Village Super Market, Inc · FY 2026 · Reported 8 Oct 2026 · US
Village grew sales through digital demand, fresh and pharmacy, and larger replacement stores, but earnings quality was defined by lower Wakefern patronage dividends and higher operating costs. Cash flow improved, though largely from working capital timing rather than stronger profit conversion.
Key figures
Million USD | FY 2026 | FY 2025 | Change |
|---|---|---|---|
Revenue | 2,405.71 | 2,320.69 | +3.7 % |
Net income | 52.45 | 56.38 | -7.0 % |
Operating cash flow | 108.80 | 93.28 | +16.6 % |
Net margin | 2.2 % | 2.4 % | -0.2 pp |
Figures in USD, as reported. Margins are computed from the reported lines.
Revenue growth did not translate into better underlying profitability
Revenue rose 3.7% to $2.41 billion in FY 2026, driven primarily by same store sales growth of 2.2% and the replacement store openings in Watchung and East Orange 30. Management tied the same store gain to digital sales growth, strong fresh and pharmacy performance, and continued growth in remodeled and replacement stores, partly offset by egg price deflation and cannibalization from the Watchung replacement store 30.
That sales mix was not enough to protect margin. Gross profit as a percentage of sales fell to 28.17% from 28.57%, while net margin narrowed to 2.2% from 2.4% 30. Management attributed the gross margin decline primarily to lower patronage dividends and other rebates from Wakefern, plus an unfavorable mix change and higher promotional spending, only partly offset by improved departmental gross margin percentages 31.
The pressure came more from cooperative income and overhead than from labor
The most important detail in this report is that margin pressure came from sources that sit outside a simple labor inflation story. Adjusted operating and administrative expense as a percentage of sales increased to 24.05% from 23.98%, driven primarily by higher legal and other professional fees, utility, repair and maintenance costs, facility insurance costs, and store pre-opening costs 29.
Those increases were largely offset by lower employee costs, lower advertising costs, and short-term rental income 31. That suggests the earnings decline was tied more to weaker cooperative economics at Wakefern and a noisier overhead base around store development than to broad-based wage deleverage.
Reported earnings were cleaner than last year, but still weaker
Net income fell 7.0% to $52.45 million in FY 2026, while adjusted net income also decreased to $52,688 from $56,429 32. The small gap between reported and adjusted results in FY 2026 reflects limited special items: a $338 pension settlement charge and no impairment charge, versus a pension gain, rent concession income, and $1,462 of impairment charges in FY 2025 29.
That makes this year's decline harder to dismiss as accounting noise. Management explicitly said adjusted net income fell primarily because of the lower gross margin and higher operating and administrative expense, partly offset by a lower effective tax rate of 28.8% versus 31.1% due to excess tax benefits from vested stock-based compensation 32.
Cash flow improved, but mostly from timing and balance-sheet movements
Operating cash flow increased 16.6% to $108.80 million in FY 2026 34. But management said the improvement came from favorable changes in operating assets and liabilities, including income tax receivables and payables, a lower increase in merchandise inventories, and favorable changes in accounts payable and accrued expenses driven largely by timing of payments, partly offset by lower patronage dividends received 35.
Village still has capacity to fund investment. It spent $53,741 on capital expenditures in FY 2026, including the East Orange replacement store, Galloway construction, remodels, technology upgrades and initial solar panel installations 36. Management budgeted $80,000 for FY 2027 capital expenditures, expects same store sales growth of 0.5% to 2.0%, and said cash on hand, operating cash flow and the credit facility should be adequate for foreseeable needs 43.
What to watch next
Whether gross margin stabilizes after the FY 2026 hit from lower Wakefern patronage dividends and rebates 3134.
Whether FY 2027 same store sales of 0.5% to 2.0% are enough to absorb pre-opening and other store investment costs tied to Galloway and the new Manhattan Fairway 43.
Whether the litigation with Wakefern stays without material impact, since the company said it cannot determine the probability or range of reasonably possible loss 45.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's reported filings. AI was used in parts of the analysis and drafting. Figures come from the reported financial statements, and figures in the text are checked automatically against the cited filing passages. This is not investment advice.