What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-03-06 compared with 2023-12-06 · 43 added, 31 removed, 164 unchanged (31% of the section changed)

36 unchanged sentences

The following table sets forth the major components of the Consolidated Statements of Operations as a percentage of sales:

13 Weeks Ended

October 28, 2023 October 29, 2022

13 Weeks Ended 26 Weeks Ended

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Sales 100.00 % 100.00 % 100.00 % 100.00 %

9 unchanged sentences

Net income 2.52 % 2.19 % 2.34 % 2.16 %

Sales were $536,354 in the 13 weeks ended October 28, 2023, an increase of 3.2% compared to the 13 weeks ended October 29, 2022.

Sales increased due to an increase in same store sales of 2.0% and increased sales due to the remodel and conversion of the Pelham, NY Fairway to the ShopRite banner on August 15, 2022.

Same store sales increased due primarily to retail price inflation.

Sales were $575,579 in the 13 weeks ended January 27, 2024, an increase of 2.1% compared to the 13 weeks ended January 28, 2023.

Sales increased due to an increase in same store sales of 2.2% partially offset by the impact of the closure of a Gourmet Garage location on November 1, 2023.

Same store sales increased due primarily to retail price inflation, digital sales growth, higher pharmacy sales and continued growth in recently remodeled stores.

New stores, replacement stores and stores with banner changes 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.

Sales were $1,111,933 in the 26 weeks ended January 27, 2024, an increase of 2.6% compared to the 26 weeks ended January 28, 2023.

Sales increased due to an increase in same store sales of 2.1% and increased sales due to the remodel and conversion of the Pelham, NY Fairway to the ShopRite banner on August 15, 2022 partially offset by the impact of the closure of a Gourmet Garage location on November 1, 2023.

Same store sales increased due primarily to retail price inflation, digital sales growth, higher pharmacy sales and continued growth in recently remodeled stores.

Gross Profit .

Gross profit as a percentage of sales decreased .21% in the 13 weeks ended October 28, 2023 compared to the 13 weeks ended October 29, 2022 due primarily to higher promotional spending (.22%), increased warehouse assessment charges from Wakefern (.20%) and an unfavorable change in product mix (.14%) partially offset by increased departmental gross margin percentages (.36%).

Department gross margins increased due primarily to improvements in commissary operations.

Gross profit as a percentage of sales increased .93% in the 13 weeks ended January 27, 2024 compared to the 13 weeks ended January 28, 2023 due primarily to increased departmental gross margin percentages (.49%), higher patronage dividends and rebates received from Wakefern (.49%), decreased warehouse assessment charges from Wakefern (.14%) and decreased LIFO charges (.05%) partially offset by higher promotional spending (.13%) and an unfavorable change in product mix (.11%).

Department gross margins increased due primarily to improvements in both shrink and commissary operations.

Gross profit in both the 13 weeks ended January 27, 2024 and the 13 weeks ended January 28, 2023 was favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2024 (.58%) and 2023 (.17%).

Gross profit as a percentage of sales increased .38% in the 26 weeks ended January 27, 2024 compared to the 26 weeks ended January 28, 2023 due primarily to increased departmental gross margin percentages (.42%), increased patronage dividends and rebates received from Wakefern (.24%) and decreased LIFO charges (.04%) partially offset by higher promotional spending (.18%), an unfavorable change in product mix (.12%) and increased warehouse assessment charges from Wakefern (.02%).

Department gross margins increased due primarily to improvements in both shrink and commissary operations.

Gross profit in both the 26 weeks ended January 27, 2024 and the 26 weeks ended January 28, 2023 was favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2024 (.30%) and 2023 (.09%).

Operating and Administrative Expense.

Operating and administrative expense as a percentage of sales increased .13% in the 13 weeks ended October 28, 2023 compared to the 13 weeks ended October 29, 2022 due primarily to increased facility repair and maintenance costs (.10%), security costs (.07%) and external fees associated with digital sales (.05%) partially offset by lower labor costs and fringe benefits (.10%).

Operating and administrative expense as a percentage of sales increased .64% in the 13 weeks ended January 27, 2024 compared to the 13 weeks ended January 28, 2023 due primarily to increased labor costs and fringe benefits (.25%), facility repair and maintenance costs (.09%), security costs (.07%), software licensing associated with technology investments (.06%), external consulting fees (.06%) and external fees associated with digital sales

Higher labor and fringe benefit costs due primarily to minimum wage and demand driven pay rate increases and higher union health and welfare plan costs.

Operating and administrative expense as a percentage of sales increased .39% in the 26 weeks ended January 27, 2024 compared to the 26 weeks ended January 28, 2023 due primarily to increased facility repair and maintenance costs (.10%), labor and fringe benefits (.08%), security costs (.07%), software licensing associated with technology investments (.05%) and external fees associated with digital sales (.05%).

Depreciation and Amortization .

Depreciation and amortization expense in the 13 weeks ended October 28, 2023 was flat compared to the 13 weeks ended October 29, 2022.

Depreciation and amortization expense decreased in the 13 and 26 weeks ended January 27, 2024 compared to the 13 and 26 weeks ended January 28, 2023 due primarily to the timing of capital expenditures.

Interest Expense .

Interest expense in the 13 weeks ended October 28, 2023 was flat compared to the 13 weeks ended October 29, 2022.

Interest expense increased in the 13 and 26 weeks ended January 27, 2024 compared to the 13 and 26 weeks ended January 28, 2023 due primarily to higher average outstanding debt balances.

Interest Income .

Interest income increased in the 13 weeks ended October 28, 2023 compared to the 13 weeks ended October 29, 2022 due primarily to higher interest rates and larger amounts invested in variable rate notes receivable from Wakefern and demand deposits at Wakefern.

Interest income increased in the 13 and 26 weeks ended January 27, 2024 compared to the 13 and 26 weeks ended January 28, 2023 due primarily to higher interest rates and larger amounts invested in variable rate notes receivable from Wakefern and demand deposits at Wakefern.

Income Taxes.

The effective income tax rate was 31.5% in the 13 weeks ended October 28, 2023 compared to 31.0% in the 13 weeks ended October 29, 2022.

Net Income was $11,585 in the 13 weeks ended October 28, 2023 compared to $11,081 in the 13 weeks ended October 29, 2022.

Net income increased 5% compared to the prior year due primarily to the increase in sales of 3.2% and higher interest income.

The effective income tax rate was 31.5% in the 13 and 26 weeks ended January 27, 2024 compared to 30.9% in the 13 and 26 weeks ended January 28, 2023.

Net Income was $14,480 in the 13 weeks ended January 27, 2024 compared to $12,322 in the 13 weeks ended January 28, 2023.

Net income increased 18% compared to the prior year due primarily to the increase in sales of 2.1%, increased gross profit margin and higher interest income.

Net income was $26,066 in the 26 weeks ended January 27, 2024 compared to $23,405 in the 26 weeks ended January 28, 2023.

Net income increased 11% compared to the 26 weeks ended January 28, 2023 due primarily to the increase in sales of 2.6%, increased gross profit margin and higher interest income.

CRITICAL ACCOUNTING POLICIES

2 unchanged sentences

The Company’s critical accounting policies relating to the impairment of long-lived assets, goodwill and indefinite-lived intangible assets and accounting for patronage dividends earned as a stockholder of Wakefern, are described in the Company’s Annual Report on Form 10-K for the year ended July 29, 2023.

A s of October 28, 2023, there have been no changes to the critical accounting policies contained therein.

A s of January 27, 2024, there have been no changes to the critical accounting policies contained therein.

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

2 unchanged sentences

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $18,379 in the 13 weeks ended October 28, 2023 compared to $22,019 in the corresponding period of the prior year.

The change in cash flows from operating activities in fiscal 2024 was primarily due to changes in working capital.

Working capital changes, including Other assets and liabilities, decreased cash flows from operating activities by $3,317 in fiscal 2024 compared to an increase of $756 in fiscal 2023.

Net cash provided by operating activities was $48,674 in the 26 weeks ended January 27, 2024 compared to $48,357 in the corresponding period of the prior year.

The change in cash flows from operating activities in fiscal 2024 was primarily due to an increase in net income partially offset by changes in working capital.

Working capital changes, including Other assets and liabilities, increased cash flows from operating activities by $2,551 in fiscal 2024 compared to an increase of $4,275 in fiscal 2023.

The change in impact of working capital is due primarily to the timing of tax payments.

During the 13 weeks ended October 28, 2023, Village used cash to fund capital expenditures of $13,773, dividends of $3,350, principal payments of long-term debt of $2,698, share repurchases of $782, an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $1,813 and additional net investments of $2,139 in notes receivable from Wakefern.

Capital expenditures primarily include costs associated with the construction of the Old Bridge replacement store scheduled to open in fiscal 2024, the minor remodel of the Millburn, NJ ShopRite and various technology, equipment and facility upgrades.

We have budgeted $85,000 for capital expenditures in fiscal 2024.

During the 26 weeks ended January 27, 2024, Village used cash to fund capital expenditures of $34,783, dividends of $6,701, principal payments of long-term debt of $5,387, share repurchases of $1,358, an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $3,825 and additional net investments of $4,345 in notes receivable from Wakefern.

Capital expenditures primarily include costs associated with the construction of the Old Bridge

replacement store scheduled to open in fiscal 2024, the minor remodel of the Millburn, NJ ShopRite, two other replacement stores scheduled to open in fiscal 2025, the purchase of real estate and various technology, equipment and facility upgrades.

We have revised our budgeted capital expenditures downward from prior estimates to approximately $70,000 in fiscal 2024 due to the timing of construction spends for replacement stores shifting from fiscal 2024 into fiscal 2025.

Planned expenditures include costs for construction of the Old Bridge replacement store scheduled to open in fiscal 2024 and two other replacement stores scheduled to open in fiscal 2025, potential real estate purchases, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades.

The Company’s primary sources of liquidity in fiscal 2024 are expected to be cash and cash equivalents on hand at October 28, 2023 and operating cash flow generated in fiscal 2024.

On April 28, 2022 the Company entered into a partnership agreement for a 30% interest in the development of a retail center in Old Bridge, New Jersey, which includes a Village replacement store with an operating lease obligation of $4,304 as of October 28, 2023.

The Company’s primary sources of liquidity in fiscal 2024 are expected to be cash and cash equivalents on hand at January 27, 2024 and operating cash flow generated in fiscal 2024.

Village will fund its share of project costs estimated to be $15,000 to $20,000 over the two to three year life of the project.

As of October 28, 2023, Village has invested $12,688 into the real estate partnership, which is accounted for as an equity method investment included in Investments in Real Estate Partnerships on the consolidated balance sheet.

As of January 27, 2024, Village has invested $14,700 into the real estate partnership, which is accounted for as an equity method investment included in Investments in Real Estate Partnerships on the consolidated balance sheet.

On August 15, 2022, notes receivable due from Wakefern of $28,850 that earned interest at the prime rate plus 1.25% matured.

1 unchanged sentence

On September 28, 2022, the Company invested an additional $30,000 in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on September 28, 2027.

At October 28, 2023, the Company held variable rate notes receivable due from Wakefern of $32,211 that earn interest at the prime rate plus .75% and mature on February 15, 2024, $31,559 that earn interest at the prime rate plus .50% and mature on August 15, 2027 and $32,578 that earn interest at the prime rate plus .50% and mature on September 28, 2027.

At January 27, 2024, the Company held variable rate notes receivable due from Wakefern of $32,962 that earned interest at the prime rate plus .75% and matured on February 15, 2024, $32,275 that earn interest at the prime rate plus .50% and mature on August 15, 2027 and $33,317 that earn interest at the prime rate plus .50% and mature on September 28, 2027.

The Company invested $33,338 of the proceeds received from the notes that matured on February 15, 2024 in variable rate notes receivable from Wakefern that earn interest at the SOFR plus 2.25% and mature on February 15, 2029.

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 $66,275 at October 28, 2023 compared to $67,714 at July 29, 2023.

Working capital was $60,061 at January 27, 2024 compared to $67,714 at July 29, 2023.

Working capital ratios at the same dates were 1.34 and 1.38 to one, respectively.

24 unchanged sentences

Village also executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 3.59%, resulting in a fixed effective rate of 5.34%.

Based on current trends, the Company believes cash and cash equivalents on hand at October 28, 2023, operating cash flow and availability under our Credit Facility are sufficient to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months.

There have been no other substantial changes as of October 28, 2023 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 29, 2023.

Based on current trends, the Company believes cash and cash equivalents on hand at January 27, 2024, operating cash flow and availability under our Credit Facility are sufficient to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months.

There have been no other substantial changes as of January 27, 2024 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 29, 2023.

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

9 unchanged sentences

and are indicated by words such as “will,” “expect,” “should,” “intend,” “anticipates,” “believes” and similar words or phrases.

The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from the results expressed, suggested or implied by such forward-

looking statements.

The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from the results expressed, suggested or implied by such forward-looking statements.

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

• We expect the increase in same store sales to range from 1.0% to 3.0% in fiscal 2024.

• We have budgeted $85,000 for capital expenditures in fiscal 2024.

• We have revised our budgeted capital expenditures downward from prior estimates to approximately $70,000 in fiscal 2024 due to the timing of construction spends for replacement stores shifting from fiscal 2024 into fiscal 2025.

52 unchanged sentences

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