SPRINGFIELD, N.J., Dec. 03, 2020 (GLOBE NEWSWIRE) -- Village Super Market, Inc. (NASDAQ:VLGEA) today reported its results of operations for the first quarter ended October 24, 2020.
Net income was $3,360,000 in the 13 weeks ended October 24, 2020 compared to $2,567,000 in the 13 weeks ended October 26, 2019. The 13 weeks ended October 26, 2019 included pre-opening costs of the Stroudsburg, Pennsylvania replacement store of $594,000 (net of tax) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store of $191,000 (net of tax). Excluding these items, net income was flat in the 13 weeks ended October 24, 2020 compared to the prior year. Net income was flat despite the increase in same store sales due to the impact of lower sales volumes in Manhattan, higher costs as we transition and integrate commissary operations into our business and increased operating and administrative expenses.
Sales were $490,136,000 in the 13 weeks ended October 24, 2020, an increase of 20.3% compared to the 13 weeks ended October 26, 2019. Sales increased due to the Fairway acquisition on May 14, 2020, the opening of the Stroudsburg replacement store on November 1, 2019 and a same store sales increase of 6.6%. Same store sales increased due primarily to increased customer demand across most stores due to the impact of the COVID-19 pandemic. We continue to experience higher average basket sizes and decreased transaction counts as customers consolidate shopping trips. Digital sales growth accelerated through both ShopRite from Home and partnerships with online grocery picking and delivery services, increasing 172% in the 13 weeks ended October 24, 2020 compared to the 13 weeks ended October 26, 2019. Demand remains high in most stores, however sales at Fairway and Gourmet Garage locations in Manhattan have been significantly negatively impacted due primarily to residential population migration out of the city and less commuter and tourist traffic during the COVID-19 pandemic. New stores and replacement stores are included in same store sales in the quarter after the store has been in operation for four full quarters. Store renovations and expansions are included in same store sales immediately.
Gross profit as a percentage of sales increased to 28.15% in the 13 weeks ended October 24, 2020 compared to 27.87% in the 13 weeks ended October 26, 2019. Gross profit increased due primarily to higher margins associated with Fairway despite higher costs as we transition and integrate the commissary operations into our business. Excluding the impact of Fairway, gross profit as a percentage of sales decreased .39% due primarily to decreased departmental gross margin percentages (.70%), decreased patronage dividends and rebates received from Wakefern (.10%) and an unfavorable change in product mix (.10%) partially offset by lower promotional spending (.35%) and increased leverage on warehouse assessment charges from Wakefern (.16%).
Departmental gross profits, excluding the impact of Fairway, decreased in the 13 weeks ended October 24, 2020 compared to the 13 weeks ended October 26, 2019 due primarily to price investments resulting from ShopRite's Right Price Promise pricing strategy introduced in October 2019. Both product mix and departmental gross margin percentages were also impacted by limitations in service departments and product availability as a result of the COVID-19 pandemic.
Operating and administrative expense as a percentage of sales increased to 25.37% in the 13 weeks ended October 24, 2020 compared to 25.32% in the 13 weeks ended October 26, 2019. The 13 weeks ended October 26, 2019 included pre-opening costs of the Stroudsburg, Pennsylvania replacement store (.21%) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store (.07%). Excluding these items, operating and administrative expense as a percentage of sales increased .33% in the 13 weeks ended October 24, 2020 compared to the 13 weeks ended October 26, 2019 due primarily to incremental costs related to COVID-19, including enhanced wages and benefits and expanded safety and sanitation protocols (.24%), increased occupancy costs due primarily to the acquisitions of Fairway (.79%), increased costs associated with digital sales (.40%) partially offset by decreased payroll (.75%) and workers' compensation and other fringe benefits (.25%). Payroll decreased primarily due to leverage from higher sales and reductions in service department offerings partially offset by the addition of Fairway and growth of ShopRite from Home.
Village Super Market operates a chain of 35 supermarkets in New Jersey, New York, Maryland and Pennsylvania under the ShopRite and Fairway banners and three Gourmet Garage specialty markets in New York City.
