What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-03-05 compared with 2024-12-04 · 59 added, 31 removed, 160 unchanged (36% of the section changed)

24 unchanged sentences

On March 17, 2024, we opened an 83,000 sq.

replacement ShopRite store in Old Bridge, NJ, that replaced our existing 32,000 sq.

replacement ShopRite store in Old Bridge, NJ, that replaced an existing 32,000 sq.

On November 1, 2023, Village closed an 8,400 sq.

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

13 Weeks Ended

October 26, 2024 October 28, 2023

13 Weeks Ended 26 Weeks Ended

January 25, 2025 January 27, 2024 January 25, 2025 January 27, 2024

Sales 100.00 % 100.00 % 100.00 % 100.00 %

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Net income 2.82 % 2.52 % 2.57 % 2.34 %

Sales were $557,697 in the 13 weeks ended October 26, 2024, an increase of 4.0% compared to the 13 weeks ended October 28, 2023.

Sales increased due to an increase in same store sales of 2.4% and the opening of the Old Bridge, NJ replacement store on March 17, 2024, partially offset by the impact of the closure of a Gourmet Garage location on November 1, 2023.

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

Sales were $599,651 in the 13 weeks ended January 25, 2025, an increase of 4.2% compared to the 13 weeks ended January 27, 2024.

Sales increased due to an increase in same store sales of 2.3% and the opening of the Old Bridge, NJ replacement store on March 17, 2024.

Same store sales increased due primarily to digital sales growth, continued growth in recently remodeled stores, higher pharmacy sales and inflation in the meat and dairy departments.

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 $1,157,347 in the 26 weeks ended January 25, 2025, an increase of 4.1% compared to the 26 weeks ended January 27, 2024.

Sales increased due to an increase in same store sales of 2.4% and the opening of the Old Bridge, NJ replacement store on March 17, 2024.

Same store sales increased due primarily to digital sales growth, continued growth in recently remodeled stores, higher pharmacy sales and inflation in the meat and dairy departments.

Gross Profit .

Gross profit as a percentage of sales increased .51% in the 13 weeks ended October 26, 2024 compared to the 13 weeks ended October 28, 2023 due primarily to increased patronage dividends and rebates received from Wakefern (.35%), decreased warehouse assessment charges from Wakefern (.20%), increased departmental gross margin percentages (.14%) and lower LIFO charges (.06%) partially offset by an unfavorable change in product mix (.20%) and higher promotional spending (.04%).

Gross profit as a percentage of sales decreased .05% in the 13 weeks ended January 25, 2025 compared to the 13 weeks ended January 27, 2024 due primarily to higher promotional spending (.16%), an unfavorable change in product mix (.14%) and decreased patronage dividends and rebates received from Wakefern (.02%) partially offset by increased departmental gross margin percentages (.17%), decreased warehouse assessment charges from Wakefern (.06%) and lower LIFO charges (.04%).

Gross profit in both the 13 weeks ended January 25, 2025 and the 13 weeks ended January 27, 2024 was favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2025 (.62%) and 2024 (.58%).

Gross profit as a percentage of sales increased .23% in the 26 weeks ended January 25, 2025 compared to the 26 weeks ended January 27, 2024 due primarily to increased departmental gross margin percentages (.17%), higher patronage dividends and rebates received from Wakefern (.16%), decreased warehouse assessment charges from Wakefern (.13%) and lower LIFO charges (.05%) partially offset by an unfavorable change in product mix (.18%) and higher promotional spending (.10%).

Gross profit in both the 26 weeks ended January 25, 2025 and the 26 weeks ended January 27, 2024 was favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2025 (.32%) and 2024 (.30%).

Operating and Administrative Expense.

Operating and administrative expense as a percentage of sales increased .37% in the 13 weeks ended October 26, 2024 compared to the 13 weeks ended October 28, 2023 due primarily to increased employee costs (.27%), increased external fees associated with digital sales growth (.22%) and higher utility costs (.11%) partially offset by operating leverage on fixed occupancy costs (.16%) and lower supply spending (.05%).

Employee costs increased due primarily to minimum wage and demand driven pay rate increases and higher fringe benefit costs, including self-insured medical plans and multi-employer union health and welfare plan benefits.

Operating and administrative expense as a percentage of sales decreased .49% in the 13 weeks ended January 25, 2025 compared to the 13 weeks ended January 27, 2024 due primarily to lower facility insurance costs (.12%), decreased legal and consulting fees (.13%), sales leverage on occupancy and facility costs (.07%), reduced supply (.07%), employee costs (.06%) and security spends (.05%).

Operating and administrative expense as a percentage of sales decreased .08% in the 26 weeks ended January 25, 2025 compared to the 26 weeks ended January 27, 2024 due primarily to sales leverage on occupancy and facility costs (.09%), lower

facility insurance costs (.07%), reduced supply spending (.06%), lower legal and consulting fees (.05%) and decreased security spends (.04%) partially offset by increased external fees associated with digital sales growth (.11%) and employee costs (.10%).

Depreciation and Amortization .

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

Depreciation and amortization expense varied slightly in the 13 and 26 weeks ended January 25, 2025 compared to the 13 and 26 weeks ended January 27, 2024, respectively, due primarily to capital expenditures.

Interest Expense .

Interest expense decreased in the 13 weeks ended October 26, 2024 compared to the 13 weeks ended October 28, 2023 due primarily to lower average outstanding debt balances.

Interest expense decreased in the 13 and 26 weeks ended January 25, 2025 compared to the 13 and 26 weeks ended January 27, 2024 due primarily to lower average outstanding debt balances.

Interest Income .

Interest income decreased in the 13 weeks ended October 26, 2024 compared to the 13 weeks ended October 28, 2023 due primarily to lesser amounts invested in demand deposits at Wakefern.

Interest income decreased in the 13 weeks ended January 25, 2025 compared to the 13 weeks ended January 27, 2024 due primarily to lower interest rates earned on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Interest income decreased in the 26 weeks ended January 25, 2025 compared to the 26 weeks ended January 27, 2024 due primarily to lesser amounts invested in demand deposits at Wakefern and lower interest rates earned on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Income Taxes.

The effective income tax rate was 31.2% in the 13 weeks ended October 26, 2024 compared to 31.5% in the 13 weeks ended October 28, 2023.

Net income was $12,803 in the 13 weeks ended October 26, 2024 compared to $11,585 in the 13 weeks ended October 28, 2023.

The effective income tax rate was 31.1% in the 13 weeks ended January 25, 2025 compared to 31.5% in the 13 weeks ended January 27, 2024.

The effective income tax rate was 31.1% in the 26 weeks ended January 25, 2025 compared to 31.5% in the 26 weeks ended January 27, 2024.

Net income was $16,896 in the 13 weeks ended January 25, 2025 compared to $14,480 in the 13 weeks ended January 27, 2024.

Net income was $29,697 in the 26 weeks ended January 25, 2025 compared to $26,066 in the 26 weeks ended January 27, 2024.

CRITICAL ACCOUNTING POLICIES

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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 27, 2024.

A s of October 26, 2024, there have been no changes to the critical accounting policies contained therein.

A s of January 25, 2025, 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 $20,175 in the 13 weeks ended October 26, 2024 compared to $18,379 in the corresponding period of the prior year.

Net cash provided by operating activities was $60,952 in the 26 weeks ended January 25, 2025 compared to $48,674 in the corresponding period of the prior year.

The change in cash flows from operating activities in fiscal 2025 was primarily due to an increase in net income and changes in working capital.

Working capital changes, including Other assets and liabilities, decreased cash flows from operating activities by $2,522 in fiscal 2025 compared to a decrease of $3,317 in fiscal 2024.

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

During the 13 weeks ended October 26, 2024, Village used cash to fund capital expenditures of $11,701, dividends of $3,324, principal payments of long-term debt of $2,711, additional net investments of $2,202 in notes receivable from Wakefern and an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $339.

Working capital changes, including Other assets and liabilities, increased cash flows from operating activities by $11,221 in fiscal 2025 compared to an increase of $2,551 in fiscal 2024.

The change in impact of working capital is due primarily to the timing of tax payments, increased patronage dividends received partially offset by timing of payments associated with promotional funding and pension benefits.

During the 26 weeks ended January 25, 2025, Village used cash to fund capital expenditures of $27,548, dividends of $6,652, principal payments of long-term debt of $5,468, additional net investments of $4,298 in notes receivable from Wakefern and an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $339.

Capital expenditures primarily include costs associated with construction of replacement stores and various technology, equipment and facility upgrades.

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Planned expenditures include costs for construction of replacement stores in both East Orange, NJ and Watchung, NJ, 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 2025 are expected to be cash and cash equivalents on hand at October 26, 2024 and operating cash flow generated in fiscal 2025.

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 the Village Old Bridge replacement store with an operating lease obligation of $4,363 as of October 26, 2024.

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

As of October 26, 2024, Village has invested $17,694 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.

The Company’s primary sources of liquidity in fiscal 2025 are expected to be cash and cash equivalents on hand at January 25, 2025 and operating cash flow generated in fiscal 2025.

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 the Village Old Bridge replacement store with an operating lease obligation of $4,352 as of January 25, 2025.

As of January 25, 2025, Village has invested $17,694 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.

No additional equity investment is expected for this project.

On February 15, 2024, notes receivable due from Wakefern of $33,338 that earned interest at the prime rate plus .75% matured.

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

At October 26, 2024, the Company held variable rate notes receivable due from Wakefern of $34,500 that earn interest at the prime rate plus 0.50% and mature on August 15, 2027, $35,613 that earn interest at the prime rate plus.50% and mature on September 28, 2027, and $34,951 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029.

At January 25, 2025, the Company held variable rate notes receivable due from Wakefern of $35,223 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $36,360 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $35,577 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 $23,788 at October 26, 2024 compared to $25,485 at July 27, 2024.

Working capital was $24,821 at January 25, 2025 compared to $25,485 at July 27, 2024.

Working capital ratios at the same dates were 1.13 and 1.15 to one, respectively.

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The term loan is secured by the Vineland store shopping center.

Based on current trends, the Company believes cash and cash equivalents on hand at October 26, 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 October 26, 2024 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 27, 2024.

New Markets Tax Credit Financing

On December 29, 2017, the Company entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC (“Wells Fargo”) under a qualified New Markets Tax Credit (“NMTC”) program related to the construction of a new store in the Bronx, New York.

The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities.

The Act permits taxpayers to claim credits against their Federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”).

CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.

In connection with the financing, the Company loaned $4,835 to VSM Investment Fund, LLC (the "Investment Fund") at an interest rate of 1.403% per year and with a maturity date of December 31, 2044.

Wells Fargo contributed $2,375 to the Investment Fund and, by virtue of such contribution, is entitled to substantially all of the tax benefits derived from the NMTC.

The Investment Fund is a wholly owned subsidiary of Wells Fargo.

The loan to the Investment Fund was recorded in Other assets in the consolidated balance sheets.

The Investment Fund then contributed the proceeds to a CDE, which, in turn, loaned combined funds of $6,563, net of debt issuance costs, to Village Super Market of NY, LLC, a wholly-owned subsidiary of the Company, at an interest rate of 1.000% per year with a maturity date of December 31, 2051.

The proceeds of the loans from the CDE were used to partially fund the construction of the Bronx store.

The Notes payable related to New Markets Tax Credit, net of debt issuance costs, were recorded in long-term debt in the consolidated balance sheets.

The NMTC was subject to 100% recapture for a period of seven years, which ended in December 2024.

The Company was required to and fulfilled its obligation to be in compliance with various regulations and contractual provisions that applied to the New Markets Tax Credit arrangement for the duration of the seven year recapture period.

The transaction included a put/call provision whereby the Company would be obligated or entitled to repurchase Wells Fargo's interest in the Investment Fund for a de minimus amount.

In January 2025, Wells Fargo exercised the put option requiring Village to repurchase Wells Fargo's interest in the Investment Fund.

This resulted in a non-cash extinguishment of the $6,563 loans payable to the CDE and the $4,835 loan receivable from the Investment Fund.

The $1,728 net benefit resulting from the loan extinguishments was recognized ratably over the seven-year compliance period as a reduction in operating and administrative expense.

Based on current trends, the Company believes cash and cash equivalents on hand at January 25, 2025, 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 25, 2025 to the contractual obligations and commitments discussed in the Company’s Annual Report on Form 10-K for the year ended July 27, 2024.

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

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and legal matters;

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.

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

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The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations, withdrawals by other participating employers and the actual return on assets held in the plans, among other factors.

• The Company uses a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, automobile, general liability, property, director and officers’ liability, and certain employee health care benefits.

• The Company uses a combination of insurance and self-insurance to provide for potential liability for workers’ compensation, automobile, general liability, property, employment practices, director and officers’ liability, and certain employee health care benefits.

Any projection of losses is subject to a high degree of variability.

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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