Item 7. Management’s Discussion and Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
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
Year Ended
December 27, 2025
2025 vs. 2024
2024 vs. 2023
Comparable store sales, excluding fuel (individual year)
2.1
1.9
Comparable store sales, excluding fuel (two-year stacked)
4.0
Comparable store sales (individual year)
2.0
1.7
%
Comparable store sales (two-year stacked)
3.7
%
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. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction.
Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.
Analysis of Consolidated Statements of Income
2024
2023
Percentage Change
(amounts in thousands except per share amounts)
2025
(As restated)
(As restated)
2025 vs.
2024 vs.
For the Fiscal Years Ended December 27, 2025, December 28, 2024 and December 30, 2023
(52 Weeks)
(52 Weeks)
(52 Weeks)
2024
2023
Net sales
$
4,939,373
$
4,773,880
$
4,696,950
3.5
%
1.6
%
Other revenue
18,336
17,850
17,623
2.7
1.3
Total revenue
4,957,709
4,791,730
4,714,573
3.5
1.6
Cost of sales, including advertising, warehousing and distribution expenses
3,717,846
3,592,980
3,539,054
3.5
1.5
Gross profit
1,239,863
1,198,750
1,175,519
3.4
2.0
Gross profit margin
25.1
%
25.1
%
25.0
%
Operating, general and administrative expenses
1,126,210
1,072,364
1,042,378
5.0
2.9
O, G & A, percent of net sales
22.8
%
22.5
%
22.2
%
Income from operations
113,653
126,386
133,141
(10.1)
(5.1)
Operating margin
2.3
%
2.6
%
2.8
%
Investment income (loss) and interest expense
14,697
21,970
13,162
(33.1)
66.9
Investment income (loss) and interest expense, percent of net sales
0.3
%
0.5
%
0.3
%
Other income (expense)
(4,403)
(3,409)
(3,652)
29.2
(6.7)
Other income (expense), percent of net sales
(0.1)
%
(0.1)
%
(0.1)
%
Income before provision for income taxes
123,947
144,947
142,651
(14.5)
1.6
Income before provision for income taxes, percent of net sales
2.5
%
3.0
%
3.0
%
Provision for income taxes
30,256
38,923
41,797
(22.3)
(6.9)
Effective income tax rate
24.4
%
26.9
%
29.3
%
Net income
$
93,691
$
106,024
$
100,854
(11.6)
%
5.1
%
Net income, percent of net sales
1.9
%
2.2
%
2.1
%
Basic and diluted earnings per share
$
3.65
$
3.94
$
3.75
(7.4)
%
5.0
%
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
Net Sales
Individual Year-Over-Year Analysis of Sales
Percentage Change
2025 vs.
2024 vs.
2024
2023
Net sales, excluding fuel
3.4
%
1.8
%
Net sales
3.5
1.6
Comparable store sales, excluding fuel
2.1
1.9
Comparable store sales
2.0
%
1.7
%
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. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.
According to the latest U.S. 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. Bureau of Labor Statistics’ index rates may be reflective of a trend, it will not necessarily be indicative of the Company’s actual results. According to the U.S. Department of Energy, the 52-week average price of gasoline in the Central Atlantic States decreased 7.1%, or $0.25 cents per gallon, in 2025 compared to the 52-week average in 2024. The 52-week average price of gasoline in the Central Atlantic States, according to the U.S. 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. The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 195 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers in all 202 of its locations via multiple grocery delivery partners.
Although the Company experienced retail inflation and deflation in various commodities for the periods presented, the Company anticipates overall product costs to increase given the recent inflationary indicators in the food retail industry. 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. Management remains confident in its ability to generate long-term sales growth in a highly competitive environment, but also understands some competitors have greater financial resources and could use these resources to take measures which could adversely affect the Company’s competitive position.
Cost of Sales and Gross Profit
Cost of sales consists of direct product costs (net of discounts and allowances), net advertising costs, warehousing costs, transportation costs, as well as manufacturing facility costs. Increased sales volume resulted in an increase in cost of sales. Both direct product cost and distribution cost increase when sales volume increases.
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.
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
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. 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.
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 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.
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. See the Liquidity and Capital Resources section for further information regarding the Company’s capital expenditure program.
A breakdown of the material increases (decreases) as a percent of sales in "Operating, general and administrative expenses" is as follows:
2025 vs. 2024
(amounts in thousands)
Increase
Increase (Decrease)
December 27, 2025
(Decrease)
as a % of sales
Employee expense
$
19,732
0.0
%
Fixed expense (depreciation and amortization expense)
13,046
0.1
Employee insurance benefits expense
11,786
0.2
Outside services and repairs expense
8,185
0.0
Utilities expense
4,332
0.1
Gain on disposition of fixed assets (real estate property sales)
(3,386)
(0.1)
Other expenses (supplies and travel expense)
151
0.0
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.
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
2024 vs. 2023
(amounts in thousands)
Increase
Increase (Decrease)
December 28, 2024
(Decrease)
as a % of sales
Employee expense
$
12,498
0.1
%
Employee insurance benefits expense
4,684
0.1
Third party expense (technology, consulting, and financial service fees)
9,769
0.2
Supplies expense
2,999
0.0
Other expenses (utilities, asset disposals, and deferred compensation plan liability)
36
(0.1)
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, 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
The primary source of cash is cash flows generated from operations. In addition, the Company has access to a revolving credit agreement entered into on September 1, 2016, and amended on September 29, 2023, with Wells Fargo Bank, N.A. (the “Credit Agreement”). The Credit Agreement matures on October 1, 2027, and provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of December 27, 2025, the availability under the revolving credit agreement was $19.9 million with $10.1 million of letters of credit outstanding. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company.
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. See “Item 7a. Quantitative and Qualitative Disclosures about Market Risk” for more details regarding the Company’s market risk.
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
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 2025, 2024 and 2023. The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors reconsiders the declaration of dividends quarterly. 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.
Cash Flow Information
(amounts in thousands)
For the Fiscal Years Ended December 27, 2025,
2025
2024
2023
2025 vs.
2024 vs.
December 28, 2024 and December 30, 2023
(52 weeks)
(52 Weeks)
(52 weeks)
2024
2023
Net cash provided by (used in):
Operating activities
$
207,206
$
187,467
$
201,602
$
19,739
$
(14,135)
Investing activities
(105,321)
(144,779)
(138,800)
39,458
(5,979)
Financing activities
(175,117)
(36,582)
(36,582)
(138,535)
—
Operating
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.
Investing
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. 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.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Results of Operations (continued)
Financing
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.
Contractual Obligations
The following table represents scheduled maturities of the Company’s long-term contractual obligations as of December 27, 2025.
Payments due by period
Less than
More than
(dollars in thousands)
Total
1 year
1-3 years
3-5 years
5 years
Operating leases
$
203,005
$
47,882
$
78,095
$
42,755
$
34,273
Total
$
203,005
$
47,882
$
78,095
$
42,755
$
34,273
Off-Balance Sheet Arrangements
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.
Critical Accounting Policies and Estimates
The Company has chosen accounting policies that it believes are appropriate to accurately and fairly report its operating results and financial position, and the Company applies those accounting policies in a consistent manner. The Significant Accounting Policies are summarized in Note 1 to the Consolidated Financial Statements.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that the Company makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. The Company evaluates these estimates and assumptions on an ongoing basis and may retain outside consultants, lawyers and actuaries to assist in its evaluation. The Company believes the following accounting policies are the most critical because they involve the most significant judgments and estimates used in preparation of its Consolidated Financial Statements.
Inventories
Inventories are valued at the lower of cost or net realizable value, using both the retail inventory and average cost methods. The retail inventory method is commonly used by retail companies to determine cost and calculate gross margin based on applying a cost-to-retail ratio to each similar merchandise category’s ending retail value. The Company’s center store and pharmacy inventories are valued using last in, first out (LIFO). The Company’s fresh inventories are valued using average cost. The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities. 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.
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WEIS MARKETS, INC.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Critical Accounting Policies and Estimates (continued)
Vendor Allowances
Vendor allowances related to the Company’s buying and merchandising activities are recorded as a reduction of cost of sales as they are earned, in accordance with the underlying agreement. Off-invoice and bill-back allowances are used to reduce direct product costs upon the receipt of goods. Promotional rebates and credits are accounted for as a reduction in the cost of inventory and recognized when the related inventory is sold. Volume incentive discounts are accounted for as a reduction of cost of sales and realized using estimated amounts at the time it is deemed probable that the incentive target will be reached. Long-term contract incentives, which require an exclusive vendor relationship, are allocated over the life of the contract. Promotional allowance funds for specific vendor-sponsored programs are recognized as a reduction of cost of sales as the program occurs and the funds are earned per the agreement. 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 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. Swell allowances for damaged goods are realized in cost of sales as provided by the supplier, helping to offset product shrink losses also recorded in cost of sales.
Income Taxes
Income taxes are inherently complex and require Management’s evaluation and estimates, specifically regarding current and deferred income taxes and uncertain tax positions. The Company reviews the tax positions taken, or expected to be taken, on tax returns to determine whether, and to what extent, a benefit can be recognized in its Consolidated Financial Statements. 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.
Leases
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. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 2 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment. The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: (continued)
Critical Accounting Policies and Estimates (continued)
Self-Insurance
The Company is self-insured for a majority of its workers’ compensation, general liability, vehicle accident and employee medical benefit claims. The self-insurance liability for most of the medical benefit claims is determined based on historical data and an estimate of claims incurred but not reported. 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 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.
Forward-Looking Statements
In addition to historical information, this Annual Report may contain forward-looking statements, which are included pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. For example, risks and uncertainties can arise with changes in: general economic conditions, including their impact on capital expenditures; tariffs and trade policies; business conditions and trends in the retail industry; the regulatory environment; 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. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Company files periodically with the Securities and Exchange Commission.
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WEIS MARKETS, INC.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.