10-Q 1 sptn-20240420.htm 10-Q 10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 20, 2024.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-31127

 

img255259576_0.jpg 

 

SPARTANNASH COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Michigan

 

38-0593940

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

850 76th Street, S.W.

P.O. Box 8700

Grand Rapids, Michigan

 

49518

(Address of Principal Executive Offices)

 

(Zip Code)

(616) 878-2000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, no par value

 

SPTN

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

 

Accelerated filer

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

 

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 28, 2024, the registrant had 33,891,770 outstanding shares of common stock, no par value.

 

 


 

FORWARD-LOOKING STATEMENTS

The matters discussed in this Quarterly Report on Form 10-Q, in the Company’s press releases, in the Company's website-accessible conference calls with analysts and investor presentations include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), about the plans, strategies, objectives, goals or expectations of SpartanNash Company and subsidiaries (“SpartanNash” or “the Company”). These forward-looking statements may be identifiable by words or phrases indicating that the Company or management "expects," "projects," "anticipates," "plans," "believes," "intends," or "estimates," or that a particular occurrence or event "may," "could," "should," "will" or "will likely" result, occur or be pursued or "continue" in the future, that the "outlook", "trend", "guidance" or "target" is toward a particular result or occurrence, that a development is an "opportunity," "priority," "strategy," "focus," that the Company is "positioned" for a particular result, or similarly stated expectations.

Undue reliance should not be placed on the forward-looking statements contained in this Quarterly Report on Form 10-Q, SpartanNash’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 and other periodic reports filed with the Securities and Exchange Commission (“SEC”), which speak only as of the date made. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies may affect actual results and could cause actual results to differ materially. These risks and uncertainties include the Company's ability to compete in an extremely competitive industry; the Company's dependence on certain major customers; the Company's ability to implement its growth strategy and transformation initiatives; the Company's ability to implement its growth strategy through acquisitions and successfully integrate acquired businesses; disruptions to the Company's information security network, including security breaches and cyber-attacks; impacts to the availability and performance of the Company's information technology systems; changes in relationships with the Company's vendor base; changes in product availability and product pricing from vendors; macroeconomic uncertainty, including rising inflation, potential economic recession, and increasing interest rates; difficulty attracting and retaining well-qualified Associates and effectively managing increased labor costs; failure to successfully retain or manage transitions with executive leaders and other key personnel; impacts to the Company's business and reputation due to an increasing focus on environmental, social and governance matters; customers to whom the Company extends credit or for whom the Company guarantees loans may fail to repay the Company; changes in the geopolitical conditions; disruptions associated with severe weather conditions and natural disasters, including effects from climate change; disruptions associated with disease outbreaks; the Company's ability to manage its private brand program for U.S. military commissaries, including the termination of the program or not achieving the desired results; impairment charges for goodwill or other long-lived assets; the Company's level of indebtedness; interest rate fluctuations; the Company's ability to service its debt and to comply with debt covenants; changes in government regulations; labor relations issues; changes in the military commissary system, including its supply chain, or in the level of governmental funding; product recalls and other product-related safety concerns; cost increases related to multi-employer pension plans; and other risks and uncertainties listed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission.

This section and the discussions contained in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 and in Part I, Item 2 “Critical Accounting Policies” of this Quarterly Report on Form 10-Q, are intended to provide meaningful cautionary statements for purposes of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This should not be construed as a complete list of all the economic, competitive, governmental, technological and other factors that could adversely affect the Company’s expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to the Company or that the Company currently believes are immaterial also may impair its business, operations, liquidity, financial condition and prospects. The Company undertakes no obligation to update or revise its forward-looking statements to reflect developments that occur or information obtained after the date of this Quarterly Report. In addition, historical information should not be considered as an indicator of future performance.

 

2


 

TABLE OF CONTENTS

 

Page

PART I.

FINANCIAL INFORMATION

4

 

 

 

Item 1.

Financial Statements

4

 

 

 

Condensed Consolidated Balance Sheets

4

 

 

 

Condensed Consolidated Statements of Earnings

5

 

 

 

Condensed Consolidated Statements of Comprehensive Income

6

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity

7

 

 

 

Condensed Consolidated Statements of Cash Flows

8

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

 

 

 

Item 4.

Controls and Procedures

27

 

 

 

PART II.

OTHER INFORMATION

27

 

 

 

Item 1.

Legal Proceedings

27

 

 

 

Item 1A.

Risk Factors

27

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

 

 

 

Item 5.

Other Information

28

 

 

 

Item 6.

Exhibits

29

 

 

 

 

Signatures

30

 

 

3


 

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, Unaudited)

 

April 20,

 

 

December 30,

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

 

18,968

 

 

$

 

17,964

 

Accounts and notes receivable, net

 

 

422,161

 

 

 

 

421,859

 

Inventories, net

 

 

555,368

 

 

 

 

575,226

 

Prepaid expenses and other current assets

 

 

69,608

 

 

 

 

62,440

 

Total current assets

 

 

1,066,105

 

 

 

 

1,077,489

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

647,536

 

 

 

 

649,071

 

Goodwill

 

 

182,160

 

 

 

 

182,160

 

Intangible assets, net

 

 

100,132

 

 

 

 

101,535

 

Operating lease assets

 

 

245,385

 

 

 

 

242,146

 

Other assets, net

 

 

100,483

 

 

 

 

103,174

 

 

 

 

 

 

 

 

 

Total assets

$

 

2,341,801

 

 

$

 

2,355,575

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

 

447,458

 

 

$

 

473,419

 

Accrued payroll and benefits

 

 

54,135

 

 

 

 

78,076

 

Other accrued expenses

 

 

54,548

 

 

 

 

57,609

 

Current portion of operating lease liabilities

 

 

42,162

 

 

 

 

41,979

 

Current portion of long-term debt and finance lease liabilities

 

 

9,724

 

 

 

 

8,813

 

Total current liabilities

 

 

608,027

 

 

 

 

659,896

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

Deferred income taxes

 

 

81,315

 

 

 

 

73,904

 

Operating lease liabilities

 

 

232,887

 

 

 

 

226,118

 

Other long-term liabilities

 

 

20,503

 

 

 

 

28,808

 

Long-term debt and finance lease liabilities

 

 

613,864

 

 

 

 

588,667

 

Total long-term liabilities

 

 

948,569

 

 

 

 

917,497

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common stock, voting, no par value; 100,000 shares
     authorized;
34,349 and 34,610 shares outstanding

 

 

459,204

 

 

 

 

460,299

 

Preferred stock, no par value, 10,000 shares authorized; no shares outstanding

 

 

 

 

 

 

 

Accumulated other comprehensive income

 

 

3,648

 

 

 

 

796

 

Retained earnings

 

 

322,353

 

 

 

 

317,087

 

Total shareholders’ equity

 

 

785,205

 

 

 

 

778,182

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

 

2,341,801

 

 

$

 

2,355,575

 

See accompanying notes to condensed consolidated financial statements.

4


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

 

16 Weeks Ended

 

 

April 20, 2024

 

 

April 22, 2023

 

Net sales

$

 

2,806,263

 

 

$

 

2,907,394

 

Cost of sales

 

 

2,365,919

 

 

 

 

2,460,728

 

Gross profit

 

 

440,344

 

 

 

 

446,666

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Selling, general and administrative

 

 

403,633

 

 

 

 

418,196

 

Acquisition and integration, net

 

 

327

 

 

 

 

74

 

Restructuring and asset impairment, net

 

 

5,768

 

 

 

 

4,083

 

Total operating expenses

 

 

409,728

 

 

 

 

422,353

 

 

 

 

 

 

 

 

 

Operating earnings

 

 

30,616

 

 

 

 

24,313

 

 

 

 

 

 

 

 

 

Other expenses and (income)

 

 

 

 

 

 

 

Interest expense, net

 

 

13,487

 

 

 

 

11,589

 

Other, net

 

 

(1,048

)

 

 

 

(1,039

)

Total other expenses, net

 

 

12,439

 

 

 

 

10,550

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

 

18,177

 

 

 

 

13,763

 

Income tax expense

 

 

5,206

 

 

 

 

2,426

 

Net earnings

$

 

12,971

 

 

$

 

11,337

 

 

 

 

 

 

 

 

 

Net earnings per basic common share

$

 

0.38

 

 

$

 

0.33

 

 

 

 

 

 

 

 

 

Net earnings per diluted common share

$

 

0.37

 

 

$

 

0.32

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

34,139

 

 

 

 

34,547

 

Diluted

 

 

34,593

 

 

 

 

35,457

 

 

See accompanying notes to condensed consolidated financial statements.

5


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, Unaudited)

 

16 Weeks Ended

 

 

April 20, 2024

 

 

April 22, 2023

 

Net earnings

$

 

12,971

 

 

$

 

11,337

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), before tax

 

 

 

 

 

 

 

Change in interest rate swap

 

 

4,608

 

 

 

 

(1,136

)

Postretirement liability adjustment

 

 

(892

)

 

 

 

(911

)

Total other comprehensive income (loss), before tax

 

 

3,716

 

 

 

 

(2,047

)

 

 

 

 

 

 

 

 

Income tax (expense) benefit related to items of other comprehensive income (loss)

 

 

(864

)

 

 

 

490

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss), after tax

 

 

2,852

 

 

 

 

(1,557

)

Comprehensive income

$

 

15,823

 

 

$

 

9,780

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, Unaudited)

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Common

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

Outstanding

 

 

Stock

 

 

Income

 

 

Earnings

 

 

Total

 

Balance at December 30, 2023

 

34,610

 

 

$

 

460,299

 

 

$

 

796

 

 

$

 

317,087

 

 

$

 

778,182

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

12,971

 

 

 

 

12,971

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

2,852

 

 

 

 

 

 

 

 

2,852

 

Dividends - $0.2175 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,705

)

 

 

 

(7,705

)

Share repurchases

 

(134

)

 

 

 

(2,616

)

 

 

 

 

 

 

 

 

 

 

 

(2,616

)

Stock-based compensation

 

 

 

 

 

3,720

 

 

 

 

 

 

 

 

 

 

 

 

3,720

 

Stock warrant

 

 

 

 

 

326

 

 

 

 

 

 

 

 

 

 

 

 

326

 

Issuances of common stock for associate stock purchase plan

 

32

 

 

 

 

626

 

 

 

 

 

 

 

 

 

 

 

 

626

 

Cancellations of stock-based awards

 

(159

)

 

 

 

(3,151

)

 

 

 

 

 

 

 

 

 

 

 

(3,151

)

Balance at April 20, 2024

 

34,349

 

 

$

 

459,204

 

 

$

 

3,648

 

 

$

 

322,353

 

 

$

 

785,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Common

 

 

Comprehensive

 

 

Retained

 

 

 

 

 

 

Outstanding

 

 

Stock

 

 

Income (Loss)

 

 

Earnings

 

 

Total

 

Balance at December 31, 2022

 

35,079

 

 

$

 

468,061

 

 

$

 

2,979

 

 

$

 

295,028

 

 

$

 

766,068

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

11,337

 

 

 

 

11,337

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(1,557

)

 

 

 

 

 

 

 

(1,557

)

Dividends - $0.215 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,679

)

 

 

 

(7,679

)

Share repurchases

 

(435

)

 

 

 

(10,910

)

 

 

 

 

 

 

 

 

 

 

 

(10,910

)

Stock-based compensation

 

 

 

 

 

5,147

 

 

 

 

 

 

 

 

 

 

 

 

5,147

 

Stock warrant

 

 

 

 

 

607

 

 

 

 

 

 

 

 

 

 

 

 

607

 

Issuances of common stock for associate stock purchase plan

 

17

 

 

 

 

358

 

 

 

 

 

 

 

 

 

 

 

 

358

 

Issuances of restricted stock

 

425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellations of stock-based awards

 

(151

)

 

 

 

(3,917

)

 

 

 

 

 

 

 

 

 

 

 

(3,917

)

Balance at April 22, 2023

 

34,935

 

 

$

 

459,346

 

 

$

 

1,422

 

 

$

 

298,686

 

 

$

 

759,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

7


 

SPARTANNASH COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)

 

16 Weeks Ended

 

 

April 20, 2024

 

 

April 22, 2023

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net earnings

$

 

12,971

 

 

$

 

11,337

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Non-cash restructuring, asset impairment, and other charges

 

 

6,168

 

 

 

 

4,040

 

Depreciation and amortization

 

 

30,646

 

 

 

 

29,745

 

Non-cash rent

 

 

(985

)

 

 

 

(1,148

)

LIFO expense

 

 

2,020

 

 

 

 

11,172

 

Postretirement benefits income

 

 

(856

)

 

 

 

(706

)

Deferred income taxes

 

 

6,547

 

 

 

 

14,765

 

Stock-based compensation expense

 

 

3,720

 

 

 

 

5,147

 

Stock warrant

 

 

326

 

 

 

 

607

 

(Gain) loss on disposals of assets

 

 

(20

)

 

 

 

22

 

Other operating activities

 

 

567

 

 

 

 

459

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(720

)

 

 

 

(5,052

)

Inventories

 

 

17,842

 

 

 

 

(9,069

)

Prepaid expenses and other assets

 

 

1,947

 

 

 

 

6,243

 

Accounts payable

 

 

(3,526

)

 

 

 

5,136

 

Accrued payroll and benefits

 

 

(30,813

)

 

 

 

(52,867

)

Current income taxes

 

 

(6,377

)

 

 

 

(17,512

)

Other accrued expenses and other liabilities

 

 

(2,994

)

 

 

 

(5,027

)

Net cash provided by (used in) operating activities

 

 

36,463

 

 

 

 

(2,708

)

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(40,163

)

 

 

 

(38,864

)

Net proceeds from the sale of assets

 

 

1,754

 

 

 

 

125

 

Payments from customers on loans

 

 

558

 

 

 

 

355

 

Other investing activities

 

 

(253

)

 

 

 

(892

)

Net cash used in investing activities

 

 

(38,104

)

 

 

 

(39,276

)

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from senior secured credit facility

 

 

412,238

 

 

 

 

459,706

 

Payments on senior secured credit facility

 

 

(392,905

)

 

 

 

(404,328

)

Repayment of other long-term debt and finance lease liabilities

 

 

(2,694

)

 

 

 

(2,232

)

Share repurchases

 

 

(2,616

)

 

 

 

(10,910

)

Net payments related to stock-based award activities

 

 

(3,151

)

 

 

 

(3,917

)

Dividends paid

 

 

(8,088

)

 

 

 

(7,820

)

Other financing activities

 

 

(139

)

 

 

 

(636

)

Net cash provided by financing activities

 

 

2,645

 

 

 

 

29,863

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

1,004

 

 

 

 

(12,121

)

Cash and cash equivalents at beginning of period

 

 

17,964

 

 

 

 

29,086

 

Cash and cash equivalents at end of period

$

 

18,968

 

 

$

 

16,965

 

See accompanying notes to condensed consolidated financial statements.

8


 

SPARTANNASH COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1 – Summary of Significant Accounting Policies and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SpartanNash Company and its subsidiaries (“SpartanNash” or “the Company”). Intercompany accounts and transactions have been eliminated. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023.

In the opinion of management, the accompanying condensed consolidated financial statements, taken as a whole, contain all adjustments, including normal recurring items, necessary to present fairly the financial position of SpartanNash as of April 20, 2024, and the results of its operations and cash flows for the interim periods presented. The preparation of the condensed consolidated financial statements and related notes to the financial statements requires management to make estimates. Estimates are based on historical experience, where applicable, and expectations of future outcomes which management believes are reasonable under the circumstances. Interim results are not necessarily indicative of results for a full year.

The unaudited information in the condensed consolidated financial statements for the first quarters of 2024 and 2023 include the results of operations of the Company for the 16-week periods ended April 20, 2024 and April 22, 2023, respectively.

Note 2 – Adoption of New Accounting Standards and Recently Issued Accounting Standards

As of April 20, 2024 and for the period then ended, there were no recently adopted accounting standards that had a material impact on the Company’s condensed consolidated financial statements. There were no recently issued accounting standards not yet adopted which would have a material effect on the Company’s condensed consolidated financial statements.

9


 

Note 3 – Revenue

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of products and customers for each of the Company’s reportable segments:

 

16 Weeks Ended April 20, 2024

 

(In thousands)

Wholesale

 

 

Retail

 

 

Total

 

Type of products:

 

 

 

 

 

 

 

 

 

 

 

Center store (a)

$

 

761,245

 

 

$

 

303,214

 

 

$

 

1,064,459

 

Fresh (b)

 

 

615,369

 

 

 

 

296,916

 

 

 

 

912,285

 

Non-food (c)

 

 

608,306

 

 

 

 

148,871

 

 

 

 

757,177

 

Fuel

 

 

 

 

 

 

42,921

 

 

 

 

42,921

 

Other

 

 

29,101

 

 

 

 

320

 

 

 

 

29,421

 

Total

$

 

2,014,021

 

 

$

 

792,242

 

 

$

 

2,806,263

 

Type of customers:

 

 

 

 

 

 

 

 

 

 

 

Individuals

$

 

 

 

$

 

791,922

 

 

$

 

791,922

 

Independent retailers (d)

 

 

665,185

 

 

 

 

 

 

 

 

665,185

 

National accounts

 

 

636,630

 

 

 

 

 

 

 

 

636,630

 

Military (e)

 

 

699,907

 

 

 

 

 

 

 

 

699,907

 

Other

 

 

12,299

 

 

 

 

320

 

 

 

 

12,619

 

Total

$

 

2,014,021

 

 

$

 

792,242

 

 

$

 

2,806,263

 

 

 

 

16 Weeks Ended April 22, 2023

 

(In thousands)

Wholesale

 

 

Retail

 

 

Total

 

Type of products:

 

 

 

 

 

 

 

 

 

 

 

Center store (a)

$

 

827,701

 

 

$

 

314,814

 

 

$

 

1,142,515

 

Fresh (b)

 

 

654,258

 

 

 

 

310,712

 

 

 

 

964,970

 

Non-food (c)

 

 

570,967

 

 

 

 

147,599

 

 

 

 

718,566

 

Fuel

 

 

 

 

 

 

48,266

 

 

 

 

48,266

 

Other

 

 

32,758

 

 

 

 

319

 

 

 

 

33,077

 

Total

$

 

2,085,684

 

 

$

 

821,710

 

 

$

 

2,907,394

 

Type of customers:

 

 

 

 

 

 

 

 

 

 

 

Individuals

$

 

 

 

$

 

821,392

 

 

$

 

821,392

 

Independent retailers (d)

 

 

702,806

 

 

 

 

 

 

 

 

702,806

 

National accounts

 

 

681,985

 

 

 

 

 

 

 

 

681,985

 

Military (e)

 

 

685,695

 

 

 

 

 

 

 

 

685,695

 

Other

 

 

15,198

 

 

 

 

318

 

 

 

 

15,516

 

Total

$

 

2,085,684

 

 

$

 

821,710

 

 

$

 

2,907,394

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Center store includes dry grocery, frozen and beverages.

 

(b) Fresh includes produce, meat, dairy, deli, bakery, prepared proteins, seafood and floral.

 

(c) Non-food includes general merchandise, health and beauty care, tobacco products and pharmacy.

 

(d) Independent retailers include sales to manufacturers, brokers and distributors.

 

(e) Military represents the distribution of grocery products to U.S. military commissaries and exchanges, which primarily includes sales to manufacturers and brokers.

 

Contract Assets and Liabilities

Under its contracts with customers, the Company stands ready to deliver product upon receipt of a purchase order. Accordingly, the Company has no performance obligations under its contracts until its customers submit a purchase order. The Company does not receive pre-payment from its customers or enter into commitments to provide goods or services that have terms greater than one year. As the performance obligation is part of a contract that has an original expected duration of less than one year, the Company has applied the practical expedient under Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, to omit disclosures regarding remaining performance obligations.

Revenue recognized from performance obligations related to prior periods (for example, due to changes in estimated rebates and incentives impacting the transaction price) was not material in any period presented.

For volume-based arrangements, the Company estimates the amount of the advanced funds earned by the retailers based on the expected volume of purchases by the retailer and amortizes the advances as a reduction of the transaction price and revenue earned. These advances are not considered contract assets under ASC 606 as they are not generated through the transfer of goods or services to the retailers. These advances are included in Other assets, net within the condensed consolidated balance sheets.

10


 

When the Company transfers goods or services to a customer, payment is due subject to normal terms and is not conditional on anything other than the passage of time. Typical payment terms range from "due upon receipt" to due within 30 days, depending on the customer. At contract inception, the Company expects that the period of time between the transfer of goods to the customer and when the customer pays for those goods will be less than one year, which is consistent with the Company’s standard payment terms. Accordingly, the Company has elected the practical expedient to not adjust for the effects of a significant financing component. As a result, these amounts are recorded as receivables and not contract assets. The Company had no contract assets for any period presented.

The Company does not typically incur incremental costs of obtaining a contract that are contingent upon successful contract execution and would therefore be capitalized.

Allowance for Credit Losses

Changes to the balance of the allowance for credit losses were as follows:

 

 

Allowance for Credit Losses

 

 

 

Current Accounts

 

 

Long-term

 

 

 

 

(In thousands)

 

and Notes Receivable

 

 

Notes Receivable

 

 

Total

 

Balance at December 30, 2023

 

$

 

4,611

 

 

$

 

1,212

 

 

$

 

5,823

 

Changes in credit loss estimates

 

 

 

(151

)

 

 

 

(279

)

 

 

 

(430

)

Write-offs charged against the allowance

 

 

 

(35

)

 

 

 

(350

)

 

 

 

(385

)

Balance at April 20, 2024

 

$

 

4,425

 

 

$

 

583

 

 

$

 

5,008

 

 

 

 

Allowance for Credit Losses

 

 

 

Current Accounts

 

 

Long-term

 

 

 

 

(In thousands)

 

and Notes Receivable

 

 

Notes Receivable

 

 

Total

 

Balance at December 31, 2022

 

$

 

6,098

 

 

$

 

948

 

 

$

 

7,046

 

Changes in credit loss estimates

 

 

 

(1,370

)

 

 

 

240

 

 

 

 

(1,130

)

Write-offs charged against the allowance

 

 

 

(210

)

 

 

 

 

 

 

 

(210

)

Balance at April 22, 2023

 

$

 

4,518

 

 

$

 

1,188

 

 

$

 

5,706

 

 

Note 4 – Goodwill and Other Intangible Assets

The Company has two reporting units, Wholesale and Retail. The carrying amount of goodwill recorded within the Wholesale reporting unit was $181.0 million and the value within the Retail reporting unit was $1.1 million as of both April 20, 2024 and December 30, 2023.

The Company has indefinite-lived intangible assets that are not amortized, consisting primarily of indefinite-lived trade names and liquor licenses. The carrying amount of indefinite-lived intangible assets was $67.8 million as of both April 20, 2024 and December 30, 2023.

The Company reviews goodwill and other indefinite-lived intangible assets for impairment annually, during the fourth quarter of each year, and more frequently if circumstances indicate impairment is probable. Such circumstances have not arisen in the current fiscal year. Testing goodwill and other indefinite-lived intangible assets for impairment requires management to make significant estimates about the Company’s future performance, cash flows, and other assumptions that can be affected by potential changes in economic, industry or market conditions, business operations, competition, or the Company’s stock price and market capitalization.

Note 5 – Restructuring and Asset Impairment

The following table provides the activity of reserves for closed properties for the 16-week period ended April 20, 2024. Included in the liability are lease-related ancillary costs from the date of closure to the end of the remaining lease term, as well as related severance. Reserves for closed properties recorded in the condensed consolidated balance sheets are included in “Other accrued expenses” in Current liabilities and “Other long-term liabilities” in Long-term liabilities based on the timing of when the obligations are expected to be paid. Reserves for severance are recorded in “Accrued payroll and benefits”.

 

 

Reserves for Closed Properties

 

(In thousands)

 

Lease Ancillary Costs

 

 

Severance

 

 

Total

 

Balance at December 30, 2023

 

$

 

2,977

 

 

$

 

 

 

$

 

2,977

 

Accretion expense

 

 

 

25

 

 

 

 

 

 

 

 

25

 

Payments

 

 

 

(169

)

 

 

 

 

 

 

 

(169

)

Balance at April 20, 2024

 

$

 

2,833

 

 

$

 

 

 

$

 

2,833

 

 

11


 

Restructuring and asset impairment, net in the condensed consolidated statements of earnings consisted of the following:

 

16 Weeks Ended

 

(In thousands)

April 20, 2024

 

 

April 22, 2023

 

Asset impairment charges (a)

$

 

6,121

 

 

$

 

3,745

 

Loss (gain) on sales of assets related to closed facilities

 

 

51

 

 

 

 

(61

)

Other (income) costs associated with site closures

 

 

(254

)

 

 

 

314

 

Lease termination adjustments

 

 

(150

)

 

 

 

 

Changes in estimates

 

 

 

 

 

 

85

 

   Total

$

 

5,768

 

 

$

 

4,083

 

(a) Asset impairment charges in the current year quarter were incurred on long-lived assets in the Retail segment due to changes in the competitive environment. In the prior year quarter, asset impairment charges related to two store closures within the Retail segment and impairment losses related to a distribution location that sustained significant store damage within the Wholesale segment.

Long-lived assets which are not recoverable are measured at fair value on a nonrecurring basis using Level 3 inputs under the fair value hierarchy, as further described in Note 6. In the current year, assets with a book value of $6.1 million were fully impaired. In the prior year quarter, long-lived assets with a book value of $7.4 million were measured at a fair value of $3.7 million, resulting in impairment charges of $3.7 million. The fair value of long-lived assets is determined by estimating the amount and timing of net future cash flows, including the expected proceeds from the sale of assets and expected insurance recoveries, discounted using a risk-adjusted rate of interest. The Company estimates future cash flows based on historical results of operations, external factors expected to impact future performance, experience and knowledge of the geographic area in which the assets are located, and when necessary, uses the support of real estate brokers.

Note 6 – Fair Value Measurements

ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value into the following hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability, reflecting the reporting entity’s own assumptions about the assumptions that market participants would use in pricing.

Financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts and notes receivable, and accounts payable approximate fair value because of the short-term maturities of these financial instruments. For discussion of the fair value measurements related to goodwill, and long- or indefinite-lived asset impairment charges, refer to Notes 4 and 5. At April 20, 2024 and December 30, 2023, the book value and estimated fair value of the Company’s debt instruments, excluding debt financing costs, were as follows:

(In thousands)

April 20, 2024

 

 

December 30, 2023