $100 million last year).
• Debt: $150 million (unchanged from last year).
• Key Moves: Invested $17.7 million in a NJ retail center partnership and acquired land for future stores.

Verdict: Stable finances, but cash reserves dipped due to expansion efforts. They’re not overleveraged, but growth is cautious.

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5. Risks to Watch

• Inflation: Could further pressure profits if costs keep rising.
• Competition: Big players like Amazon and Costco threaten market share.
• Economic Downturns: Shoppers might trade down to cheaper alternatives.

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6. How They Stack Up Against Competitors

• Advantages: Strong local brand loyalty + Wakefern’s co-op power (364 stores total) for better pricing and advertising.
• Disadvantages: Can’t match Walmart/Costco’s scale or pricing.

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7. Leadership & Strategy

• No leadership changes: CEO has been in place for 5+ years.
• New Focus: Expanding online sales, ready-to-eat meals, and store remodels.
• Wakefern Partnership: Their president sits on Wakefern’s board, influencing co-op-wide tech and marketing decisions.

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8. What’s Next?

• Store Expansion: 1-2 new/replacement stores annually (next: East Orange, NJ, in 2026).
• Digital Growth: Boosting online ordering and delivery.
• Store Brands: Expanding budget-friendly private-label products to combat inflation.

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9. Market Trends

• Opportunity: Rising demand for affordable groceries and prepared meals plays to their strengths.
• Regulatory Risk: New food safety rules may slightly increase costs.

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Investment Takeaways

👍 Pros:

• Steady revenue growth in a recession-resistant industry.
• Reliable dividends.
• Strategic investments in stores and tech.
• Strong co-op support from Wakefern.

👎 Cons:

• Profit margins under pressure.
• Lags behind mega-retailers in pricing power.

Who Should Invest?

• Good for: Conservative investors seeking stability and dividends in a slow-growth industry.
• Avoid if: You want high growth or exposure to innovative sectors.

Final Rating: A "slow-and-steady" pick. Not flashy, but reasonably priced with a margin of safety. Monitor inflation and competition closely.

Let me know if you’d like help comparing Village Super Market to other grocery stocks! 😊