10q10k10q10k.net
VILLAGE SUPER MARKET INC

VILLAGE SUPER MARKET INCVLGEAEarnings & Financial Report

Nasdaq · Consumer Staples · Retail-Grocery Stores

A supermarket is a self-service shop offering a wide variety of food, beverages and household products, organized into sections under one roof. The supermarket retail format first appeared around 1930 in the United States as the culmination of almost two decades of retail innovations to the grocery store, and began to spread to other countries after extensive worldwide publicity in 1956. In everyday American English usage, "grocery store" is often used interchangeably with "supermarket", whil...

What changed in VILLAGE SUPER MARKET INC's 10-K — 2023 vs 2024

Top changes in VILLAGE SUPER MARKET INC's 2024 10-K

83 paragraphs added · 96 removed · 72 edited across 4 sections

Item 2. Properties

Properties — owned and leased real estate

6 edited+0 added−2 removed3 unchanged
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 29, 2023, Village has invested $10,875 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.
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 27, 2024, Village has invested $17,355 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.
For additional information on lease obligations, see Note 7 to the consolidated financial statements. On April 28, 2022 the Company entered into a partnership agreement for a 30% interest in the development of a retail center in Old Bridge, New Jersey, which includes a Village replacement store with an operating lease obligation of $4,127 as of July 29, 2023.
For additional information on lease obligations, see Note 7 to the consolidated financial statements. 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 Village's Old Bridge replacement store with an operating lease obligation of $4,374 as of July 27, 2024.
Most of the Company’s leases contain renewal options at increased rents of five years each at the Company’s sole discretion. These options enable Village to retain the use of facilities in desirable operating areas.
The stores are freestanding or are located in shopping centers or city storefronts. Most of the Company’s leases contain renewal options at increased rents of five years each at the Company’s sole discretion. These options enable Village to retain the use of facilities in desirable operating areas.
As of July 29, 2023, finance lease right-of-use assets of $10,912 are included in property, equipment and fixtures, net in the Company's consolidated balance sheet. 5 The annual rental payment, including finance leases, for all of the Company's leased facilities for the year ended July 29, 2023 was approximately $37,131.
As of July 27, 2024, finance lease right-of-use assets of $9,964 are included in property, equipment and fixtures, net in the Company's consolidated balance sheet. The annual rental payment, including finance leases, for all of the Company's leased facilities for the year ended July 27, 2024 was approximately $38,307.
The Company owns all trade fixtures and equipment in its stores and several other properties including a shopping center and parcels of vacant land, which are available as locations for possible future stores or other development. On October 13, 2021, Village purchased the Galloway store shopping center for $9,800.
The Company owns all trade fixtures and equipment in its stores 5 and several other properties including retail shopping centers, a warehouse in southern New Jersey and parcels of vacant land, which are available as locations for possible future stores or other development. On January 27, 2023, Village purchased the Vineland store shopping center for $9,500.
The remaining 30 stores (containing 1,501,000 square feet of total space), the central commissary and the corporate headquarters are leased, with initial lease terms generally ranging from 20 to 30 years, usually with renewal options. The stores are freestanding or are located in shopping centers or city storefronts.
ITEM 2. PROPERTIES As of July 27, 2024, Village owns the sites of eight of its supermarkets (containing 539,000 square feet of total space). The remaining 29 stores (containing 1,543,000 square feet of total space), the central commissary and the corporate headquarters are leased, with initial lease terms generally ranging from 20 to 30 years, usually with renewal options.
Removed
ITEM 2. PROPERTIES As of July 29, 2023, Village owns the sites of eight of its supermarkets (containing 539,000 square feet of total space) and the micro-fulfillment center in southern New Jersey.
Removed
On January 27, 2023, Village purchased the Vineland store shopping center for $9,500.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed1 unchanged
During fiscal 2023, Village paid cash dividends of $13,193. Dividends in fiscal 2023 consist of $1.00 per Class A common share and $.65 per Class B common share. During fiscal 2022, Village paid cash dividends of $13,041. Dividends in fiscal 2022 consist of $1.00 per Class A common share and $.65 per Class B common share. 7
During fiscal 2024, Village paid cash dividends of $13,341. Dividends in fiscal 2024 consist of $1.00 per Class A common share and $.65 per Class B common share. During fiscal 2023, Village paid cash dividends of $13,193. Dividends in fiscal 2023 consist of $1.00 per Class A common share and $.65 per Class B common share. 7
Stock Price and Dividend Information The Class A common stock of Village Super Market, Inc. is traded on the NASDAQ Global Select Market under the symbol “VLGEA.” The table below sets forth the high and low last reported sales price for the fiscal quarter indicated. 2023 High Low 4th Quarter $23.74 $20.42 3rd Quarter $23.65 $21.69 2nd Quarter $24.10 $20.58 1st Quarter $22.97 $19.23 2022 High Low 4th Quarter $24.25 $22.13 3rd Quarter $24.76 $22.21 2nd Quarter $23.64 $21.26 1st Quarter $22.87 $21.43 As of October 11, 2023, there were approximately 237 holders of record of Class A common stock.
Stock Price and Dividend Information The Class A common stock of Village Super Market, Inc. is traded on the NASDAQ Global Select Market under the symbol “VLGEA.” The table below sets forth the high and low last reported sales price for the fiscal quarter indicated. 2024 High Low 4th Quarter $30.82 $24.87 3rd Quarter $28.61 $25.01 2nd Quarter $26.52 $23.69 1st Quarter $24.42 $21.87 2023 High Low 4th Quarter $23.74 $20.42 3rd Quarter $23.65 $21.69 2nd Quarter $24.10 $20.58 1st Quarter $22.97 $19.23 As of October 9, 2024, there were approximately 265 holders of record of Class A common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

8 edited+1 added−2 removed1 unchanged
(4) Includes a $1,911 (net of tax) gain for Superstorm Sandy insurance proceeds received, an $854 (net of tax) gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020, a $2,512 incremental benefit from a federal net operating loss carryback at a rate higher than the current statutory tax rate, a $1,423 (net of tax) gain arising from the breakup of Village’s initial “stalking horse” bid under the January 20, 2020 Fairway Asset Purchase Agreement, transaction costs incurred for the Fairway acquisition of $1,888 (net of tax), amortization of acquisition related inventory step-up of $355 (net of tax), a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $1,160 (net of tax), pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $891 (net of tax) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store of $557 (net of tax).
(5) Includes a $1,911 (net of tax) gain for Superstorm Sandy insurance proceeds received, an $854 (net of tax) gain on the sale of pharmacy prescription lists related to three store pharmacies closed in March 2020, a $2,512 incremental benefit from a federal net operating loss carryback at a rate higher than the current statutory tax rate, a $1,423 (net of tax) gain arising from the breakup of Village’s initial “stalking horse” bid under the January 20, 2020 Fairway Asset Purchase Agreement, transaction costs incurred for the Fairway acquisition of $1,888 (net of tax), amortization of acquisition related inventory step-up of $355 (net of tax), a non-cash pension charge related to the termination of a company-sponsored pension plan and other pension settlement charges of $1,160 (net of tax), pre-opening costs related to the Stroudsburg, Pennsylvania replacement store of $891 (net of tax) and store closure costs and charges to write off the lease asset and related obligations for the old Stroudsburg store of $557 (net of tax).
(7) 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.
(6) 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.
(3) Includes a $2,802 (net of tax) gain on the sale of the leasehold interest in a non-supermarket related parking lot lease obtained as part of the Fairway acquisition, a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs of $276 (net of tax), non-cash impairment charges for the Fairway trade name and the long lived assets 8 for one Gourmet Garage store of $2,010 (net of tax), pension settlement charges of $409 (net of tax) and estimated net income of $417 due to the fiscal year including a 53rd week.
Employees’ Retirement Plan, and a $342 (net of tax) gain on the sale of an equity investment. 8 (4) Includes a $2,802 (net of tax) gain on the sale of the leasehold interest in a non-supermarket related parking lot lease obtained as part of the Fairway acquisition, a gain on the sale of a pharmacy prescription list related to the Silver Spring store, net of store closing costs of $276 (net of tax), non-cash impairment charges for the Fairway trade name and the long lived assets for one Gourmet Garage store of $2,010 (net of tax), pension settlement charges of $409 (net of tax) and estimated net income of $417 due to the fiscal year including a 53rd week.
For year July 29, 2023 July 30, 2022 July 31, 2021 July 25, 2020 July 27, 2019 Sales $ 2,166,654 $ 2,061,084 $ 2,030,330 $ 1,804,594 $ 1,643,502 Net income 49,716 (1) 26,830 (2) 19,994 (3) 24,939 (4) 25,539 (5) Net income as a % of sales 2.29 % 1.30 % 0.98 % 1.38 % 1.55 % Net income per share: Class A common stock: Basic $ 3.78 $ 2.06 $ 1.53 $ 1.93 $ 1.98 Diluted 3.38 1.84 1.37 1.72 1.77 Class B common stock: Basic 2.45 1.34 1.00 1.25 1.29 Diluted 2.45 1.34 1.00 1.25 1.29 Cash dividends per share: Class A 1.00 1.00 1.00 1.00 1.00 Class B 0.65 0.65 0.65 0.65 0.65 At year-end Total assets (6) $ 967,706 $ 924,448 $ 889,004 $ 915,546 $ 502,289 Long-term debt (6) 361,418 374,035 370,078 396,181 47,725 Working capital 67,714 79,796 44,023 34,522 56,307 Shareholders’ equity 410,166 372,109 341,473 332,320 318,672 Book value per share 27.61 25.64 23.48 22.84 22.15 Other data Same store sales trend (7) 3.5 % 4.1 % 2.3 % 5.3 % (0.5) % Total square feet 2,040,000 2,040,000 2,026,000 2,091,000 1,804,000 Average total sq. ft. per store 54,000 54,000 55,000 55,000 55,000 Selling square feet 1,488,000 1,488,000 1,481,000 1,529,000 1,401,000 Sales per average square foot of selling space (8) $ 1,460 $ 1,390 $ 1,349 $ 1,275 $ 1,186 Number of stores 38 38 37 38 33 Sales per average number of stores (8) $ 57,017 $ 55,635 $ 52,713 $ 53,284 $ 54,715 Capital expenditures and acquisitions $ 46,400 $ 43,270 $ 25,233 $ 54,495 $ 27,988 (1) Includes litigation settlement gains related to claims associated with the Fairway acquisition and liabilities associated thereto of $828 (net of tax) and a $276 (net of tax) loss on an equity investment.
For year July 27, 2024 July 29, 2023 July 30, 2022 July 31, 2021 July 25, 2020 Sales $ 2,236,566 $ 2,166,654 $ 2,061,084 $ 2,030,330 $ 1,804,594 Net income 50,462 (1) 49,716 (2) 26,830 (3) 19,994 (4) 24,939 (5) Net income as a % of sales 2.26 % 2.29 % 1.30 % 0.98 % 1.38 % Net income per share: Class A common stock: Basic $ 3.78 $ 3.78 $ 2.06 $ 1.53 $ 1.93 Diluted 3.40 3.38 1.84 1.37 1.72 Class B common stock: Basic 2.46 2.45 1.34 1.00 1.25 Diluted 2.46 2.45 1.34 1.00 1.25 Cash dividends per share: Class A 1.00 1.00 1.00 1.00 1.00 Class B 0.65 0.65 0.65 0.65 0.65 At year-end Total assets $ 981,664 $ 967,706 $ 924,448 $ 889,004 $ 915,546 Long-term debt 339,291 361,418 374,035 370,078 396,181 Working capital 25,485 67,714 79,796 44,023 34,522 Shareholders’ equity 447,559 410,166 372,109 341,473 332,320 Book value per share 30.32 27.61 25.64 23.48 22.84 Other data Same store sales trend (6) 2.3 % 3.5 % 4.1 % 2.3 % 5.3 % Total square feet 2,082,000 2,040,000 2,040,000 2,026,000 2,091,000 Average total sq. ft. per store 56,000 54,000 54,000 55,000 55,000 Selling square feet 1,512,000 1,488,000 1,488,000 1,481,000 1,529,000 Sales per average square foot of selling space (7) $ 1,491 $ 1,460 $ 1,390 $ 1,349 $ 1,275 Number of stores 37 38 38 37 38 Sales per average number of stores (7) $ 58,475 $ 57,017 $ 55,635 $ 52,713 $ 53,284 Capital expenditures and acquisitions $ 63,113 $ 46,400 $ 43,270 $ 25,233 $ 54,495 (1) Includes pre-opening costs of $626 (net of tax) associated with opening of the Old Bridge, NJ ShopRite replacement store opened on March 17, 2024 and $1,466 (net of tax) non-cash impairment charges for long-lived assets due to the closure of the automated micro-fulfillment center in south NJ.
Amounts for the year ended July 25, 2020 exclude the results of the Fairway stores acquired on May 14, 2020. Amounts for the year ended July 27, 2019 exclude the results of the Gourmet Garage stores acquired on June 24, 2019. 9 Unaudited Quarterly Financial Data (Dollars in thousands except per share amounts).
Amounts for the year ended July 30, 2022 exclude the results of the Gourmet Garage store opened in the West Village in Manhattan on April 29, 2022. Amounts for the year ended July 25, 2020 exclude the results of the Fairway stores acquired on May 14, 2020. Unaudited Quarterly Financial Data (Dollars in thousands except per share amounts).
First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2023 Sales $ 519,689 $ 563,866 $ 529,294 $ 553,806 $ 2,166,654 Gross profit 149,285 154,879 151,223 161,063 616,450 Net income 11,081 12,322 11,017 15,296 49,716 Net income per share: Class A common stock: Basic 0.85 0.95 0.84 1.15 3.78 Diluted 0.76 0.85 0.75 1.03 3.38 Class B common stock: Basic 0.55 0.62 0.54 0.74 2.45 Diluted 0.55 0.62 0.54 0.74 2.45 2022 Sales $ 494,211 $ 537,408 $ 501,962 $ 527,503 $ 2,061,084 Gross profit 140,180 149,611 141,591 148,285 579,667 Net income (loss) 7,328 10,129 (3,231) 12,603 26,830 Net income (loss) per share: Class A common stock: Basic 0.56 0.78 (0.25) 0.97 2.06 Diluted 0.50 0.69 (0.22) 0.87 1.84 Class B common stock: Basic 0.37 0.50 (0.16) 0.63 1.34 Diluted 0.37 0.50 (0.16) 0.63 1.34
First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2024 Sales $ 536,354 $ 575,579 $ 546,396 $ 578,237 $ 2,236,566 Gross profit 152,948 163,442 155,932 169,653 641,975 Net income 11,585 14,480 8,966 15,431 50,462 Net income per share: Class A common stock: Basic 0.87 1.09 0.67 1.16 3.78 Diluted 0.78 0.97 0.60 1.04 3.40 Class B common stock: Basic 0.56 0.71 0.44 0.75 2.46 Diluted 0.56 0.71 0.44 0.75 2.46 2023 Sales $ 519,689 $ 563,866 $ 529,294 $ 553,806 $ 2,166,654 Gross profit 149,285 154,879 151,223 161,063 616,450 Net income (loss) 11,081 12,322 11,017 15,296 49,716 Net income (loss) per share: Class A common stock: Basic 0.85 0.95 0.84 1.15 3.78 Diluted 0.76 0.85 0.75 1.03 3.38 Class B common stock: Basic 0.55 0.62 0.54 0.74 2.45 Diluted 0.55 0.62 0.54 0.74 2.45 9
The change in same store sales in fiscal 2021 excludes the impact of the 53rd week in fiscal 2021 and fiscal 2022 excludes the impact of the 53rd week in fiscal 2021. (8) Amounts for the year ended July 30, 2022 exclude the results of the Gourmet Garage store opened in the West Village in Manhattan on April 29, 2022.
The change in same store sales in fiscal 2021 excludes the impact of the 53rd week in fiscal 2021 and fiscal 2022 excludes the impact of the 53rd week in fiscal 2021.
(2) Includes pension settlement charges of $8,556 (net of tax) including the result of the termination of the Village Super Market, Inc. Employees’ Retirement Plan, and a $342 (net of tax) gain on the sale of an equity investment.
(2) Includes litigation settlement gains related to claims associated with the Fairway acquisition and liabilities associated thereto of $828 (net of tax). (3) Includes pension settlement charges of $8,556 (net of tax) including the result of the termination of the Village Super Market, Inc.
Removed
(5) Includes a $290 (net of tax) gain for Superstorm Sandy insurance proceeds received, a tax benefit of $777 related to the favorable settlement of a tax audit with the New Jersey Division of Taxation and a non-cash pension charge related to pension settlement charges of $308 (net of tax).
Added
(7) Amounts for the year ended July 27, 2024 exclude the results of the Old Bridge replacement store opened on March 17, 2024 and the closure of a Gourmet Garage location on November 1, 2023.
Removed
(6) On July 28, 2019, the Company adopted ASU 2016-02, “Leases.” The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities, included in long-term debt of $99,415 and $111,139, respectively, as of the date of adoption.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+10 added−20 removed52 unchanged
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.
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.
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 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. 17 • 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.
An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .26% per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.72% on the term loan. • A secured $50,000 term loan issued on September 1, 2020 repayable in equal monthly installments based on a fifteen-year amortization schedule through September 01, 2035 and bearing interest at the applicable SOFR plus 1.61%.
An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .26% per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.72% on the term loan. • A secured $50,000 term loan issued on September 1, 2020 repayable in equal monthly installments based on a fifteen-year amortization schedule through September 1, 2035 and bearing interest at the applicable SOFR plus 1.61%.
Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("SOFR") plus 1.10% and expires on May 6, 2025. • 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%.
Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("SOFR") plus 1.10% and expires on May 6, 2025. 15 • 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%.
Most product departments include high-quality, competitively priced own-brand offerings under the Wholesome Pantry, Bowl & Basket, Paperbird and Fairway brands. Our Fairway Markets offer a one-stop destination shopping experience with an emphasis on fresh, unique, and high quality offerings paired with an expansive variety of natural, organic, specialty and gourmet products.
Most product departments include high-quality, competitively priced own-brand offerings under the Wholesome Pantry, Bowl & Basket, Paperbird, Fairway and Gourmet Garage brands. Our Fairway Markets offer a one-stop destination shopping experience with an emphasis on fresh, unique, and high quality offerings paired with an expansive variety of natural, organic, specialty and gourmet products.
Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets. 19 • Our goodwill and indefinite-lived intangible assets are tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment.
Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets. • Our goodwill and indefinite-lived intangible assets are tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment.
Online ordering for home delivery is available in all Fairway stores through fairwaymarket.com, the Fairway app or through third party service providers. Online ordering for home delivery 10 is available in all Gourmet Garage stores through gourmetgarage.com, the Gourmet Garage app or through third party service providers.
Online ordering for home delivery is available in all Fairway stores through fairwaymarket.com, the Fairway app or through third party service providers. Online ordering for home delivery is available in all Gourmet Garage stores through gourmetgarage.com, the Gourmet Garage app or through third party service providers.
The failure of any Wakefern member to fulfill its obligations to Wakefern or a member’s insolvency or withdrawal from Wakefern could result in increased costs to the Company. Additionally, an adverse change in Wakefern’s results of operations could have an adverse effect on Village’s results of operations. • Approximately 92% of our employees are covered by collective bargaining agreements.
The failure of any Wakefern member to fulfill its obligations to Wakefern or a member’s insolvency or withdrawal from Wakefern could result in increased costs to the Company. Additionally, an adverse change in Wakefern’s results of operations could have an adverse effect on Village’s results of operations. • Approximately 91% of our employees are covered by collective bargaining agreements.
An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .57% per annum through September 4, 2035, resulting in a fixed effective interest rate of 2.18% on the term loan.
An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .57% per annum through September 1, 2035, resulting in a fixed effective interest rate of 2.18% on the term loan.
Both fiscal 2023 and 2022 contain 52 weeks. NON-GAAP MEASURES The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles ("GAAP"). We provide non-GAAP measures, including Adjusted net income and Adjusted operating and administrative expenses as management believes these supplemental measures are useful to investors and analysts.
Both fiscal 2024 and 2023 contain 52 weeks. 10 NON-GAAP MEASURES The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles ("GAAP"). We provide non-GAAP measures, including Adjusted net income and Adjusted operating and administrative expenses as management believes these supplemental measures are useful to investors and analysts.
(the “Company” or “Village”) operates a chain of 34 supermarkets in New Jersey (26), New York (6), Maryland (1) and Pennsylvania (1) under the ShopRite and Fairway banners and four Gourmet Garage specialty markets in New York City.
(the “Company” or “Village”) operates a chain of 34 supermarkets in New Jersey (26), New York (6), Maryland (1) and Pennsylvania (1) under the ShopRite and Fairway banners and three Gourmet Garage specialty markets in New York City.
The Credit Facility also provides for up to $25,000 of letters of credit ($7,336 outstanding at July 29, 2023), which secure obligations for store leases and construction performance guarantees to municipalities. The Credit Facility contains covenants that, among other conditions, require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio.
The Credit Facility also provides for up to $25,000 of letters of credit ($7,336 outstanding at July 27, 2024), which secure obligations for store leases and construction performance guarantees to municipalities. The Credit Facility contains covenants that, among other conditions, require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio.
The Company utilizes valuation techniques, such as earnings multiples, in addition to the Company’s market capitalization, to assess goodwill for impairment. Calculating the fair value of a reporting unit requires the use of estimates. Management believes the fair value of Village’s one reporting unit exceeds its carrying value at July 29, 2023.
The Company utilizes valuation techniques, such as earnings multiples, in addition to the Company’s market capitalization, to assess goodwill for impairment. Calculating the fair value of a reporting unit requires the use of estimates. Management believes the fair value of Village’s one reporting unit exceeds its carrying value at July 27, 2024.
Dividends in fiscal 2023 consist of $1.00 per Class A common share and $.65 per Class B common share. During fiscal 2022, Village paid cash dividends of $13,041. Dividends in fiscal 2022 consist of $1.00 per Class A common share and $.65 per Class B common share. OUTLOOK This annual report contains certain forward-looking statements about Village’s future performance.
Dividends in fiscal 2024 consist of $1.00 per Class A common share and $.65 per Class B common share. During fiscal 2023, Village paid cash dividends of $13,193. Dividends in fiscal 2023 consist of $1.00 per Class A common share and $.65 per Class B common share. OUTLOOK This annual report contains certain forward-looking statements about Village’s future performance.
The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof. • We expect the increase in same store sales to range from 1.0% to 3.0% in fiscal 2024. • We have budgeted $85,000 for capital expenditures in fiscal 2024.
The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof. • We expect the increase in same store sales to range from 1.0% to 3.0% in fiscal 2025. 16 • We have budgeted $75,000 for capital expenditures in fiscal 2025.
Department gross margins increased due primarily to pricing initiatives and improvements in commissary operations partially offset by higher inventory shrink. OPERATING AND ADMINISTRATIVE EXPENSE Operating and administrative expense as a percentage of sales decreased to 23.86% in fiscal 2023 compared to 24.63% in fiscal 2022.
Department gross margins increased due primarily to pricing initiatives and improvements in commissary operations partially offset by higher inventory shrink. 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.
Based on current trends, the Company believes cash and cash equivalents on hand at July 29, 2023, operating cash flow and availability under our Credit Facility are sufficient to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. During fiscal 2023, Village paid cash dividends of $13,193.
Based on current trends, the Company believes cash and cash equivalents on hand at July 27, 2024, operating cash flow and availability under our Credit Facility are sufficient to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months. During fiscal 2024, Village paid cash dividends of $13,341.
Interest income increased in fiscal 2023 compared to fiscal 2022 due primarily to higher interest rates and larger amounts invested in variable rate notes receivable from Wakefern and demand deposits invested at Wakefern. INCOME TAXES The Company’s effective income tax rate was 31.6% and 31.3% in fiscal 2023 and 2022, respectively.
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. INCOME TAXES The Company’s effective income tax rate was 30.6% in fiscal 2024 compared to 31.6% in fiscal 2023.
The Company paid rent to related parties under this lease of $735 in both fiscal 2023 and 2022, respectively, and has a related lease obligation of $1,851 at July 29, 2023. This lease expires in fiscal 2026 with options to extend at increasing annual rents. The Company has ownership interests in four real estate partnerships.
The Company paid rent to related parties under this lease of $735 in both fiscal 2024 and 2023, respectively, and has a related lease obligation of $1,144 at July 27, 2024. This lease expires in fiscal 2026 with options to extend at increasing annual rents. The Company has ownership interests in four real estate partnerships.
The Company’s primary sources of liquidity in fiscal 2024 are expected to be cash and cash equivalents on hand at July 29, 2023 and operating cash flow generated in fiscal 2024.
The Company’s primary sources of liquidity in fiscal 2025 are expected to be cash and cash equivalents on hand at July 27, 2024 and operating cash flow generated in fiscal 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 29, 2023, Village has invested $10,875 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.
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 27, 2024, Village has invested $17,355 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 was in compliance with all covenants of the credit agreement at July 29, 2023. As of July 29, 2023, $67,664 remained available under the unsecured revolving line of credit.
The Company was in compliance with all covenants of the credit agreement at July 27, 2024. As of July 27, 2024, $67,664 remained available under the unsecured revolving line of credit.
Village also executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 2.95%, resulting in a fixed effective rate of 4.30%. This loan qualified for an interest rate subsidy program with Wakefern on financing related to certain capital expenditure projects.
An interest rate swap for a notional amount equal to the term loan fixes the base SOFR at 2.95% per annum through September 4, 2029, resulting in a fixed effective interest rate of 4.30% on the term loan. This loan qualified for an interest rate subsidy program with Wakefern on financing related to certain capital expenditure projects.
At July 29, 2023, Village had demand deposits invested at Wakefern in the amount of $122,028. These deposits earn overnight money market rates. Credit Facility The Company has a credit facility (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”).
At July 27, 2024, Village had demand deposits invested at Wakefern in the amount of $97,126. These deposits earn overnight money market rates. Credit Facility The Company has a credit facility (the “Credit Facility”) with Wells Fargo National Bank, National Association (“Wells Fargo”).
As part of this agreement, Village is required to purchase certain amounts of Wakefern common stock. At July 29, 2023, the Company’s indebtedness to Wakefern for the outstanding amount of this stock subscription was $2,423. The maximum per store investment is currently $975.
As part of this agreement, Village is required to purchase certain amounts of Wakefern common stock. At July 27, 2024, the Company’s indebtedness to Wakefern for the outstanding amount of this stock subscription was $1,662. The maximum per store investment is currently $975.
Adjusted net income increased 40% compared to the prior year due primarily to the 3.5% increase in same store sales, improvements in gross profit and operating and administrative expense margins and increased interest income. 14 CRITICAL ACCOUNTING POLICIES Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial condition and results of operations.
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. 13 CRITICAL ACCOUNTING POLICIES Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial condition and results of operations.
Same store sales increased due primarily to retail price inflation. 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.
Same store sales increased due primarily to retail price inflation, digital sales growth, higher pharmacy sales and continued growth in recently remodeled stores. New stores, replacement stores and stores with banner changes are included in same store sales in the quarter after the store has been in operation for four full quarters.
On April 28, 2022 the Company entered into a partnership agreement for a 30% interest in the development of a retail center in Old Bridge, New Jersey, which includes a Village replacement store with an operating lease obligation of $4,127 as of July 29, 2023.
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 $4,374 as of July 27, 2024.
Planned expenditures include costs for construction of the Old Bridge replacement store scheduled to open in fiscal 2024 and two other replacement stores scheduled to open in fiscal 2025, potential real estate purchases, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades. • The Board’s current intention is to continue to pay quarterly dividends in 2024 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. • We expect our effective income tax rate in fiscal 2024 to be in the range of 31.0% - 32.0%. 18 Various uncertainties and other factors could cause actual results to differ from the forward-looking statements contained in this report.
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 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. • 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. • We expect our effective income tax rate in fiscal 2025 to be in the range of 31.0% - 32.0%.
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 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.
The unsecured term loan is repayable in equal monthly installments based on a seven year amortization schedule through September 4, 2029 and bears interest at the applicable SOFR plus 1.35%.
The term loan is secured by the Galloway store shopping center. • An unsecured $10,000 term loan issued on September 1, 2022 repayable in equal monthly installments based on a seven-year amortization schedule through September 4, 2029 and bearing interest at the applicable SOFR plus 1.35%.
Village paid aggregate rents to two of these partnerships for leased stores of $1,568 and $1,556 in fiscal 2023 and 2022, respectively, and has aggregate lease obligations of $15,996 at July 29, 2023 related to these leases. 21
Village paid aggregate rents to three of these partnerships for leased stores of $1,827 and $1,568 in fiscal 2024 and 2023, respectively, and has aggregate lease obligations of $15,733 at July 27, 2024 related to these leases. 19
GROSS PROFIT Gross profit as a percentage of sales increased to 28.45% in fiscal 2023 compared to 28.12% in fiscal 2022 due primarily to increased departmental gross margin percentages (.23%), increased patronage dividends and rebates received from Wakefern (.08%), lower LIFO charges (.04%), a favorable change in product mix (.02%) and lower promotional spending (.03%) partially offset by increased warehouse assessment charges from Wakefern (.07%).
GROSS PROFIT 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%).
These include: • The supermarket business is highly competitive and characterized by narrow profit margins. Results of operations may be materially adversely impacted by competitive pricing and promotional programs, industry consolidation and competitor store openings.
Various uncertainties and other factors could cause actual results to differ from the forward-looking statements contained in this report. These include: • The supermarket business is highly competitive and characterized by narrow profit margins. Results of operations may be materially adversely impacted by competitive pricing and promotional programs, industry consolidation and competitor store openings.
At July 29, 2023, the Company held variable rate notes receivable due from Wakefern of $31,483 that earn interest at the prime rate plus .75% and mature on February 15, 2024, $30,865 that earn interest at the prime rate plus .50% and mature on August 15, 2027 and $31,861 that earn interest at the prime rate plus .50% and mature on September 28, 2027.
At July 27, 2024, the Company held variable rate notes receivable due from Wakefern of $33,740 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $34,829 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $34,293 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029.
At July 29, 2023, the Company held variable rate notes receivable due from Wakefern of $31,483 that earn interest at the prime rate plus .75% and mature on February 15, 2024, $30,865 that earn interest at the prime rate plus .50% and mature on August 15, 2027 and $31,861 that earn interest at the prime rate plus .50% and mature on September 28, 2027.
At July 27, 2024, the Company held variable rate notes receivable due from Wakefern of $33,740 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $34,829 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $34,293 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029.
Other companies may have different definitions of Non-GAAP Measures and provide for different adjustments, and comparability to the Company's results of operations may be impacted by such differences.
Other companies may have different definitions of Non-GAAP Measures and provide for different adjustments, and comparability to the Company's results of operations may be impacted by such differences. 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 secured term loan is repayable in equal monthly installments based on a fifteen year amortization schedule through January 27, 2038 and bears interest at the applicable SOFR plus 1.75%.
Net of the subsidy, the Company will pay interest at a fixed effective rate of 2.30%. • A secured $7,125 term loan issued on January 27, 2023 repayable in equal monthly installments based on a fifteen-year amortization schedule through January 27, 2038 and bearing interest at the applicable SOFR plus 1.75%.
Village also executed an interest rate swap for a notional amount equal to the term loan amount that fixes the base SOFR at 3.59%, resulting in a fixed effective rate of 5.34%.
An interest rate swap for a notional amount equal to the term loan fixes the base SOFR at 3.59% per annum through January 27, 2038, resulting in a fixed effective interest rate of 5.34% on the term loan. The term loan is secured by the Vineland store shopping center.
This program has included store remodels as well as the opening or acquisition of additional stores. When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores.
This program has included store remodels as well as the opening or acquisition of additional stores. When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores. On March 17, 2024, we opened an 83,000 sq. ft. replacement ShopRite store in Old Bridge, NJ, that replaced our existing 32,000 sq. ft. store.
Planned expenditures include costs for construction of the Old Bridge replacement store scheduled to open in fiscal 2024 and two other replacement stores scheduled to open in fiscal 2025, potential real estate purchases, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades.
We have budgeted $75,000 for capital expenditures in fiscal 2025. 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.
At July 29, 2023, Village had demand deposits invested at Wakefern in the amount of $122,028. These deposits earn overnight money market rates. The Company subleased the Galloway and Vineland stores from Wakefern under sublease agreements which provided for combined annual rents of $413 and $959 in fiscal 2023 and 2022.
At July 27, 2024, Village had demand deposits invested at Wakefern in the amount of $97,126. 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.
Both leases contained normal periodic rent increases and 20 options to extend the lease. The sublease agreements were terminated upon the acquisition of the Galloway store shopping center in fiscal 2022 and Vineland store shopping center in fiscal 2023 for $9,800 and $9,500, respectively. The Company leases a supermarket from a realty firm 30% owned by certain officers of Village.
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.
LIQUIDITY and CAPITAL RESOURCES CASH FLOWS Net cash provided by operating activities was $104,513 in fiscal 2023 compared to $79,625 in fiscal 2022.
LIQUIDITY and CAPITAL RESOURCES CASH FLOWS Net cash provided by operating activities was $80,849 in fiscal 2024 compared to $104,513 in fiscal 2023. 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.
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 also owns and operates an automated micro-fulfillment center to facilitate online order fulfillment for the south New Jersey stores.
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 contributed cash of $1,440 to fully fund the plan and the remaining $10,901 represents non-cash charges for unrecognized losses within accumulated other comprehensive loss as of the termination date. 12 RESULTS OF OPERATIONS The following table sets forth the components of the consolidated statements of operations of the Company as a percentage of sales: July 29, 2023 July 30, 2022 Sales 100.00 % 100.00 % Cost of sales 71.55 % 71.88 % Gross profit 28.45 % 28.12 % Operating and administrative expense 23.86 % 24.63 % Depreciation and amortization 1.58 % 1.61 % Operating income 3.01 % 1.88 % Interest expense (0.19) % (0.19) % Interest income 0.53 % 0.20 % Income before income taxes 3.35 % 1.89 % Income taxes 1.06 % 0.59 % Net income 2.29 % 1.30 % SALES Sales were $2,166,654 in fiscal 2023, an increase of $105,570, or 5.1% from fiscal 2022.
(3) Fiscal 2023 litigation settlement gains are related to claims associated with the Fairway acquisition and liabilities associated thereto. 11 RESULTS OF OPERATIONS The following table sets forth the components of the consolidated statements of operations of the Company as a percentage of sales: July 27, 2024 July 29, 2023 Sales 100.00 % 100.00 % Cost of sales 71.30 % 71.55 % Gross profit 28.70 % 28.45 % Operating and administrative expense 24.34 % 23.86 % Depreciation and amortization 1.48 % 1.58 % Impairment of assets 0.10 % — % Operating income 2.78 % 3.01 % Interest expense (0.18) % (0.19) % Interest income 0.66 % 0.53 % Income before income taxes 3.26 % 3.35 % Income taxes 1.00 % 1.06 % Net income 2.26 % 2.29 % SALES Sales were $2,236,566 in fiscal 2024 compared to $2,166,654 in fiscal 2023.
Economic conditions such as inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, unemployment rates, disturbances due to social unrest and changing demographics may adversely affect our sales and profits. • Village purchases substantially all of its merchandise from Wakefern.
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. • Village purchases substantially all of its merchandise 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 $85,000 for capital expenditures in fiscal 2024.
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.
LIQUIDITY and DEBT Working capital was $67,714 and $79,796 at July 29, 2023 and July 30, 2022, respectively. Working capital ratios at the same dates were 1.38 and 1.50 to one, respectively. The decrease in working capital in fiscal 2023 compared to fiscal 2022 is due 16 primarily to an additional $36,425 investment in long-term notes receivable from Wakefern.
LIQUIDITY and DEBT Working capital was $25,485 at July 27, 2024 compared to $67,714 at July 29, 2023. Working capital ratios at the same dates were 1.15 and 1.38 to one, respectively.
During fiscal 2022, Village used cash to fund capital expenditures of $43,270, dividends of $13,041, principal payments of long-term debt of $8,299 and additional investments of $2,489 in notes receivable from Wakefern.
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.
Working capital changes, including other assets and other liabilities, increased net cash provided by operating activities by $15,021 in fiscal 2023 compared to $7,081 in fiscal 2022.
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 impact of working capital is due primarily to the timing of tax payments.
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. On April 29, 2022, Village opened a 14,600 sq. ft. Gourmet Garage in the West Village in Manhattan, NYC.
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.
Labor costs and fringe benefits decreased due primarily to sales leverage and ongoing productivity initiatives partially offset by minimum wage and market-driven pay rate increases. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense was $34,002 and $33,122 in fiscal 2023 and 2022, respectively. Depreciation and amortization expense increased due primarily to capital expenditures.
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. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense decreased in fiscal 2024 compared to fiscal 2023 due primarily to the timing of capital expenditures.
NET INCOME Net income was $49,716 in fiscal 2023 compared to $26,830 in fiscal 2022. Adjusted net income was $49,164 in fiscal 2023 compared to $35,044 in fiscal 2022.
Adjusted net income was $52,554 in fiscal 2024 compared to $48,888 in fiscal 2023.
Sales increased due primarily to an increase in same store sales of 3.5%, the opening of a Gourmet Garage in the West Village in Manhattan, NY on April 29, 2022 and increased sales due to the remodel and conversion of the Pelham, NY Fairway to the ShopRite banner on August 15, 2022.
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.
Adjusted operating and administrative expense as a percentage of sales decreased to 23.89% in fiscal 2023 compared to 24.05% in fiscal 2022 due primarily to lower labor costs (.19%) and decreased supply spending (.12%) partially offset by increased self-insured claim costs (.09%) and higher facility repair and maintenance costs (.05%).
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%).
Removed
The Company’s stores, eight of which are owned, average 54,000 total square feet.
Added
On November 1, 2023, Village closed an 8,400 sq. ft. Gourmet Garage store located in New York City. The impact associated with the closure and ongoing results of operating were not material to Village’s consolidated financial statements.
Removed
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. 11 The following tables reconciles Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses: July 29, 2023 July 30, 2022 Net Income $ 49,716 $ 26,830 Adjustments to Operating Expenses: Litigation settlement gain (1) $ (1,200) $ — Loss (gain) on non-operating investments (2) 400 (494) Pension termination and settlement charges (3) — 12,341 Adjustments to Income Taxes: Tax impact of adjustments to operating expenses 248 (3,633) Adjusted net income $ 49,164 $ 35,044 Operating and administrative expenses $ 516,902 $ 507,597 Adjustments to operating and administrative expenses 800 (11,847) Adjusted operating and administrative expenses 517,702 495,750 Adjusted operating and administrative expenses as a % of sales 23.89 % 24.05 % (1) Fiscal 2023 litigation settlement gains are related to claims associated with the Fairway acquisition and liabilities associated thereto.
Added
The following tables reconciles Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses: Years ended July 27, 2024 July 29, 2023 Net Income $ 50,462 $ 49,716 Adjustments to Operating Expenses: Store pre-opening costs (1) $ 907 $ — Impairment of assets (2) 2,125 — Litigation settlement gain (3) — (1,200) Adjustments to Income Taxes: Tax impact of adjustments to operating expenses (940) 372 Adjusted net income $ 52,554 $ 48,888 Operating and administrative expenses $ 544,348 $ 516,902 Adjustments to operating and administrative expenses (907) 1,200 Adjusted operating and administrative expenses $ 543,441 $ 518,102 Adjusted operating and administrative expenses as a % of sales 24.30 % 23.91 % (1) Fiscal 2024 pre-opening costs are associated with opening of the Old Bridge, NJ ShopRite replacement store opened on March 17, 2024.
Removed
(2) Fiscal 2023 and 2022 include a $400 loss and a $494 gain, respectively, related to non-operating equity investments. (3) Fiscal 2022 pension settlement charges related primarily to the termination of the Village Super Market, Inc. Employees’ Retirement Plan.
Added
(2) Fiscal 2024 includes non-cash impairment charges for long-lived assets due to the closure of the automated micro-fulfillment center in south NJ.
Removed
INTEREST EXPENSE Interest expense was $4,220 and $3,907 in fiscal 2023 and 2022, respectively. Interest expense increased due primarily to higher average outstanding debt balances. 13 INTEREST INCOME Interest income was $11,399 and $4,023 in fiscal 2023 and 2022, respectively.
Added
Store renovations and expansions are included in same store sales immediately.
Removed
The patronage dividend receivable based on these estimates was $12,466 and $12,239 at July 29, 2023 and July 30, 2022, respectively. PENSION PLANS The determination of the Company’s obligation and expense for Company-sponsored pension plans is dependent, in part, on Village’s selection of assumptions used by actuaries in calculating those amounts.
Added
IMPAIRMENT OF ASSETS 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. 12 INTEREST EXPENSE Interest expense decreased in fiscal 2024 compared to fiscal 2023 due primarily to lower average outstanding debt balances.
Removed
These assumptions are described in Note 9 to the consolidated financial statements and include, among others, the discount rate, the expected long-term rate of return on plan assets and the rate of increase in compensation costs. Actual results that differ from the Company’s assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods.
Added
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. NET INCOME Net income was $50,462 in fiscal 2024 compared to $49,716 in fiscal 2023.
Removed
While management believes that its assumptions are appropriate, significant differences in actual experience or significant changes in the Company’s assumptions may materially affect cash flows, pension obligations and future expense.
Added
The patronage dividend receivable based on these estimates was $16,068 and $12,466 at July 27, 2024 and July 29, 2023, respectively. RECENTLY ISSUED ACCOUNTING STANDARDS For the disclosure related to recently issued accounting standards, see Note 1 to the consolidated financial statements.
Removed
The objective of the discount rate assumption is to reflect the rate at which the Company’s pension obligations could be effectively settled based on the expected timing and amounts of benefits payable to participants under the plans.
Added
Capital expenditures primarily include costs associated with the construction of the Old Bridge replacement store 14 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.
Removed
Our methodology for selecting the discount rate as of July 29, 2023 was to match the plans' cash flows to that of a yield curve on high-quality fixed-income investments. Based on this method, we utilized a weighted-average discount rate of 4.85% at July 29, 2023 compared to 3.77% at July 30, 2022.
Added
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.
Removed
Changes in the discount rate and updated assumptions on mortality tables and improvement scales resulted in a net decrease in the projected benefit obligation by approximately $771 at July 29, 2023. Village evaluated the expected increase in compensation costs of 4.50% and concluded no changes in this assumption was necessary in estimating pension plan obligations and expense.
Added
On February 15, 2024, notes receivable due from Wakefern of $33,338 that earned interest at the prime rate plus .75% matured. 18 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.
Removed
The Company utilizes a liability-driven investment ("LDI") 15 strategy. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability.
Removed
The investment allocation to fixed income instruments will increase as each plans' funded status increases. Based on the Company’s LDI strategy, the Company assumed a weighted-average assumed long-term rate of return on plan assets of 5.75% in fiscal 2023.
Removed
Sensitivity to changes in the major assumptions used in the calculation of the Company’s pension plans is as follows: Percentage point change Projected benefit obligation decrease (increase) Expense decrease (increase) Discount rate + / - 1.0 % $ 638 $ (684) $ 34 $ (72) Expected return on assets + / - 1.0 % $ — — $ 21 $ (21) In April 2022, the Company terminated the Village Super Market, Inc.
Removed
Employees’ Retirement Plan. Prior to termination, the Company made a $1,485 contribution to fully fund the plan. Plan assets were liquidated to fund lump sum distributions to participants of $37,289 and purchase annuity contracts totaling $14,930 with an insurance company for all participants who did not elect a lump sum distribution.

… 6 more changes not shown on this page.

Other VLGEA 10-K year-over-year comparisons