VILLAGE SUPER MARKET : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

Published: 2021-10-14 12:51:04 ET VLGEA

(Dollars in thousands, except per share and per square foot data).

OVERVIEW

On February 22, 2021, Village closed the ShopRite store located in Silver Spring, Maryland. Despite continued investment in marketing and promotional programs, the store was unable to generate sales at a level sufficient to maintain profitability, resulting in its closure. The impacts associated with this closure were not material to the consolidated financial statements.

Adjustments to Operating and administrative expense: Gain on sale of assets (1)

RESULTS OF OPERATIONS

The following table sets forth the components of the consolidated statements of operations of the Company as a percentage of sales:

New stores and replacement stores are included in same store sales in the quarter after the store has been in operation for four full quarters. Store renovations and expansions are included in same store sales immediately.

GROSS PROFIT

OPERATING AND ADMINISTRATIVE EXPENSE

DEPRECIATION AND AMORTIZATION

IMPAIRMENT OF ASSETS

Impairment of assets includes non-cash charges related to the Fairway trade name of $2,386 (see note 1 to the consolidated financial statements) and the long-lived assets for one Gourmet Garage store of $514.

INTEREST EXPENSE

INTEREST INCOME

INCOME TAXES

The Company's effective income tax rate was 30.7% and 21.4% in fiscal 2021 and 2020, respectively.

NET INCOME

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

IMPAIRMENT

BUSINESS COMBINATIONS

PENSION PLANS

Sensitivity to changes in the major assumptions used in the calculation of the Company's pension plans is as follows:

RECENTLY ISSUED ACCOUNTING STANDARDS

For the disclosure related to recently issued accounting standards, see Note 1 to the consolidated financial statements.

LIQUIDITY and CAPITAL RESOURCES

CASH FLOWS

During fiscal 2021, Village used cash to fund capital expenditures of $25,233, dividends of $13,050, principal payments of long-term debt of $8,414 and additional investments of $2,287 in notes receivable from Wakefern, net of proceeds received on matured notes. Capital expenditures include one major remodel, continued expansion of ShopRite from Home and self-checkout, and various merchandising, technology, equipment and facility upgrades.

LIQUIDITY and DEBT

Working capital was $44,023 and $34,522 at July 31, 2021 and July 25, 2020, respectively. Working capital ratios at the same dates were 1.29 and 1.21 to one, respectively. The Company's working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

At July 31, 2021, Village had demand deposits invested at Wakefern in the amount of $86,670. These deposits earn overnight money market rates.

During fiscal 2021, Village paid cash dividends of $13,050. Dividends in fiscal 2021 consist of $1.00 per Class A common share and $.65 per Class B common share.

During fiscal 2020, Village paid cash dividends of $12,965. Dividends in fiscal 2020 consist of $1.00 per Class A common share and $.65 per Class B common share.

OUTLOOK

Various uncertainties and other factors could cause actual results to differ from the forward-looking statements contained in this report. These include:

At July 31, 2021, Village had demand deposits invested at Wakefern in the amount of $86,670. These deposits earn overnight money market rates.

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