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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-02-26 · 97 added, 67 removed, 157 unchanged (51% of the section changed)

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Results of Operations (continued)

Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to significant fluctuations caused by retail inflation and deflation in various commodities and changes in government benefits such as SNAP/EBT, Management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis.

The following table provides the two-year stacked comparable store sales, including and excluding fuel, for the fiscal years ended December 27, 2025, and December 28, 2024, as well as fiscal years ended December 28, 2024, and December 30, 2023, respectively.

Percentage Change

December 27, 2025

Comparable store sales, excluding fuel (individual year)

Comparable store sales, excluding fuel (two-year stacked)

Comparable store sales (individual year)

Comparable store sales (two-year stacked)

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters.

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(amounts in thousands except per share amounts)

(As restated)

For the Fiscal Years Ended December 27, 2025, December 28, 2024 and December 30, 2023

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Basic and diluted earnings per share

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Individual Year-Over-Year Analysis of Sales

Percentage Change

Net sales, adjusted for an additional week in 2022, excluding fuel

Net sales, adjusted for an additional week in 2022

Net sales, excluding fuel

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Comparable store sales

The 2024 and 2023 years were comprised of 52 weeks, whereas the 2022 year was comprised of 53 weeks.

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable when it has been in operation after five full fiscal quarters.

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The Company only includes retail food stores in the calculation.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Net Sales (continued)

According to the latest U.S.

Bureau of Labor Statistics’ report, the annual Food-at-Home Price Index increased 1.8% in 2024, adjusted, 5.0% in 2023 and 11.4% in 2022.

Bureau of Labor Statistics’ report, the annual Food-at-Home Price Index increased 2.4% in 2025, 1.8% in 2024, and 5.0% in 2023.

Even though the U.S.

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The 52-week average price of gasoline in the Central Atlantic States, according to the U.S.

Department of Energy, decreased 10.1%, or $0.42 per gallon, in 2023 compared to the 53-week average in 2022.

Comparable store sales, excluding fuel and adjusted for the 53rd week in 2022, increased for all years presented.

Comparable store sales, including fuel, increased in 2024 compared to 2023, which decreased when compared to 2022.

Department of Energy, decreased 5.1%, or $0.19 cents per gallon, in 2024 compared to the 52-week average in 2023.

Comparable store sales, excluding fuel, and comparable stores sales, including fuel, both increased for all years presented.

Comparable store sales, excluding fuel, increased 2.1% and comparable store sales, including fuel, increased 2.0% for 2025 compared to 2024.

On a comparable store sales basis, pharmacy services increased in sales driven by the increased number of filled prescriptions.

Comparable store sales increased 1.9% excluding fuel and 1.7% including fuel for 2024 compared to 2023.

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 195 store locations.

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Both direct product cost and distribution cost increase when sales volume increases.

Gross profit rate was 25.2% in 2024, 25.1% in 2023, and 25.6% in 2022.

The increase in gross profit rate is attributable to increased grocery sales, which have a higher gross profit margin than pharmacy and fuel sales.

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $608 thousand, $6.7 million and $29.2 million in 2024, 2023 and 2022, respectively.

The Company has experienced retail inflation and deflation in various commodities for the periods presented.

Management cannot accurately measure the full impact of inflation or deflation on retail pricing due to changes in the types of merchandise sold between periods, shifts in customer buying patterns and the fluctuation of competitive factors.

Gross profit rate was 25.1% in 2025 and 2024, and 25.0% in 2023.

The increase is attributable to initiatives to improve merchandise category gross profit performance.

WEIS MARKETS, INC.

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Results of Operations (continued)

Cost of Sales and Gross Profit (continued)

The Company experienced unfavorable non-cash LIFO inventory valuation adjustments, decreasing gross profit by $302 thousand, $608 thousand and $6.7 million in 2025, 2024 and 2023, respectively.

The Company has experienced retail inflation and deflation in various commodities for the periods presented.

Operating, General and Administrative Expenses

The majority of the expenses were driven by increased sales volume.

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 55.7% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor increased by 0.2% in 2024 compared to 2023 and increased 0.1% in 2023 compared to 2022.

Direct store labor expenses increased in 2024 compared to 2023 due to increased wage expenses for hourly employees.

Direct store labor increased slightly in 2023 compared to 2022 due to flat net sales results for the same period.

Employee-related costs such as wages, employer paid taxes, health care benefits and retirement plans, comprise approximately 58.8% of the total “Operating, general and administrative expenses.” As a percent of sales, direct store labor increased by 0.1% in 2025 compared to 2024 and increased by 0.2% in 2024 compared to 2023 due to increased wage expenses for hourly employees.

Management continues to monitor store labor efficiencies and develop labor standards to reduce costs while maintaining the Company’s customer service expectations.

During 2023, the Company completed a multi-year initiative to install or upgrade self-checkouts in its stores in response to customer preference and labor supply, including adding convertible dual-use checkout lanes.

Depreciation and amortization expense charged to “Operating, general and administrative expenses” was $112.8 million, or 2.3% of net sales, for 2025 compared to $102.8 million, or 2.2% of net sales, for 2024 compared to $98.0 million, or 2.2% of net sales, for 2023.

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Employee expense

Fixed expense (depreciation and amortization expense)

Employee insurance benefits expense

Third party fees (information technology, consulting, and financial service fees)

Supplies expense

Other expenses (utilities, asset disposals, and deferred compensation plan liability)

The net increase in other expenses to 2024 from 2023 included a gain from the asset disposal on the sale of business assets and the change in the Company’s deferred compensation plan liability.

Employee insurance benefit expense increased in 2024 from 2023 due to more high dollar claims.

Outside services and repairs expense

Utilities expense

Gain on disposition of fixed assets (real estate property sales)

Other expenses (supplies and travel expense)

Operating, general, and administrative expenses as a percent of sales increased by 0.3% for the fiscal year ended December 27, 2025, compared with 2024.

The increase was driven primarily by higher employee-related expenses, including increased base pay and one-time deferred compensation plan liability credit in 2024, partially offset by lower employee incentive compensation costs.

Additional increases resulted from higher employee insurance benefits expense;

higher outside services and repairs expense, including asset maintenance costs, technology contract costs, and share purchase transaction costs;

higher fixed expenses due to increased depreciation and amortization costs associated with five new or relocated stores and twelve acquired competitor pharmacy prescription files;

and higher utilities expense.

These increases were partially offset by a net gain on the disposition of fixed assets related to real estate property sales, which reduced operating, general, and administrative expenses in 2025 compared with 2024.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

(amounts in thousands)

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as a % of sales

Employee expense

Employee insurance benefits expense

Fixed expense (amortization, depreciation, insurance expenses, and occupancy costs)

Repairs and maintenance expense

Other expenses (employee expense, utilities, technology, asset disposals and insurance proceeds)

The majority of the decrease in other expenses to 2023 from 2022 were technology expenses due to more third-party information technology subscription and consulting services offset by less asset disposals and insurance proceeds.

Employee insurance benefits expense decreased to 2023 from 2022 due to a dependent audit which resulted in fewer claims.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Third party expense (technology, consulting, and financial service fees)

Supplies expense

Other expenses (utilities, asset disposals, and deferred compensation plan liability)

Operating, general, and administrative expenses as a percent of sales increased by 0.3% for the fiscal year ended December 28, 2024, compared with 2023.

The increase was driven primarily by higher employee-related expense;

higher employee insurance benefits expense;

higher third party expense, including technology, consulting, and financial services costs;

and higher supplies expense.

These increases were partially offset by a net gain on the disposition of fixed assets related to real estate property sales and a one-time deferred compensation plan liability credit in 2024 in comparison to 2023.

Provision for Income Taxes

The effective income tax rate was 24.4%, 26.9% and 29.3% in 2025, 2024, and 2023, respectively.

The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee-related expenses.

The Company reduced its provision for income taxes by $5.5 million in 2022 primarily due to the effects of Pennsylvania House Bill 1342 which was enacted on July 8, 2022.

The bill made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031, offset by taxable income changes, inclusive of, updating market sourcing rules, and codifying the economic nexus standard.

The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes, federal and state tax credits, and nondeductible employee-related expenses.

Pennsylvania House Bill 1342 made significant changes to the Commonwealth’s corporate income tax laws which included lowering the tax rate gradually from 9.99% in 2022 to 4.99% in 2031, offset by taxable income changes, inclusive of, updating market sourcing rules, and codifying the economic nexus standard.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

This legislation includes provisions that permanently extend the expiring elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation on qualifying property placed in service after January 19, 2025, and full expensing of domestic research and development expenditures.

In accordance with Accounting Standards Codification ASC 740, “Income Taxes”, the Company recognized the enacted legislation effective September 27, 2025.

The legislation has multiple effective dates with some provisions taking effect in 2025 and others phased in through 2027.

As a result of the Company’s elections, the 2025 cash taxes decreased with no material impact to its effective tax rate.

Liquidity and Capital Resources

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The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.

The Company has not had an obligation on the Credit Agreement since the second quarter of 2018.

The Company’s investment portfolio consists of high-grade bonds with maturity dates between one and 30 years and four high yield, large capitalized public company equity securities.

The portfolio totaled $192.0 million as of December 28, 2024.

On October 1, 2025, the Company divested a portion of its marketable securities portfolio to increase cash and cash equivalents liquidity to satisfy working capital obligations, selling $7.2 million in equity securities and $24.4 million in corporate and municipal bonds.

As of December 27, 2025, the Company’s marketable securities portfolio totaled $97.1 million consisting of high-grade corporate and municipal bonds with maturity dates between one and 30 years, commercial paper, and no equity securities.

Management anticipates maintaining the investment portfolio but has the ability to liquidate if needed.

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Quantitative and Qualitative Disclosures about Market Risk” for more details regarding the Company’s market risk.

The Company’s capital expenditure program includes the construction of new superstores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet.

The Company completed the purchase of a store located in Newville, Pennsylvania in the first quarter of 2025.

Management continues to reinvest in its long-term capital expenditure program including plans to complete multiple carryover projects from prior years that were delayed due to labor and supply chain disruptions.

The Company anticipates to fund the long-term capital expenditure program, the acquisition of retail stores, the construction of additional distribution facilities, repurchases of common stock, and cash dividends on common stock through its cash and cash equivalents, marketable securities, cash flows from operating activities, and revolving credit agreement.

The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

The Company’s capital expenditure program includes the construction of new stores, the expansion and remodeling of existing units, the acquisition of sites for future expansion, new technology purchases and the continued upgrade of the Company’s distribution facilities and transportation fleet.

In 2025, the Company acquired one store in Pennsylvania and opened three new stores in Maryland and one new store in Delaware.

The Company continues to reinvest and anticipates to fund the long-term capital expenditure program, the acquisition of retail stores, the construction of additional distribution facilities, repurchases of common stock, and cash dividends on common stock through its cash and cash equivalents, marketable securities, cash flows from operating activities, and the revolving Credit Agreement.

The Company has no other commitment of capital resources as of December 27, 2025, other than the lease commitments on its store facilities and transportation equipment under operating leases that expire at various dates through 2038.

The Board of Directors’ 2004 resolution authorizing the repurchase of up to one million shares of the Company’s common stock has a remaining balance of 752,468 shares, and no repurchases were made during the year ended December 27, 2025.

Quarterly Cash Dividends

Total cash dividend payments on common stock, on a per share basis, amounted to $1.36 in 2024, $1.36 in 2023 and $1.30 in 2022.

The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022.

Total cash dividend payments on common stock, on a per share basis, amounted to $1.36 in 2025, 2024 and 2023.

The Company expects to continue paying regular cash dividends on a quarterly basis.

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The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments and the amount of the dividends depends upon the financial condition of the Company, results of operations and other factors which the Board of Directors deems relevant.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Cash Flow Information

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Financing activities

Cash flows from operating activities decreased in 2024 as compared to 2023 and 2022.

The decrease in 2024 from 2023 is due to increased value of inventory on hand due to timing of New Year’s selling period and in 2023 from 2022 is due to lower net income.

Cash flows from operating activities increased in 2025 as compared to 2024 and 2023.

The increase in 2025 from 2024 is due to a decrease in current income taxes as a result of the impacts of the OBBBA and the decrease in 2024 from 2023 is due to increased value of inventory on hand due to timing of New Year’s selling period.

Property and equipment purchases totaled $205.2 million in 2025, $168.5 million in 2024 and $104.0 million in 2023.

As a percentage of sales, capital expenditures totaled 4.2% in 2025, 3.5% in 2024 and 2.2% in 2023.

The Company decreased its marketable securities holdings in 2024 by $34.0 million to fund the increase in capital expenditures and increased its marketable securities holdings in 2023 by approximately $39.5 million and in 2022 the Company maintained its marketable securities portfolio.

In 2024, the Company purchased two previously leased store locations.

In 2025, the Company purchased one new location and opened four new stores.

The Company also completed a business acquisition in 2024, for which cash consideration totaled $16.2 million.

The Company decreased its marketable securities holdings in 2025 by $94.9 million to partially fund the share purchase transaction referenced in Note 13 and decreased its marketable securities holdings in 2024 by $34.0 million to fund the increase in capital expenditures and increased its marketable securities holdings in 2023 by approximately $39.5 million.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Results of Operations (continued)

Net cash used in financing activities in 2025 was $175.1 million compared to $36.6 million in 2024.

The Company purchased 2,153,846 shares of common stock from the trustees of The Patricia R.

Weis Marital Trust and The Patricia G.

Ross Weis Revocable Trust at $65.00 per share on June 6, 2025 for an aggregate purchase price of $140.0 million dollars, as further described in Note 13.

The Company paid dividends of $35.1 million in 2025, $36.6 million in 2024 and $36.6 million in 2023.

The Company increased its quarterly dividend from 32 cents per share to 34 cents per share in the fourth quarter of 2022.

Contractual Obligations

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The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations or cash flows.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Critical Accounting Policies and Estimates

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Allowances for inventory shortages are recorded based on the results of these counts and to provide for estimated shortages from the last physical count to the financial statement date.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Critical Accounting Policies and Estimates (continued)

Vendor Allowances

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Cash discounts for prompt payment of invoices are realized in cost of sales as invoices are paid.

Warehouse and back-haul allowances provided by suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.

Warehouse and back-haul allowances provided by

suppliers for distributing their product through the Company’s distribution system are recorded in cost of sales as the required performance is completed.

Warehouse slotting allowances are recorded in cost of sales when new items are initially set up in the Company’s distribution system, which is when the related expenses are incurred and performance under the agreement is complete.

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The assessment of the Company’s tax position relies on the judgment of Management to estimate the more likely than not merits associated with the Company’s various tax positions.

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Critical Accounting Policies and Estimates (continued)

The Company leases approximately 47% of its open store facilities under operating leases that expire at various dates through 2038, with the remaining store facilities being owned.

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Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

WEIS MARKETS, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations:

Critical Accounting Policies and Estimates (continued)

Self-Insurance

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The other self-insurance liabilities including workers’ compensation are determined actuarially, based on claims filed and an estimate of claims incurred but not yet reported.

The Company is self-insured for certain healthcare claims and stop-loss coverage is maintained for individual annual claim occurrences exceeding a $600 thousand specific deductible.

The Company is liable for workers’ compensation claims ranging from $1.0 million to $2.0 million per claim.

Property and casualty insurance coverage is maintained with outside carriers at deductible or retention levels ranging from $250 thousand to $1.0 million.

The Company is self-insured for certain healthcare claims and stop-loss coverage is maintained for individual annual claim occurrences exceeding a $600 thousand deductible with a specific aggregating deductible of $700 thousand.

The Company administers a self-insured commercial general liability program with a retention of $1.0 million per claim.

The Company also manages self-insured workers’ compensation programs in Pennsylvania and Maryland, each with a $2.0 million retention per claim.

In all other jurisdictions, including Delaware, New Jersey, New York, Virginia, and West Virginia, workers’ compensation coverage is maintained with a $1.0 million deductible per claim.

Property and casualty insurance is placed with multiple carriers on either a per claim or per occurrence basis, with deductibles and retention levels varying by coverage, ranging from $0 to $2.0 million.

Significant assumptions used in the development of the actuarial estimates include reliance on the Company’s historical claims data including average monthly claims and average lag time between incurrence and reporting of the claim.

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general economic conditions, including their impact on capital expenditures;

business conditions in the retail industry;

tariffs and trade policies;

business conditions and trends in the retail industry;

the regulatory environment;

rapidly changing technology and competitive factors, including increased competition with regional and national retailers;

and price pressures.

rapidly changing technology, including cybersecurity and data privacy risks, and competitive factors, including increased competition with regional and national retailers;

price pressures;

further expenditures related to restatement of our financial statement;

and the results of any shareholder actions associated with the restatements.

Readers are cautioned not to place undue reliance on forward-looking statements, which reflect Management’s analysis only as of the date hereof.

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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-K

Item 7. Management’s Discussion and Analysis