[x] | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended: October 26, 2019 | |
OR | |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Commission File No. 0-2633 |
NEW JERSEY | 22-1576170 |
(State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) |
733 MOUNTAIN AVENUE, SPRINGFIELD, NEW JERSEY | 07081 |
(Address of principal executive offices) | (Zip Code) |
(973) 467-2200 | |
(Registrant's telephone number, including area code) |
Large accelerated filer q | Accelerated filer x | |
Non-accelerated filer q (Do not check if a smaller reporting company) | Smaller reporting company x | |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _____ No __X__ |
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: | ||
December 4, 2019 | ||
Class A Common Stock, No Par Value | 10,089,561 Shares | |
Class B Common Stock, No Par Value | 4,293,748 Shares |
PART I | PAGE NO. |
FINANCIAL INFORMATION | |
Item 1. Financial Statements (Unaudited) | |
Consolidated Balance Sheets | |
Consolidated Statements of Operations | |
Consolidated Statements of Comprehensive Income | |
Consolidated Statements of Shareholders' Equity | |
Consolidated Statements of Cash Flows | |
Notes to Consolidated Financial Statements | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative & Qualitative Disclosures about Market Risk | |
Item 4. Controls and Procedures | |
PART II | |
OTHER INFORMATION | |
Item 6. Exhibits | |
Signatures |
VILLAGE SUPER MARKET, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||
October 26, 2019 | July 27, 2019 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 77,941 | $ | 101,121 | |||
Merchandise inventories | 40,683 | 38,503 | |||||
Patronage dividend receivable | 16,275 | 11,908 | |||||
Income taxes receivable | 78 | 43 | |||||
Other current assets | 16,833 | 17,206 | |||||
Total current assets | 151,810 | 168,781 | |||||
Property, equipment and fixtures, net | 224,489 | 224,890 | |||||
Operating lease assets | 96,093 | — | |||||
Notes receivable from Wakefern | 51,004 | 50,208 | |||||
Investment in Wakefern | 28,783 | 28,644 | |||||
Goodwill | 12,650 | 12,650 | |||||
Other assets | 16,862 | 17,116 | |||||
Total assets | $ | 581,691 | $ | 502,289 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Operating lease obligations | $ | 11,325 | $ | — | |||
Finance lease obligations | 416 | 1,022 | |||||
Notes payable to Wakefern | 89 | 43 | |||||
Accounts payable to Wakefern | 64,581 | 66,130 | |||||
Accounts payable and accrued expenses | 22,666 | 23,950 | |||||
Accrued wages and benefits | 19,101 | 20,259 | |||||
Income taxes payable | 2,243 | 1,070 | |||||
Total current liabilities | 120,421 | 112,474 | |||||
Long-term debt | |||||||
Operating lease obligations | 97,092 | — | |||||
Finance lease obligations | 23,595 | 40,753 | |||||
Notes payable to Wakefern | 839 | 803 | |||||
Notes payable related to New Markets Tax Credit | 6,107 | 6,169 | |||||
Total long-term debt | 127,633 | 47,725 | |||||
Pension liabilities | 4,672 | 4,759 | |||||
Other liabilities | 6,518 | 18,659 | |||||
Commitments and contingencies | |||||||
Shareholders' equity | |||||||
Preferred stock, no par value: Authorized 10,000 shares, none issued | — | — | |||||
Class A common stock, no par value: Authorized 20,000 shares; issued 10,593 shares at October 26, 2019 and July 27, 2019 | 65,947 | 65,114 | |||||
Class B common stock, no par value: Authorized 20,000 shares; issued and outstanding 4,294 shares at October 26, 2019 and July 27, 2019 | 697 | 697 | |||||
Retained earnings | 273,614 | 270,753 | |||||
Accumulated other comprehensive loss | (8,241 | ) | (8,342 | ) | |||
Less treasury stock, Class A, at cost: 503 shares at October 26, 2019 and 502 shares at July 27, 2019 | (9,570 | ) | (9,550 | ) | |||
Total shareholders’ equity | 322,447 | 318,672 | |||||
Total liabilities and shareholders’ equity | $ | 581,691 | $ | 502,289 |
VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | |||||||
13 Weeks Ended | |||||||
October 26, 2019 | October 27, 2018 | ||||||
Sales | $ | 407,402 | $ | 401,550 | |||
Cost of sales | 293,856 | 289,437 | |||||
Gross profit | 113,546 | 112,113 | |||||
Operating and administrative expense | 103,140 | 96,293 | |||||
Depreciation and amortization | 7,438 | 6,898 | |||||
Operating income | 2,968 | 8,922 | |||||
Interest expense | (567 | ) | (1,116 | ) | |||
Interest income | 1,259 | 1,178 | |||||
Income before income taxes | 3,660 | 8,984 | |||||
Income taxes | 1,093 | 2,715 | |||||
Net income | $ | 2,567 | $ | 6,269 | |||
Net income per share: | |||||||
Class A common stock: | |||||||
Basic | $ | 0.20 | $ | 0.49 | |||
Diluted | $ | 0.18 | $ | 0.43 | |||
Class B common stock: | |||||||
Basic | $ | 0.13 | $ | 0.32 | |||
Diluted | $ | 0.13 | $ | 0.32 |
VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) | |||||||
13 Weeks Ended | |||||||
October 26, 2019 | October 27, 2018 | ||||||
Net income | $ | 2,567 | $ | 6,269 | |||
Other comprehensive income: | |||||||
Amortization of pension actuarial loss, net of tax (1) | 101 | 102 | |||||
Comprehensive income | $ | 2,668 | $ | 6,371 |
(1) | Amounts are net of tax of $44 and $43 for the 13 weeks ended October 26, 2019 and October 27, 2018, respectively. All amounts are reclassified from Accumulated other comprehensive loss to Operating and administrative expense. |
VILLAGE SUPER MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
13 Weeks Ended October 26, 2019 and October 27, 2018 | ||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Accumulated Other Comprehensive Income (Loss) | Treasury Stock Class A | Total Shareholders' Equity | ||||||||||||||||||||||||||||
Shares Issued | Amount | Shares Issued | Amount | Retained Earnings | Shares | Amount | ||||||||||||||||||||||||||
Balance, July 27, 2019 | 10,593 | $ | 65,114 | 4,294 | $ | 697 | $ | 270,753 | $ | (8,342 | ) | 502 | $ | (9,550 | ) | $ | 318,672 | |||||||||||||||
Net income | — | — | — | — | 2,567 | — | — | — | 2,567 | |||||||||||||||||||||||
Other comprehensive income, net of tax of $44 | — | — | — | — | — | 101 | — | — | 101 | |||||||||||||||||||||||
Dividends | — | — | — | — | (3,220 | ) | — | — | — | (3,220 | ) | |||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | — | 1 | (20 | ) | (20 | ) | |||||||||||||||||||||
Restricted shares forfeited | (2 | ) | (30 | ) | — | — | — | — | — | — | (30 | ) | ||||||||||||||||||||
Share-based compensation expense | 2 | 863 | — | — | — | — | — | — | 863 | |||||||||||||||||||||||
Adjustment due to the adoption of ASU 2016-02, net of tax of $1,385 | — | — | — | — | 3,514 | — | — | — | 3,514 | |||||||||||||||||||||||
Balance, October 26, 2019 | 10,593 | $ | 65,947 | 4,294 | $ | 697 | $ | 273,614 | $ | (8,241 | ) | 503 | $ | (9,570 | ) | $ | 322,447 | |||||||||||||||
Balance, July 28, 2018 | 10,575 | $ | 61,678 | 4,304 | $ | 699 | $ | 258,104 | $ | (8,185 | ) | 496 | $ | (9,151 | ) | $ | 303,145 | |||||||||||||||
Net income | — | — | — | — | 6,269 | — | — | — | 6,269 | |||||||||||||||||||||||
Other comprehensive income, net of tax of $43 | — | — | — | — | — | 102 | — | — | 102 | |||||||||||||||||||||||
Dividends | — | — | — | — | (3,222 | ) | — | — | — | (3,222 | ) | |||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | — | 22 | (565 | ) | (565 | ) | |||||||||||||||||||||
Share-based compensation expense | 8 | 821 | — | — | — | — | — | — | 821 | |||||||||||||||||||||||
Balance, October 27, 2018 | 10,583 | $ | 62,499 | 4,304 | $ | 699 | $ | 261,151 | $ | (8,083 | ) | 518 | $ | (9,716 | ) | $ | 306,550 |
VILLAGE SUPER MARKET, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
13 Weeks Ended | |||||||
October 26, 2019 | October 27, 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 2,567 | $ | 6,269 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 7,438 | 6,898 | |||||
Non-cash share-based compensation | 833 | 821 | |||||
Deferred taxes | 1,270 | (254 | ) | ||||
Provision to value inventories at LIFO | — | 103 | |||||
Changes in assets and liabilities: | |||||||
Merchandise inventories | (2,180 | ) | 11 | ||||
Patronage dividend receivable | (4,367 | ) | (4,351 | ) | |||
Accounts payable to Wakefern | 1,294 | (4,189 | ) | ||||
Accounts payable and accrued expenses | (1,381 | ) | 239 | ||||
Accrued wages and benefits | (1,158 | ) | (929 | ) | |||
Income taxes receivable / payable | 1,138 | 2,969 | |||||
Other assets and liabilities | (2,079 | ) | (1,462 | ) | |||
Net cash provided by operating activities | 3,375 | 6,125 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures | (22,349 | ) | (8,571 | ) | |||
Investment in notes receivable from Wakefern | (796 | ) | (743 | ) | |||
Net cash used in investing activities | (23,145 | ) | (9,314 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Principal payments of long-term debt | (170 | ) | (298 | ) | |||
Dividends | (3,220 | ) | (3,222 | ) | |||
Treasury stock purchases, including shares surrendered for withholding taxes | (20 | ) | (565 | ) | |||
Net cash used in financing activities | (3,410 | ) | (4,085 | ) | |||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (23,180 | ) | (7,274 | ) | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 101,121 | 96,108 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 77,941 | $ | 88,834 | |||
SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS MADE FOR: | |||||||
Interest | $ | 567 | $ | 1,116 | |||
Income taxes | $ | 68 | $ | — | |||
NONCASH SUPPLEMENTAL DISCLOSURES: | |||||||
Investment in Wakefern and increase in notes payable to Wakefern | $ | 93 | $ | 1,482 |
13 Weeks Ended | |||||||
October 26, 2019 | |||||||
Class A | Class B | ||||||
Numerator: | |||||||
Net income allocated, basic | $ | 1,939 | $ | 558 | |||
Conversion of Class B to Class A shares | 558 | — | |||||
Effect of share-based compensation on allocated net income | (2 | ) | (1 | ) | |||
Net income allocated, diluted | $ | 2,495 | $ | 557 | |||
Denominator: | |||||||
Weighted average shares outstanding, basic | 9,770 | 4,294 | |||||
Conversion of Class B to Class A shares | 4,294 | — | |||||
Weighted average shares outstanding, diluted | 14,064 | 4,294 | |||||
13 Weeks Ended | |||||||
October 27, 2018 | |||||||
Class A | Class B | ||||||
Numerator: | |||||||
Net income allocated, basic | $ | 4,739 | $ | 1,361 | |||
Conversion of Class B to Class A shares | 1,361 | — | |||||
Net income allocated, diluted | $ | 6,100 | $ | 1,361 | |||
Denominator: | |||||||
Weighted average shares outstanding, basic | 9,732 | 4,304 | |||||
Conversion of Class B to Class A shares | 4,304 | — | |||||
Weighted average shares outstanding, diluted | 14,036 | 4,304 |
13 Weeks Ended | |||||||
October 26, 2019 | October 27, 2018 | ||||||
Service cost | $ | 51 | $ | 53 | |||
Interest cost on projected benefit obligations | 565 | 655 | |||||
Expected return on plan assets | (703 | ) | (721 | ) | |||
Amortization of net losses | 145 | 145 | |||||
Net periodic pension cost | $ | 58 | $ | 132 |
13 Weeks Ended | |||||
Consolidated Statement of Operations Classification | October 26, 2019 | ||||
Operating lease cost | Operating and administrative expense | $ | 4,779 | ||
Finance lease cost | |||||
Amortization of leased assets | Depreciation and amortization | 237 | |||
Interest on lease liabilities | Interest expense | 517 | |||
Variable lease cost | Operating and administrative expense | 3,695 | |||
Total lease cost | $ | 9,228 |
Operating leases | Finance leases | Total | ||||||||||
Remainder of 2020 | $ | 12,663 | $ | 2,000 | $ | 14,663 | ||||||
2021 | 15,453 | 2,689 | 18,142 | |||||||||
2022 | 14,658 | 2,689 | 17,347 | |||||||||
2023 | 14,504 | 2,689 | 17,193 | |||||||||
2024 | 12,369 | 2,689 | 15,058 | |||||||||
Thereafter | 79,309 | 24,428 | 103,737 | |||||||||
Total lease payments | 148,956 | 37,184 | 186,140 | |||||||||
Less amount representing interest | 40,539 | 13,173 | 53,712 | |||||||||
Present value of lease liabilities | $ | 108,417 | $ | 24,011 | $ | 132,428 |
October 26, 2019 | ||
Weighted-average remaining lease term (years) | ||
Operating leases | 12.2 | |
Finance leases | 16.3 | |
Weighted-average discount rate | ||
Operating leases | 5.3 | % |
Finance leases | 8.5 | % |
13 Weeks Ended | ||||
October 26, 2019 | ||||
Cash paid for amounts in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ | 4,380 | ||
Operating cash flows from finance leases | 517 | |||
Financing cash flows from finance leases | 113 |
Capital and financing leases | Operating leases | ||||||
2020 | $ | 5,173 | $ | 13,573 | |||
2021 | 5,240 | 12,972 | |||||
2022 | 5,240 | 10,348 | |||||
2023 | 5,305 | 9,747 | |||||
2024 | 5,342 | 7,457 | |||||
Thereafter | 43,708 | 61,043 | |||||
Minimum lease payments | 70,008 | $ | 115,140 | ||||
Less amount representing interest | 28,233 | ||||||
Present value of minimum lease payments | 41,775 | ||||||
Less current portion | 1,022 | ||||||
$ | 40,753 |
13 Weeks Ended | |||||
October 26, 2019 | October 27, 2018 | ||||
Sales | 100.00 | % | 100.00 | % | |
Cost of sales | 72.13 | 72.08 | |||
Gross profit | 27.87 | 27.92 | |||
Operating and administrative expense | 25.32 | 23.98 | |||
Depreciation and amortization | 1.82 | 1.71 | |||
Operating income | 0.73 | 2.23 | |||
Interest expense | (0.14 | ) | (0.28 | ) | |
Interest income | 0.31 | 0.29 | |||
Income before taxes | 0.90 | 2.24 | |||
Income taxes | 0.27 | 0.68 | |||
Net income | 0.63 | % | 1.56 | % |
• | We expect same store sales to range from a 2.0% decrease to a flat in fiscal 2020, including the impact of expected investments in retail pricing and expansion of our own brand product portfolio. |
• | We have budgeted $55,000 for capital expenditures in fiscal 2020. Planned expenditures include the construction of a replacement store in Stroudsburg, Pennsylvania, three major remodels, expansion of ShopRite from Home, and various merchandising, technology, equipment and facility upgrades. |
• | The Board’s current intention is to continue to pay quarterly dividends in 2020 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 other sources of liquidity 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 2020 to be in the range of 29.5% - 30.5%. |
• | We expect approximately $1,600 of net periodic pension costs in fiscal 2020 related to the four Company sponsored defined benefit pension plans. The Company expects contributions to its defined benefit pension plans to be immaterial in fiscal 2020. |
• | 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. Village competes directly with multiple retail formats both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do. |
• | The Company’s stores are concentrated in New Jersey, with two stores in Maryland, one in northeastern Pennsylvania and four in New York City. We are vulnerable to economic downturns in New Jersey in addition to those that may affect the country as a whole. Economic conditions such as inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, unemployment rates and changing demographics may adversely affect our sales and profits. |
• | Village purchases substantially all of its merchandise from Wakefern. In addition, Wakefern provides the Company with support services in numerous areas including advertising, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services. Further, Village receives patronage dividends and other product incentives from Wakefern and also has demand deposits and notes receivable due from Wakefern. |
• | Approximately 88% of our employees are covered by collective bargaining agreements. Any work stoppages could have an adverse impact on our financial results. If we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs. |
• | The Company could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain. The real or perceived sale of contaminated food products by us could result in a loss of consumer confidence and product liability claims, which could have a material adverse effect on our sales and operations. |
• | Certain of the multi-employer plans to which we contribute are underfunded. As a result, we expect that contributions to these plans may increase. Additionally, the benefit levels and related items will be issues in the negotiation of our collective bargaining agreements. Under current law, an employer that withdraws or partially withdraws from a multi-employer pension plan may incur a withdrawal liability to the plan, which represents the portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. The failure of a withdrawing employer to fund these obligations can impact remaining employers. 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 and general liability, property, director and officers’ liability, and certain employee health care benefits. Any projection of losses is subject to a high degree of variability. Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, and insolvency of insurance carriers could all affect our financial condition, results of operations, or cash flows. |
• | Our long-lived assets, primarily store property, equipment and fixtures, are subject to periodic testing for impairment. Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets. |
• | Our effective tax rate may be impacted by the results of tax examinations and changes in tax laws. |
• | Wakefern provides all members of the cooperative with information system support that enables us to effectively manage our business data, customer transactions, ordering, communications and other business processes. These information systems are subject to damage or interruption from power outages, computer or telecommunications failures, computer viruses and related malicious software, catastrophic weather events, or human error. Any material interruption of our or Wakefern’s information systems could have a material adverse impact on our results of operations. |
Period(1) | Total Number of Shares Purchased(2) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) | ||||
July 28, 2019 to August 24, 2019 | 812 | $24.01 | 812 | $665,465 | ||||
August 25, 2019 to September 21, 2019 | — | $— | — | $5,665,465 | ||||
September 22, 2019 to October 26, 2019 | — | $— | — | $5,665,465 | ||||
Total | 812 | $24.96 | 812 | $5,665,465 |
(1) | The reported periods conform to our fiscal calendar. |
Item 6. | Exhibits |
Exhibit 31.1 | |
Exhibit 31.2 | |
Exhibit 32.1 | Certification (furnished, not filed) |
Exhibit 32.2 | Certification (furnished, not filed) |
Exhibit 99.1 | |
101 INS | XBRL Instance |
101 SCH | XBRL Schema |
101 CAL | XBRL Calculation |
101 DEF | XBRL Definition |
101 LAB | XBRL Label |
101 PRE | XBRL Presentation |
Village Super Market, Inc. | |
Registrant | |
Dated: December 5, 2019 | /s/ Robert P. Sumas |
Robert P. Sumas | |
(Chief Executive Officer) | |
Dated: December 5, 2019 | /s/ John Van Orden |
John Van Orden | |
(Chief Financial Officer) |
Exhibit 31.1 |
1. | I have reviewed this quarterly report on Form 10-Q of Village Super Market, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. | |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: December 5, 2019 | /s/ Robert P. Sumas |
Robert P. Sumas | |
Chief Executive Officer |
Exhibit 31.2 |
1. | I have reviewed this quarterly report on Form 10-Q of Village Super Market, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. | |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: December 5, 2019 | |
/s/ John Van Orden | |
John Van Orden | |
Chief Financial Officer & | |
Principal Financial Officer |
Exhibit 32.1 |
/s/ Robert P. Sumas | |
Robert P. Sumas | |
Chief Executive Officer | |
December 5, 2019 |
Exhibit 32.2 |
/s/ John Van Orden | |
John Van Orden | |
Chief Financial Officer & | |
Principal Financial Officer | |
December 5, 2019 |
Contact: | John Van Orden, CFO |
(973) 467-2200 | |
villageinvestorrelations@wakefern.com |
13 Weeks Ended | |||||||
October 26, 2019 | October 27, 2018 | ||||||
Sales | $ | 407,402 | $ | 401,550 | |||
Cost of sales | 293,856 | 289,437 | |||||
Gross profit | 113,546 | 112,113 | |||||
Operating and administrative expense | 103,140 | 96,293 | |||||
Depreciation and amortization | 7,438 | 6,898 | |||||
Operating income | 2,968 | 8,922 | |||||
Interest expense | (567 | ) | (1,116 | ) | |||
Interest income | 1,259 | 1,178 | |||||
Income before income taxes | 3,660 | 8,984 | |||||
Income taxes | 1,093 | 2,715 | |||||
Net income | $ | 2,567 | $ | 6,269 | |||
Net income per share: | |||||||
Class A common stock: | |||||||
Basic | $ | 0.20 | $ | 0.49 | |||
Diluted | $ | 0.18 | $ | 0.43 | |||
Class B common stock: | |||||||
Basic | $ | 0.13 | $ | 0.32 | |||
Diluted | $ | 0.13 | $ | 0.32 | |||
Gross profit as a % of sales | 27.87 | % | 27.92 | % | |||
Operating and administrative expense as a % of sales | 25.32 | % | 23.98 | % |
COMMITMENTS and CONTINGENCIES |
3 Months Ended |
---|---|
Oct. 26, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS and CONTINGENCIES | COMMITMENTS and CONTINGENCIES Superstorm Sandy devastated Village's trade area on October 29, 2012 and resulted in the closure of almost all of our stores for periods of time ranging from a few hours to eight days. Village disposed of substantial amounts of perishable product and also incurred repair, labor and other costs as a result of the storm. Wakefern, as the policy holder, has pursued recovery of uncollected insurance claims on behalf of all Wakefern members through litigation against the insurance carrier and others since October 2013. This litigation is ongoing and the Company received an additional $415 in November 2018 which was recognized as a reduction in Operating and administrative expense in the first quarter of fiscal 2019. Including the November 2018 recoveries, Village has received $3,998 related to losses incurred as a result of Superstorm Sandy. Any further proceeds recovered will be recognized as they are received. The Company is involved in other litigation incidental to the normal course of business. Company management is of the opinion that the ultimate resolution of these legal proceedings should not have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. |
MERCHANDISE INVENTORIES |
3 Months Ended |
---|---|
Oct. 26, 2019 | |
Inventory Disclosure [Abstract] | |
MERCHANDISE INVENTORIES | MERCHANDISE INVENTORIES At both October 26, 2019 and July 27, 2019, approximately 64% of merchandise inventories are valued by the LIFO method while the balance is valued by FIFO. If the FIFO method had been used for the entire inventory, inventories would have been $14,512 higher than reported at both October 26, 2019 and July 27, 2019. |
LEASES - Future Minimum Lease Payments for all Non-Cancelable Leases Before Adoption of ASU 2016-02 (Details) - USD ($) $ in Thousands |
Oct. 26, 2019 |
Jul. 27, 2019 |
---|---|---|
Capital and financing leases | ||
2020 | $ 5,173 | |
2021 | 5,240 | |
2022 | 5,240 | |
2023 | 5,305 | |
2024 | 5,342 | |
Thereafter | 43,708 | |
Minimum lease payments | 70,008 | |
Less amount representing interest | 28,233 | |
Present value of minimum lease payments | 41,775 | |
Less current portion | $ 416 | 1,022 |
Capital and financing lease obligations | $ 23,595 | 40,753 |
Operating leases | ||
2020 | 13,573 | |
2021 | 12,972 | |
2022 | 10,348 | |
2023 | 9,747 | |
2024 | 7,457 | |
Thereafter | 61,043 | |
Minimum lease payments | $ 115,140 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Oct. 26, 2019 |
Oct. 27, 2018 |
|
Tax expense (benefit) associated with other comprehensive loss and income | $ 316 | $ 316 |
Tax expense (benefit) associated with adjustment due to the adoption of ASU 2016-02 | 1,093 | $ 2,715 |
Accounting Standards Update 2016-02 [Member] | ||
Tax expense (benefit) associated with adjustment due to the adoption of ASU 2016-02 | $ 1,385 |
CONSOLIDATED STATMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Oct. 26, 2019 |
Oct. 27, 2018 |
|
Sales | $ 407,402 | $ 401,550 |
Cost of sales | 293,856 | 289,437 |
Gross profit | 113,546 | 112,113 |
Operating and administrative expense | 103,140 | 96,293 |
Depreciation and amortization | 7,438 | 6,898 |
Operating income | 2,968 | 8,922 |
Interest expense | (567) | (1,116) |
Interest income | 1,259 | 1,178 |
Income before income taxes | 3,660 | 8,984 |
Income taxes | 1,093 | 2,715 |
Net income | $ 2,567 | $ 6,269 |
Common Class A [Member] | ||
Net income per share: | ||
Basic (in dollars per share) | $ 0.20 | $ 0.49 |
Diluted (in dollars per share) | 0.18 | 0.43 |
Common Class B [Member] | ||
Net income per share: | ||
Basic (in dollars per share) | 0.13 | 0.32 |
Diluted (in dollars per share) | $ 0.13 | $ 0.32 |
LEASES - Additional Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Oct. 26, 2019
USD ($)
contract
| |
Lessee, Lease, Description [Line Items] | |
Number of retail stores leased | contract | 27 |
Finance lease, right-of-use asset | $ 14,464 |
Future lease payment obligations that have not yet commenced but have been executed | $ 9,280 |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms | 20 years |
Lease renewal terms | 5 years |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms | 30 years |
Lease renewal terms | 10 years |
PENSION PLANS - Schedule of Net Benefit Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Oct. 26, 2019 |
Oct. 27, 2018 |
|
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||
Service cost | $ 51 | $ 53 |
Interest cost on projected benefit obligations | 565 | 655 |
Expected return on plan assets | (703) | (721) |
Amortization of net losses | 145 | 145 |
Net periodic pension cost | $ 58 | $ 132 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Oct. 26, 2019 |
Oct. 27, 2018 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Net income | $ 2,567 | $ 6,269 |
Other comprehensive income: | ||
Amortization of pension actuarial loss, net of tax | 101 | 102 |
Comprehensive income | $ 2,668 | $ 6,371 |
DOCUMENT AND ENTITY INFORMATION - shares |
3 Months Ended | |
---|---|---|
Oct. 26, 2019 |
Dec. 03, 2019 |
|
Entity Registrant Name | VILLAGE SUPER MARKET INC | |
Entity Central Index Key | 0000103595 | |
Current Fiscal Year End Date | --07-25 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 26, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Common Class A [Member] | ||
Entity Common Stock, Shares Outstanding | 10,089,561 | |
Common Class B [Member] | ||
Entity Common Stock, Shares Outstanding | 4,293,748 |
COMMITMENTS and CONTINGENCIES (Details) - USD ($) $ in Thousands |
1 Months Ended | 84 Months Ended |
---|---|---|
Nov. 30, 2018 |
Oct. 26, 2019 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Insurance Recoveries | $ 415 | $ 3,998 |
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 26, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Lease Cost | Supplemental cash flow information related to leases is as follows:
The composition of total lease cost is as follows:
|
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Operating Lease Maturity | Maturities of operating and finance lease liabilities, including options to extend lease terms that are reasonably certain of being exercised, are as follows as of October 26, 2019:
|
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Finance Lease Maturity | Maturities of operating and finance lease liabilities, including options to extend lease terms that are reasonably certain of being exercised, are as follows as of October 26, 2019:
|
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Lease Terms and Discount Rates | As of October 26, 2019, the Company's lease terms and discount rates are as follows:
|
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Future Minimum Lease Payments for all Non-Cancelable Leases Before Adoption of ASU 2016-02 | Future minimum lease payments by year and in the aggregate for all non-cancelable leases with initial terms of one year or more consisted of the following at July 27, 2019:
|
RELATED PARTY INFORMATION - WAKEFERN |
3 Months Ended |
---|---|
Oct. 26, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY INFORMATION - WAKEFERN | RELATED PARTY INFORMATION A description of the Company’s transactions with Wakefern, its principal supplier, and with other related parties is included in the Company’s Annual Report on Form 10-K for the year ended July 27, 2019. Included in cash and cash equivalents at October 26, 2019 and July 27, 2019 are $52,945 and $73,879, respectively, of demand deposits invested at Wakefern at overnight money market rates. |
BASIS OF PRESENTATION and ACCOUNTING POLICIES |
3 Months Ended |
---|---|
Oct. 26, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION and ACCOUNTING POLICIES | BASIS OF PRESENTATION and ACCOUNTING POLICIES In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of October 26, 2019 and the consolidated statements of operations, comprehensive income and cash flows for the 13 weeks ended October 26, 2019 and October 27, 2018 of Village Super Market, Inc. (“Village” or the “Company”). On June 24, 2019, the Company purchased three Gourmet Garage specialty markets in Manhattan, New York City. Village acquired the store fixtures, leases, inventory, other working capital and other assets for $5,267, net of cash and cash equivalents. Village has accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date. In connection with this acquisition, the Company recorded $593 of goodwill attributable to the assembled workforce of Gourmet Garage and cost synergies and a $1,485 indefinite-lived intangible asset related to the trade name. Transaction costs were expensed as incurred. The allocation of the purchase price consideration to the assets acquired and the liabilities assumed will be completed upon the finalization of working capital adjustments. The significant accounting policies followed by the Company, except as updated for the adoption of new lease guidance, are set forth in Note 1 to the Company's consolidated financial statements in the July 27, 2019 Village Super Market, Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements. The results of operations for the period ended October 26, 2019 are not necessarily indicative of the results to be expected for the full year. Recently adopted accounting standards On July 28, 2019, the Company adopted ASU 2016-02, “Leases.” This guidance requires lessees to recognize lease liabilities and a right-of-use asset for all leases with terms of more than 12 months on the balance sheet. The Company adopted the standard using the modified retrospective approach under which the cumulative effect of initially applying the standard was recognized as an adjustment to opening fiscal 2020 retained earnings, with no restatement of prior year amounts. In addition, the Company applied the transition package of practical expedients permitted within the standard, which allowed the carryforward of historical lease classification, and applied the transition option which does not require application of the guidance to comparative periods in the year of adoption. The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of $99,415 and $111,139, respectively, as of the date of adoption. Included in the initial measurement of the new lease assets is the reclassification of certain prepaid and deferred rent balances. Additionally, the Company recorded an adjustment to reduce its opening retained earnings balance by $3,514, net of income taxes, as the Company derecognized the remaining financing obligations of $17,442 and related net assets of $12,543 for leases in which the Company was previously deemed to be the owner of the project for accounting purposes but did not qualify for sale-leaseback treatment. As such designation ended for these leases with adoption of the ASU, operating lease right-of-use asset and liability balances were established for these leases based on the Company's remaining fixed payment obligations under the leases and are included in the amounts described above. Accordingly, the fixed lease payments related to these leases will be recognized as an operating lease cost on a straight-line basis over the lease term, and eliminated depreciation and interest expense in the fiscal 2020 consolidated statement of operations. For the 13 weeks ended October 26, 2019 the Company recognized $677 of lease costs in Operating and administrative expense, and for the 13 weeks ended October 27, 2018 the Company recognized $107 of depreciation expense and $540 of interest expense related to these leases. The adoption of this standard also resulted in a change in naming convention for leases classified historically as capital leases to finance leases. The adoption of the new standard did not have a material impact on the consolidated statement of cash flows. |
PENSION PLANS - Additional Information (Details) |
3 Months Ended |
---|---|
Oct. 26, 2019
pension_plan
| |
Defined Benefit Plan [Abstract] | |
Number of defined benefit pension plans | 4 |
MERCHANDISE INVENTORIES (Details) - USD ($) $ in Thousands |
Oct. 26, 2019 |
Jul. 27, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Percentage of LIFO Inventory | 64.00% | 64.00% |
Inventory, LIFO Reserve | $ 14,512 | $ 14,512 |
LEASES - Total Lease Cost (Details) $ in Thousands |
3 Months Ended |
---|---|
Oct. 26, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 4,779 |
Finance lease cost | |
Amortization of leased assets | 237 |
Interest on lease liabilities | 517 |
Variable lease cost | 3,695 |
Total lease cost | $ 9,228 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock [Member]
Common Class A [Member]
|
Common Stock [Member]
Common Class B [Member]
|
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
Treasury Stock [Member] |
---|---|---|---|---|---|---|
Balance (in shares) at Jul. 28, 2018 | 10,575 | 4,304 | 496 | |||
Balance at Jul. 28, 2018 | $ 303,145 | $ 61,678 | $ 699 | $ 258,104 | $ (8,185) | $ (9,151) |
Net income | 6,269 | 6,269 | ||||
Other comprehensive income, net of tax | 102 | 102 | ||||
Dividends | (3,222) | (3,222) | ||||
Treasury stock purchases (in shares) | 22 | |||||
Treasury stock purchases | (565) | $ (565) | ||||
Share-based compensation expense (in shares) | 8 | |||||
Share-based compensation expense | 821 | $ 821 | ||||
Balance (in shares) at Oct. 27, 2018 | 10,583 | 4,304 | 518 | |||
Balance at Oct. 27, 2018 | 306,550 | $ 62,499 | $ 699 | 261,151 | (8,083) | $ (9,716) |
Balance (in shares) at Jul. 27, 2019 | 10,593 | 4,294 | 502 | |||
Balance at Jul. 27, 2019 | 318,672 | $ 65,114 | $ 697 | 270,753 | (8,342) | $ (9,550) |
Net income | 2,567 | 2,567 | ||||
Other comprehensive income, net of tax | 101 | 101 | ||||
Dividends | (3,220) | (3,220) | ||||
Treasury stock purchases (in shares) | 1 | |||||
Treasury stock purchases | (20) | $ (20) | ||||
Restricted shares forfeited (in shares) | (2) | |||||
Restricted shares forfeited | (30) | $ (30) | ||||
Share-based compensation expense (in shares) | 2 | |||||
Share-based compensation expense | 863 | $ 863 | ||||
Balance (in shares) at Oct. 26, 2019 | 10,593 | 4,294 | 503 | |||
Balance at Oct. 26, 2019 | $ 322,447 | $ 65,947 | $ 697 | $ 273,614 | $ (8,241) | $ (9,570) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Oct. 26, 2019 |
Jul. 27, 2019 |
---|---|---|
Preferred stock shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Common Class A [Member] | ||
Common stock shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock shares issued (in shares) | 10,593,000 | 10,593,000 |
Treasury shares | 503,000 | 502,000 |
Common Class B [Member] | ||
Common stock shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock shares issued (in shares) | 4,294,000 | 4,294,000 |
LEASES - Supplemental Cash Flow Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Oct. 26, 2019
USD ($)
| |
Cash paid for amounts in the measurement of lease liabilities | |
Operating cash flows from operating leases | $ 4,380 |
Operating cash flows from finance leases | 517 |
Financing cash flows from finance leases | $ 113 |
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