What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-10-09 compared with 2024-10-10 · 46 added, 44 removed, 236 unchanged (28% of the section changed)

9 unchanged sentences

The ShopRite Price Plus and Fairway Insider customer loyalty programs enable Village to offer continuity programs, focus on target marketing initiatives and to offer discounts and attach digital coupons directly to a customer's loyalty card.

Online grocery ordering for in-store pick up or home delivery is available in all of our ShopRite stores through shoprite.com, the ShopRite app or through third party service providers.

Online grocery ordering for in-store pick up or home delivery is available in all of our ShopRite stores through either shoprite.com, the ShopRite app or through third party service providers.

Additionally, the ShopRite Order Express app enables customers to pre-order deli, catering, specialty occasion cakes and other items.

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To promote production efficiency, product quality and consistency, the Company operates a centralized commissary supplying certain products in deli, bakery, prepared foods and other perishable product categories to all stores.

The Company’s stores, eight of which are owned, average 56,000 total square feet.

The Company’s stores, nine of which are owned, average 57,000 total square feet.

These larger store sizes enable the Company to offer a wide variety of national branded and locally sourced food products, including grocery, meat, produce, dairy, deli, seafood, prepared foods, bakery and frozen foods as well as non-food product offerings, including health and beauty care, general merchandise, liquor and 21 in-store pharmacies.

5 unchanged sentences

When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores.

On April 9, 2025, we opened a 72,000 sq.

replacement ShopRite store in Watchung, NJ, that replaced an existing 44,000 sq.

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

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

On August 14, 2022, we converted the Pelham, NY store from the Fairway banner to the ShopRite banner and a major remodel of the store was completed in late October 2022.

The Company operated an automated micro-fulfillment center to facilitate online order fulfillment for the south New Jersey stores that was closed on September 1, 2024.

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The Company's presentation of Non-GAAP Measures should not be construed as an implication that its future results will be unaffected by unusual or non-recurring items.

The following tables reconciles Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses:

The following tables reconcile Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses:

52 Weeks Ended

2025 July 27,

Net Income $ 56,380 $ 50,462

Adjustments to Operating Expenses:

Adjustments to Operating and Administrative Expenses:

Store pre-opening costs (1) $ 684 $ 907

Pension settlement gain (2) (874) —

Rent concession (3) (517) —

Adjustments to Impairment of Assets:

Impairment of assets (4) $ 1,462 $ 2,125

Litigation settlement gain (3) — (1,200)

Adjustments to Income Taxes:

Tax impact of adjustments to operating expenses (940) 372

Tax impact of special items $ (234) $ (940)

Adjusted net income $ 56,901 $ 52,554

3 unchanged sentences

Adjusted operating and administrative expenses as a % of sales 23.95 % 24.30 %

(1) Fiscal 2024 pre-opening costs are associated with opening of the Old Bridge, NJ ShopRite replacement store opened on March 17, 2024.

(1) Fiscal 2025 pre-opening costs are associated with opening of the Watchung, NJ ShopRite replacement store that opened on April 9, 2025 and fiscal 2024 pre-opening costs are associated with the opening of the Old Bridge, NJ ShopRite replacement store that opened on March 17, 2024.

(2) Fiscal 2025 includes a pension settlement gain related to lump sum payments made under an unfunded, non-qualified company sponsored defined benefit plan.

(3) Fiscal 2025 includes income related to rent concessions received on one store location to compensate for disruption in operations during redevelopment of the retail center.

(4) Fiscal 2025 includes non-cash impairment charges on the long-lived assets of one Gourmet Garage store and assets held for sale.

Fiscal 2024 includes non-cash impairment charges for long-lived assets due to the closure of the automated micro-fulfillment center in south NJ.

(3) Fiscal 2023 litigation settlement gains are related to claims associated with the Fairway acquisition and liabilities associated thereto.

RESULTS OF OPERATIONS

14 unchanged sentences

Sales were $2,320,690 in fiscal 2025 compared to $2,236,566 in fiscal 2024.

Sales increased due primarily to an increase in same store sales of 2.3% 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 retail price inflation, digital sales growth, higher pharmacy sales and continued growth in recently remodeled stores.

Sales increased due to an increase in same store sales of 2.1%, the opening of the Watchung, NJ replacement store on April 9, 2025 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.

These increases were partially offset by cannibalization of existing stores from the Watchung replacement store opening and recent competitive store openings.

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.

Gross profit as a percentage of sales increased to 28.70% in fiscal 2024 compared to 28.45% in fiscal 2023 due primarily to increased departmental gross margin percentages (.21%), increased patronage dividends and rebates received from Wakefern (.13%), decreased warehouse assessment charges from Wakefern (.10%) and lower LIFO charges (.09%) partially offset by higher promotional spending (.18%) and an unfavorable change in product mix (.11%).

Department gross margins increased due primarily to pricing initiatives and improvements in commissary operations partially offset by higher inventory shrink.

Gross profit as a percentage of sales decreased to 28.57% in fiscal 2025 compared to 28.70% in fiscal 2024 due primarily to an unfavorable change in product mix (.15%), higher promotional spending (.08%) and decreased departmental gross margin percentages (.06%) partially offset by higher patronage dividends and rebates received from Wakefern (.07%) and decreased warehouse assessment charges from Wakefern (.09%).

OPERATING AND ADMINISTRATIVE EXPENSE

Operating and administrative expense as a percentage of sales increased to 24.34% in fiscal 2024 compared to 23.86% in fiscal 2023.

Adjusted operating and administrative expense as a percentage of sales increased to 24.30% in fiscal 2024 compared to 23.91% in fiscal 2023 due primarily to increased labor costs and fringe benefits (.21%), increased external fees associated with digital sales growth (.08%), expanded store security (.06%) and software licensing associated with retail and commissary technology investments (.05%).

Higher labor and fringe benefit costs are 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 decreased to 23.92% in fiscal 2025 compared to 24.34% in fiscal 2024.

Adjusted operating and administrative expense as a percentage of sales decreased to 23.95% in fiscal 2025 compared to 24.30% in fiscal 2024.

The decrease in Adjusted operating and administrative expenses is due primarily to lower employee costs (.16%), sales leverage on occupancy and facility costs (.13%), lower facility insurance costs (.06%) and reduced supply spending (.06%) partially offset by higher utility rates (.07%).

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense decreased in fiscal 2024 compared to fiscal 2023 due primarily to the timing of capital expenditures.

Depreciation and amortization expense increased in fiscal 2025 compared to fiscal 2024 due primarily to capital expenditures.

IMPAIRMENT OF ASSETS

Impairment of assets in fiscal 2025 includes non-cash impairment charges on the long-lived assets of one Gourmet Garage store and assets held for sale.

Impairment of assets in fiscal 2024 includes non-cash charges for long-lived assets at the automated micro-fulfillment center which was closed in September 2024.

2 unchanged sentences

INTEREST INCOME

Interest income increased in fiscal 2024 compared to fiscal 2023 due primarily to higher interest rates and larger amounts invested in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

The Company’s effective income tax rate was 30.6% in fiscal 2024 compared to 31.6% in fiscal 2023.

The effective tax rate decreased in fiscal 2024 compared to fiscal 2023 due primarily to increased estimated work opportunity tax credits and a favorable deferred tax asset revaluation to reflect changes in state tax rates.

Interest income decreased in fiscal 2025 compared to fiscal 2024 due primarily to lower interest rates earned on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

The effective income tax rate was 31.1% in fiscal 2025 compared to 30.6% in fiscal 2024.

The increase in the effective income tax rate is due to the prior year including a favorable deferred tax asset revaluation to reflect changes in state tax rates.

Net income was $56,380 in fiscal 2025 compared to $50,462 in fiscal 2024.

Adjusted net income was $56,901 in fiscal 2025 compared to $52,554 in fiscal 2024.

Adjusted net income increased 7% compared to the prior year due primarily to the 2.3% increase in same store sales, improvements in gross profit and increased interest income.

Adjusted net income increased 8% compared to the prior year due primarily to the 2.1% increase in same store sales and improvements in operating margin.

CRITICAL ACCOUNTING POLICIES

23 unchanged sentences

Net cash provided by operating activities was $93,222 in fiscal 2025 compared to $80,849 in fiscal 2024.

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

Working capital changes, including Other assets and liabilities, decreased cash flows from operating activities by $11,340 in fiscal 2024 compared to an increase of $15,021 in fiscal 2023.

The change in cash flows from operating activities in fiscal 2025 was primarily due 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 $7,922 in fiscal 2025 compared to a decrease of $11,340 in fiscal 2024.

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

During fiscal 2025, Village used cash to fund capital expenditures of $58,765, dividends of $13,308, principal payments of long-term debt of $11,006, purchase of lease right-of-use assets of $8,133, additional net investments of $8,343 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 a replacement store in

Watchung, NJ that opened on April 9, 2025, a replacement store in East Orange, NJ expected to open in fiscal 2026, the purchase of the real estate of the Springfield, NJ store, several smaller remodels and merchandising initiatives, and various technology, equipment and facility upgrades.

The Company also acquired lease right-of-use assets for a potential future store location.

During fiscal 2024, Village used cash to fund capital expenditures of $63,113, dividends of $13,341, principal payments of long-term debt of $11,003, share repurchases of $2,211, an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $6,480 and additional net investments of $8,653 in notes receivable from Wakefern.

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

that opened on March 17, 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.

During fiscal 2023, Village used cash to fund capital expenditures of $46,400, dividends of $13,193, principal payments of long-term debt of $10,446, treasury stock purchases of $3,739, an investment in a real estate partnership for the development of a retail center in Old Bridge, New Jersey of $5,865 and additional net investments of $36,425 in notes receivable from Wakefern.

Capital expenditures primarily include costs associated with the remodel and conversion of the Pelham, NY Fairway to the ShopRite banner, the new Gourmet Garage store in the West Village of New York City, the purchase of the Vineland store shopping center, costs for construction of the Old Bridge replacement store, installation of electronic shelf labels, continued expansion of self-checkout, and various technology, equipment and facility upgrades.

Capital expenditures primarily include costs associated with the construction of the Old Bridge replacement store that opened on March 17, 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.

LIQUIDITY and DEBT

1 unchanged sentence

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

The decrease in working capital in fiscal 2024 compared to fiscal 2023 is due primarily to $33,338 in notes receivable from Wakefern that matured on February 15, 2024 and were reinvested in long-term notes receivable from Wakefern.

The Company’s working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

We have budgeted $75,000 for capital expenditures in fiscal 2026.

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.

Planned expenditures include costs for construction of a replacement store in East Orange, NJ expected to open in fiscal 2026, construction of a replacement store expected to open in fiscal 2027, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades.

The Company’s primary sources of liquidity in fiscal 2026 are expected to be cash and cash equivalents on hand at July 26, 2025 and operating cash flow generated in fiscal 2026.

During fiscal 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 $4,328 as of July 26, 2025.

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 July 26, 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.

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

The Company invested all of the proceeds received in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on August 15, 2027.

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.

No additional equity investment is expected for this partnership.

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

10 unchanged sentences

• An unsecured revolving line of credit providing a maximum amount available for borrowing of $75,000.

Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("SOFR") plus 1.10% and expires on May 6, 2025.

Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("SOFR") plus 1.25% and expires on April 30, 2030.

• An unsecured $25,500 term loan issued on May 12, 2020, repayable in equal monthly installments based on a seven-year amortization schedule through May 4, 2027 and bearing interest at the applicable SOFR plus 1.46%.

40 unchanged sentences

• We have budgeted $75,000 for capital expenditures in fiscal 2026.

• The Board’s current intention is to continue to pay quarterly dividends in 2025 at the most recent rate of $.25 per Class A and $.1625 per Class B share.

and facility upgrades.

The Company’s primary sources of liquidity in fiscal 2026 are expected to be cash and cash equivalents on hand at July 26, 2025 and operating cash flow generated in fiscal 2026.

• The Board’s current intention is to continue to pay quarterly dividends in fiscal 2026 at the most recent rate of $.25 per Class A and $.1625 per Class B share.

• We believe cash and cash equivalents on hand, operating cash flow and the Company's Credit Facility will be adequate to meet anticipated requirements for working capital, capital expenditures and debt payments for the foreseeable future.

8 unchanged sentences

We are vulnerable to economic downturns in these states in addition to those that may affect the country as a whole.

Results of operations may be materially adversely impacted by inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, labor shortages, changing demographics, natural disasters, terrorist attacks, the outbreak of pandemics or other illnesses, disruptions to supply chains and disturbances due to social unrest, geopolitical conflict and political instability.

Results of operations may be materially adversely impacted by inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, changes in tariffs, labor shortages, changing demographics, natural disasters, terrorist attacks, the outbreak of pandemics or other illnesses, disruptions to supply chains and disturbances due to social unrest, geopolitical conflict and political instability.

• Village purchases substantially all of its merchandise from Wakefern.

43 unchanged sentences

Additional information is provided in Note 3 to the consolidated financial statements.

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

The Company invested all of the proceeds received in variable rate notes receivable from Wakefern that earn interest at the prime rate plus .50% and mature on August 15, 2027.

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.

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

3 unchanged sentences

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.

As disclosed under the heading “Legal Proceedings”, we are currently engaged in litigation with Wakefern.

At this time, we are unable to assess the impact of the litigation on our results of operations.

At July 26, 2025, Village had demand deposits invested at Wakefern in the amount of $92,003.

These deposits earn overnight money market rates.

The Company subleased the Vineland store from Wakefern under a sublease agreement which provided for annual rent of $413 in fiscal 2023.

The sublease contained normal periodic rent increases and options to extend the lease.

The sublease agreement was terminated upon the acquisition of the Vineland store shopping center in fiscal 2023.

The Company leases a supermarket from a realty firm 30% owned by certain officers of Village.

The Company leases a supermarket from a realty firm 30% owned by certain Village officers and members of the Board of Directors.

The Company paid rent to related parties under this lease of $735 in both fiscal 2025 and 2024, respectively, and has a related lease obligation of $425 at July 26, 2025.

3 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-K

Item 7. Management’s Discussion and Analysis