What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-06-03 compared with 2021-03-04 · 67 added, 68 removed, 173 unchanged (44% of the section changed)

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Despite continued investment in marketing and promotional programs, the store was unable to generate sales at a level sufficient to maintain profitability, resulting in its closure.

The impacts associated with this closure will not be material to the consolidated financial statements.

The impacts associated with this closure were not material to the consolidated financial statements.

On November 1, 2019, Village opened an 82,000 sq.

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Certain of our stores include the Village Food Garden concept featuring a restaurant style kitchen, and several kiosks offering a wide variety of store prepared specialty foods for both take-home and in-store dining.

Online grocery ordering for in-store pick up or home delivery through ShopRite from Home is available in twenty-seven stores.

Online grocery ordering for in-store pick up or home delivery through ShopRite from Home is available in all of our ShopRite stores.

Customers can browse our circular, create and edit shopping lists and use ShopRite from Home through

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The Company was significantly impacted by the COVID-19 outbreak as it operates in and around one of the early U.S.

epicenters of the health crisis with much of our trade area under stay-at-home orders from mid-March 2020 through June 2020.

epicenters of the health crisis.

The Company is classified as an essential business and has remained open to serve our customers and the communities in which we operate.

We continue to experience significant sales volatility, changes in customer shopping habits, shifts in product mix and increased demand through digital channels as a result of the COVID-19 pandemic.

We continue to experience changes in customer shopping habits, shifts in product mix and increased demand through digital channels as a result of the COVID-19 pandemic.

Demand remains high in most stores, however sales at Fairway and Gourmet Garage locations in Manhattan have been negatively impacted by localized residential population migration out of the city and less commuter and tourist traffic.

We expect continued uncertainty in our business as well as the local and regional economies in which we operate depending on the duration and intensity of the COVID-19 pandemic (see the "Outlook" section below for further discussion of risks and uncertainties).

Our first priority has and will continue to be the safety of our associates and our customers.

We implemented enhanced sanitation programs, including hourly cleaning of high touch point areas throughout our stores, nightly deep cleaning and biweekly disinfectant fogging in every store, reduced store hours to allow appropriate time for cleaning, limited the number of customers allowed in each store at a time, reduced service department offerings including the sale of bulk self-service merchandise and closure of in-store restaurants and dining areas, instituted a personal protective equipment program, required temperature checks for associates and installed Plexiglas shields, floor markers and additional signage in high traffic areas to signify six-foot distances to encourage proper social distancing.

Associate Support .

We paid temporary wage premiums up to $2 per hour above the standard wage rate for hourly front-line associates and weekly premiums for salaried front-line associates from late March through mid-August, provided Emergency Paid Leave to associates affected by COVID-19, supplied meals or meal coupons to our associates on duty through our Feeding Our Village Heroes Program, expanded remote work capabilities, limited travel of regional supervision teams, created a centralized call center and real-time alert text communication platform.

Responding to the needs of our Customers and Communities .

Expanded digital capabilities, including expansion of stores offering ShopRite from Home, expanded the ShopRite Order Express app to provide pre-ordering capabilities in the deli and other areas, contactless pickup, prescription drug pickup and delivery, launched partnerships with online grocery picking and delivery services to better support our customers increased demand for these services and expanded mobile scan to an additional 10 stores.

In December 2020, we began administering COVID-19 vaccinations at certain of our retail pharmacies in New Jersey.

RESULTS OF OPERATIONS

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13 Weeks Ended 39 Weeks Ended

January 23, 2021 January 25, 2020 January 23, 2021 January 25, 2020

April 24, 2021 April 25, 2020 April 24, 2021 April 25, 2020

Sales 100.00 % 100.00 % 100.00 % 100.00 %

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Net income 0.54 % 2.43 % 0.70 % 1.21 %

Sales were $522,818 in the 13 weeks ended January 23, 2021, an increase of 19.5% compared to the 13 weeks ended January 25, 2020.

Sales were $1,012,954 in the in the 26 weeks ended January 23, 2021, an increase of 19.9% compared to the 26 weeks ended January 25, 2020.

Sales increased in both the 13 and 26 weeks ended January 23, 2021 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 6.5%.

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 176% and 174% in the 13 and 26 weeks ended January 23, 2021, respectively, compared to the 13 and 26 weeks ended January 25, 2020.

Demand remains high in most stores, however sales at Fairway and Gourmet Garage locations in Manhattan during the 13 and 26 weeks ended January 23, 2021 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.

Sales were $481,093 in the 13 weeks ended April 24, 2021, an increase of 5.0% compared to the 13 weeks ended April 25, 2020.

Sales increased in the 13 weeks ended April 24, 2021 due to the Fairway acquisition on May 14, 2020 partially offset by a same store sales decrease of 5.5%.

Sales were $1,494,047 in the 39 weeks ended April 24, 2021, an increase of 14.7% compared to the 39 weeks ended April 25, 2020.

Sales increased in the 39 weeks ended April 24, 2021 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 2.3%.

Same store sales decreased in the 13 weeks ended April 24, 2021 due primarily to the unprecedented sales levels at the beginning of the COVID-19 outbreak in our trade area in March 2020.

Since the beginning of the COVID-19 pandemic, we have experienced higher average basket sizes and decreased transaction counts as customers have consolidated shopping trips.

Additionally, digital sales growth accelerated through both ShopRite from Home and partnerships with online grocery picking and delivery services, increasing 127% and 155% in the 13 and 39 weeks ended April 24, 2021, respectively, compared to the 13 and 39 weeks ended April 25, 2020.

During the COVID-19 pandemic, sales at Fairway and Gourmet Garage locations in Manhattan during the 13 and 39 weeks ended April 24, 2021 have been significantly negatively impacted due primarily to residential population migration out of the city and less commuter and tourist traffic.

On a two-year stacked basis, same store sales increased 7.7% and 7.4% in the 13 and 39 weeks ended April 24, 2021, respectively, compared to the 13 and 39 weeks ended April 27, 2019.

The Company expects same store sales in fiscal 2021 to range from an increase of 1.0% to 2.0% compared to fiscal 2020.

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.

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Gross Profit .

Gross profit as a percentage of sales increased .17% in the 13 weeks ended January 23, 2021 compared to the 13 weeks ended January 25, 2020 due primarily to higher margins associated with Fairway despite higher costs as we transition and integrate commissary operations into our business.

Excluding the impact of Fairway, gross profit as a percentage of sales decreased .15% due primarily to decreased departmental gross margin percentages (.15%), an unfavorable change in product mix (.05%) and increased warehouse assessment charges from Wakefern (.36%) partially offset by increased patronage dividends and rebates received from Wakefern (.15%) and lower promotional spending (.26%).

Gross profit as a percentage of sales increased .22% in the 26 weeks ended January 23, 2021 compared to the 26 weeks ended January 25, 2020 due primarily to higher margins associated with Fairway despite higher costs as we transition and integrate commissary operations into our business.

Excluding the impact of Fairway, gross profit as a percentage of sales decreased .30% due primarily to decreased departmental gross margin percentages (.50%), increased warehouse assessment charges from Wakefern (.10%) and an unfavorable change in product mix (.04%) partially offset by lower promotional spending (.31%) and increased patronage dividends and rebates received from Wakefern (.03%).

Departmental gross profits, excluding the impact of Fairway, decreased in the 13 and 26 weeks ended January 23, 2021 compared to the 13 and 26 weeks ended January 25, 2020 due primarily to continued 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.

Gross profit as a percentage of sales decreased .61% in the 13 weeks ended April 24, 2021 compared to the 13 weeks ended April 25, 2020.

Higher margins associated with Fairway increased gross profit (.70%) despite higher costs as we transition and integrate commissary operations into our business.

Excluding the impact of Fairway, gross profit as a percentage of sales decreased 1.31% due primarily to decreased departmental gross margin percentages (1.00%), increased warehouse assessment charges from Wakefern (.59%) and higher promotional spending (.21%) partially offset by favorable change in product mix (.46%), and increased patronage dividends and rebates received from Wakefern (.03%).

These trends are due primarily to the disproportionately high sales levels at the beginning of the pandemic during the 13 weeks ended April 25, 2020 which favorably impacted departmental gross profit margins through reduced shrink costs, reduced promotional spending due to decreased sale item penetration, increased sales leverage on fixed warehouse assessment charges from Wakefern and resulted in a lesser mix of higher margin perishable items.

Additionally, departmental gross profits decreased due partly to continued price investments as part of ShopRite's Right Price Promise pricing strategy.

Gross profit as a percentage of sales decreased .07% in the 39 weeks ended April 24, 2021 compared to the 39 weeks ended April 25, 2020.

Higher margins associated with Fairway increased gross profit (.62%) despite higher costs as we transition and integrate commissary operations into our business.

Excluding the impact of Fairway, gross profit as a percentage of sales decreased .70% due primarily to decreased departmental gross margin percentages (.73%), increased warehouse assessment charges from Wakefern (.26%) partially offset by a favorable change in product mix (.14%), lower promotional spending (.12%) and increased patronage dividends and rebates received from Wakefern (.03%).

Departmental gross profits decreased due partly to continued price investments as part of from ShopRite's Right Price Promise pricing strategy.

Operating and Administrative Expense.

Operating and administrative expense as a percentage of sales decreased .44% in the 13 weeks ended January 23, 2021 compared to the 13 weeks ended January 25, 2020.

The 13 weeks ended January 25, 2020 includes a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges (.28%) (see note 4 to the consolidated financial statements), pre-opening costs of the Stroudsburg, Pennsylvania replacement store (.10%), store closure costs and charges to write off the variable lease obligations of the old Stroudsburg store (.12%).

Excluding these items, operating and administrative expense as a percentage of sales increased .06% in the 13 weeks ended January 23, 2021 compared to the 13 weeks ended January 25, 2020 due primarily to increased occupancy costs as a result of the Fairway acquisition (.63%), increased external costs associated with digital sales (.45%) and incremental costs related to COVID-19, including enhanced wages and benefits and expanded safety and sanitation protocols, (.07%) partially offset by decreased payroll (.61%), other fringe benefits (.25%), maintenance costs (.12%) and legal and consulting fees (.07%).

Payroll, other fringe benefits and maintenance costs 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.

Operating and administrative expense as a percentage of sales decreased .20% in the 26 weeks ended January 23, 2021 compared to the 26 weeks ended January 25, 2020.

The 26 weeks ended January 25, 2020 includes a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges (.15%) (see note 4 to the consolidated financial statements), pre-opening costs of the Stroudsburg, Pennsylvania replacement store (.15%), store closure costs and charges to write off the variable lease obligations of the old Stroudsburg store (.09%).

Excluding these items, operating and administrative expense as a percentage of sales increased .19% in the 26 weeks ended January 23, 2021 compared to the 26 weeks ended January 25, 2020 due primarily to increased occupancy costs due primarily to the Fairway acquisition (.70%), increased external costs associated with digital sales (.42%) and incremental costs related to COVID-19, including enhanced wages and benefits and expanded safety and sanitation protocols, (.15%) partially offset by decreased payroll (.59%), other fringe benefits (.30%) and maintenance costs (.09%).

Operating and administrative expense as a percentage of sales increased 1.84% in the 13 weeks ended April 24, 2021 compared to the 13 weeks ended April 25, 2020.

The 13 weeks ended April 24, 2021 includes a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs, (.08%) and the 13 weeks ended April 25, 2020 includes a gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020 (.27%) and a pension settlement charge of (.03%).

Excluding these items, operating and administrative expense as a percentage of sales increased 1.68% in the 13 weeks ended April 24, 2021 compared to the 13 weeks ended April 25, 2020 due primarily to increased occupancy costs as a result of the Fairway acquisition (0.99%), increased external fees and transportation costs associated with digital sales (.54%), increased payroll (.83%) and increased facility costs, including utilities, repairs and maintenance (.36%), partially offset by decreased costs related to COVID-19, including enhanced wages and benefits, security and outside sanitation services (1.13%).

Payroll and facilities costs increased primarily due to reduced sales leverage, increasing wage rates and the addition of Fairway.

Operating and administrative expense as a percentage of sales increased .51% in the 39 weeks ended April 24, 2021 compared to the 39 weeks ended April 25, 2020.

The 39 weeks ended April 24, 2021 includes a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs, (.03%) and the 39 weeks ended April 25, 2020 includes a gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020 (.09%), a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges (.10%) (see note 4 to the consolidated financial statements), pre-opening costs of the Stroudsburg, Pennsylvania replacement store (.10%) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store (.06%).

Excluding these items, operating and administrative expense as a percentage of sales increased .71% in the 39 weeks ended April 24, 2021 compared to the 39 weeks ended April 25, 2020 due primarily to increased occupancy costs due primarily to the Fairway acquisition (.85%) and increased external fees and transportation costs associated with digital sales (.49%), partially offset by decreased costs related to COVID-19, including enhanced wages and benefits, security and outside sanitation services (.30%) and lower payroll and fringe benefit costs (.30%).

Payroll and fringe benefits 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.

Depreciation and Amortization .

Depreciation and amortization expense increased in the 13 and 26 weeks ended January 23, 2021 compared to the 13 and 26 weeks ended January 25, 2020 due primarily to depreciation related to the Fairway acquisition.

Depreciation and amortization expense increased in the 13 and 39 weeks ended April 24, 2021 compared to the 13 and 39 weeks ended April 25, 2020 due primarily to depreciation related to the Fairway acquisition.

Interest Expense .

Interest expense increased in the 13 and 26 weeks ended January 23, 2021 compared to the 13 and 26 weeks ended January 25, 2020 due primarily to interest expense related to the credit agreement entered into on May 6, 2020 (see note 7 to the consolidated financial statements).

Interest expense increased in the 13 and 39 weeks ended April 24, 2021 compared to the 13 and 39 weeks ended April 25, 2020 due primarily to interest expense related to the credit agreement entered into on May 6, 2020 (see note 7 to the consolidated financial statements).

Interest Income .

Interest income decreased in the 13 and 26 weeks ended January 23, 2021 compared to the 13 and 26 weeks ended January 25, 2020 due primarily to lower interest rates for amounts invested in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Interest income decreased in the 13 and 39 weeks ended April 24, 2021 compared to the 13 and 39 weeks ended April 25, 2020 due primarily to lower interest rates for amounts invested in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Income Taxes.

The effective income tax rate was 29.9% in both the 13 and 26 weeks ended January 23, 2021, compared to 30.3% and 30.0% in the 13 and 26 weeks ended January 25, 2020, respectively.

Net income was $4,555 in the 13 weeks ended January 23, 2021 compared to $2,005 in the 13 weeks ended January 25, 2020.

The 13 weeks ended January 25, 2020 includes a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $871 (net of tax), pre-opening costs related to the

Stroudsburg, Pennsylvania replacement store of $304 (net of tax) and store closure costs and charges to write off the variable lease obligations related to the old Stroudsburg store of $365 (net of tax).

Excluding these items, net income increased 28% in the 13 weeks ended January 23, 2021 compared to the prior year.

Net income increased due to increased same store sales partially offset by lower sales volumes in Manhattan and higher costs as we transition and integrate commissary operations into our business.

Net income was $7,916 in the 26 weeks ended January 23, 2021 compared to $4,572 in the 26 weeks ended January 25, 2020.

The 26 weeks ended January 25, 2020 includes a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $871 (net of tax), pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $891 (net of tax) and store closure costs and charges to write off the lease asset

and related obligations for the old Stroudsburg store of $557 (net of tax).

Excluding these items, net income increased 15% in the 26 weeks ended January 23, 2021 compared to the prior year.

Net income increased due to increased same store sales partially offset by lower sales volumes in Manhattan and higher costs as we transition and integrate commissary operations into our business.

The effective income tax rate was 31.5% and 30.3% in the 13 and 39 weeks ended April 24, 2021, compared to 28.4% and 28.9% in the 13 and 39 weeks ended April 25, 2020, respectively.

The increase in the effective income tax rate is due primarily to favorable return to provision adjustments in the 13 and 39 weeks ended April 25, 2020.

Net income was $2,574 in the 13 weeks ended April 24, 2021 compared to $11,152 in the 13 weeks ended April 25, 2020.

The 13 weeks ended April 24, 2021 includes a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs, of $278 (net of tax) and the 13 weeks ended April 25, 2020 includes a gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020 of $854 (net of tax) and pension settlement charges of $83 (net of tax).

Excluding these items, net income decreased 78% in the 13 weeks ended April 24, 2021 compared to the prior year.

Net income decreased compared to the prior year period due primarily to the sharp rise in sales volumes at the beginning of the COVID-19 pandemic in March 2020 that resulted in higher gross profit margins and sales leverage on operating expenses during the 13 weeks ended April 25, 2020.

Additionally, the 13 weeks ended April 24, 2021

were negatively impacted by lower sales volumes in Manhattan and higher costs as we transition and integrate commissary operations into our business.

Net income was $10,490 in the 39 weeks ended April 24, 2021 compared to $15,724 in the 39 weeks ended April 25, 2020.

The 39 weeks ended April 24, 2021 includes a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs, of $278 (net of tax).

The 39 weeks ended April 25, 2020 includes a gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020 of $854 (net of tax), a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $954 (net of tax), pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $891 (net of tax) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store of $557 (net of tax).

Excluding these items, net income decreased 40% in the 39 weeks ended April 24, 2021 compared to the prior year.

Net income decreased due primarily to lower sales volumes in Manhattan and higher costs as we transition and integrate commissary operations into our business.

CRITICAL ACCOUNTING POLICIES

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The Company’s critical accounting policies relating to the impairment of long-lived assets and goodwill, accounting for patronage dividends earned as a stockholder of Wakefern and accounting for pension plans, are described in the Company’s Annual Report on Form 10-K for the year ended July 25, 2020.

A s of January 23, 2021, there have been no changes to the critical accounting policies contained therein.

A s of April 24, 2021, there have been no changes to the critical accounting policies contained therein.

The preparation of financial statements in conformity with U.S.

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LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $24,911 in the 26 weeks ended January 23, 2021 compared to $27,761 in the corresponding period of the prior year.

The change in cash flows from operating activities in fiscal 2021 was primarily due to changes in working capital partially offset by increased net income.

Net cash provided by operating activities was $32,995 in the 39 weeks ended April 24, 2021 compared to $59,404 in the corresponding period of the prior year.

The change in cash flows from operating activities in fiscal 2021 was primarily due to changes in working capital and lower net income.

Working capital changes, including Other assets and liabilities, decreased cash flows from operating activities by $3,820 in fiscal 2021 compared to an increase of $16,965 in fiscal 2020.

The change in impact of working capital is due primarily to higher merchandise inventories and a decrease in accounts payable to Wakefern as stock levels and inventory turnover normalized in the first half of fiscal 2021 following the COVID outbreak.

During the 26 weeks ended January 23, 2021, Village used cash to fund capital expenditures of $9,958, dividends of $6,523, principal payment of long-term debt of $4,091 and additional investments of $1,141 in notes receivable from Wakefern.

Capital expenditures primarily include costs associated with the integration of Fairway stores, completion of one major remodel, continued expansion of self checkout and equipment purchases.

Village has revised its budgeted capital expenditures lower than previously estimated to $25,000 in fiscal 2021 due primarily to shifts in timing of planned store remodels.

Planned expenditures include several smaller store remodels, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades.

The Company’s primary sources of liquidity in fiscal 2021 are expected to be cash and cash equivalents on hand at January 23, 2021 and operating cash flow generated in fiscal 2021.

At January 23, 2021, the Company held variable rate notes receivable due from Wakefern of $26,726 that earn interest at the prime rate plus 1.25% and mature on August 15, 2022 and $27,423 that earn interest at the prime rate plus .75% and mature on February 15, 2024.

The change in impact of working capital is due primarily to the significant increase in inventory turnover in March and April 2020 at the beginning of the COVID-19 outbreak that lowered stock levels and increased accounts payable to Wakefern.

During the 39 weeks ended April 24, 2021, Village used cash to fund capital expenditures of $14,901, dividends of $9,785, principal payment of long-term debt of $6,459 and additional investments of $1,708 in notes receivable from Wakefern.

Capital expenditures primarily include costs associated with the integration of Fairway stores, completion of one major remodel, continued expansion of ShopRite from Home and self-checkout.

Village has budgeted capital expenditures of $25,000 in fiscal 2021.

Planned expenditures include several smaller remodels, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades.

The Company’s primary sources of liquidity in fiscal 2021 are expected to be cash and cash equivalents on hand at April 24, 2021 and operating cash flow generated in fiscal 2021.

At April 24, 2021, the Company held variable rate notes receivable due from Wakefern of $27,022 that earn interest at the prime rate plus 1.25% and mature on August 15, 2022 and $27,694 that earn interest at the prime rate plus .75% and mature on February 15, 2024.

Wakefern has the right to prepay these notes at any time.

Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

Working capital was $38,202 at January 23, 2021 compared to $34,522 at July 25, 2020.

Working capital was $40,693 at April 24, 2021 compared to $34,522 at July 25, 2020.

Working capital ratios at the same dates were 1.27 and 1.21 to one, respectively.

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On May 6, 2020, Village entered into a credit agreement (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”) that supersedes in its entirety the prior credit agreement with Wells Fargo dated November 9, 2017.

The principal purpose of the Credit Facility is to finance general corporate and working capital

requirements and Village’s acquisition of certain Fairway assets.

The principal purpose of the Credit Facility is to finance general corporate and working capital requirements and Village’s acquisition of certain Fairway assets.

Among other things, the Credit Facility provides for a maximum loan amount of $150,500 as further set forth below:

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and its subsidiaries, including the sites of three Village stores.

The Credit Facility also provides for up to $25,000 of letters of credit ($7,336 outstanding at January 23, 2021), which secure obligations for store leases and construction performance guarantees to municipalities.

The Credit Facility also provides for up to $25,000 of letters of credit ($7,336 outstanding at April 24, 2021), which secure obligations for store leases and construction performance guarantees to municipalities.

The Credit Facility contains covenants that, among other conditions, require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio.

The Company was in compliance with all covenants of the credit agreement at January 23, 2021.

There have been no other substantial changes as of January 23, 2021 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 25, 2020.

The Company was in compliance with all covenants of the credit agreement at April 24, 2021.

There have been no other substantial changes as of April 24, 2021 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 25, 2020.

This Form 10-Q contains certain forward-looking statements about Village’s future performance.

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The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof.

• We estimate that same store sales trends will be flat to slightly down in fiscal 2021 with positive trends in the first half of the year being offset by negative trends in the second half of the year as we recycle the impact of the COVID-19 health crisis.

• The Company expects same store sales in fiscal 2021 to range from an increase of 1.0% to 2.0%.

• Excluding the impact of acquired stores, we expect decreased gross profit margins due to continued investments in retail pricing through the Right Price Promise commitment to everyday low pricing on the items customers purchase most frequently that was introduced in October 2019.

• We revised our budgeted capital expenditures lower than previously estimated to $25,000 in fiscal 2021 due primarily to shifts in timing of planned store remodels.

Planned expenditures include several smaller store remodels, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades.

• We have budgeted capital expenditures of $25,000 in fiscal 2021.

Planned expenditures include several smaller remodels, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades.

• The Board’s current intention is to continue to pay quarterly dividends in 2021 at the most recent rate of $.25 per Class A and $.1625 per Class B share.

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These include:

• The Company operates in and around one of the epicenters of the COVID-19 health crisis with much of our trade area under stay-at-home orders from mid-March 2020 through June 2020.

• The Company operates in and around one of the epicenters of the COVID-19 health crisis.

The Company is classified as an essential business and has remained open to serve our customers and the communities in which we operate.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis