WEIS MARKETS INC [WMK] Filings

10-Q 1 wmk-20240629x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]

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

For the quarterly period ended June 29, 2024

[ ]

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 1-5039

WEIS MARKETS, INC.

(Exact name of registrant as specified in its charter)


Pennsylvania		24-0755415
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 S. Second Street
P. O. Box 471		17801-0471
Sunbury, Pennsylvania		(Zip Code)
(Address of principal executive offices)


Registrant’s telephone number, including area code: (570) 286-4571	Registrant’s web address: www.weismarkets.com

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 [X] 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 [X] 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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer [X]		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 [X]

Securities registered pursuant to section 12(b) of the act:


Title of each class	Trading symbol	Name of exchange on which registered
Common stock, no par value	WMK	New York Stock Exchange

As of August 8, 2024, there were issued and outstanding 26,898,443 shares of the registrant’s common stock.

WEIS MARKETS, INC.

TABLE OF CONTENTS


FORM 10-Q		Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets		1
Condensed Consolidated Statements of Income		2
Condensed Consolidated Statements of Comprehensive Income		3
Condensed Consolidated Statements of Shareholders’ Equity		4
Condensed Consolidated Statements of Cash Flows		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures about Market Risk		18
Item 4. Controls and Procedures		18
Part II. Other Information
Item 5. Other Information		19
Item 6. Exhibits		19
Signatures		20
Exhibit 31.1 Rule 13a-14(a) Certification – CEO
Exhibit 31.2 Rule 13a-14(a) Certification – CFO
Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350

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WEIS MARKETS, INC.

PART I – FINANCIAL INFORMATION

ITEM I – FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(amounts in thousands, except shares)	June 29, 2024		December 30, 2023
Assets
Current:
Cash and cash equivalents	$	163,502	$	184,217
Marketable securities		235,149		225,991
SERP investment		29,777		26,651
Accounts receivable, net		79,124		65,092
Inventories		296,519		296,157
Prepaid expenses and other current assets		32,241		34,107
Total current assets		836,312		832,214
Property and equipment, net		970,641		961,353
Operating lease right-to-use		175,004		174,208
Goodwill		52,330		52,330
Intangible and other assets, net		20,312		19,527
Total assets	$	2,054,599	$	2,039,632

Liabilities
Current:
Accounts payable	$	217,185	$	226,164
Accrued expenses		30,241		42,676
Operating leases		39,917		40,658
Accrued self-insurance		19,906		18,353
Deferred revenue, net		9,527		12,416
Income taxes payable		2,827		516
Total current liabilities		319,603		340,782
Postretirement benefit obligations		31,559		29,032
Accrued self-insurance		25,157		25,174
Operating leases		143,354		142,345
Deferred income taxes		117,129		118,091
Other		12,552		9,871
Total liabilities		649,355		665,296
Shareholders’ Equity
Common stock, no par value, 100,800,000 shares authorized, 33,047,807 shares issued, 26,898,443 shares outstanding		9,949		9,949
Retained earnings		1,547,571		1,516,438
Accumulated other comprehensive income (loss) (Net of deferred taxes of $511 in 2024 and $430 in 2023)		(1,419)		(1,193)
		1,556,101		1,525,194
Treasury stock at cost, 6,149,364 shares		(150,857)		(150,857)
Total shareholders’ equity		1,405,244		1,374,337
Total liabilities and shareholders’ equity	$	2,054,599	$	2,039,632
See accompanying notes to Condensed Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


		13 Weeks Ended			26 Weeks Ended
(amounts in thousands, except shares and per share amounts)		June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	1,181,456	$	1,178,695	$	2,360,370	$	2,323,669
Cost of sales, including advertising, warehousing and distribution expenses		886,695		879,650		1,774,636		1,738,834
Gross profit on sales		294,761		299,045		585,734		584,835
Operating, general and administrative expenses		262,272		253,422		525,882		506,594
Income from operations		32,489		45,623		59,852		78,241
Investment income (loss) and interest expense		4,062		2,508		9,613		6,306
Other income (expense)		(407)		(915)		(1,808)		(2,173)
Income before provision for income taxes		36,144		47,216		67,657		82,374
Provision for income taxes		9,885		12,951		18,233		22,295
Net income	$	26,259	$	34,265	$	49,424	$	60,079

Weighted-average shares outstanding, basic and diluted		26,898,443		26,898,443		26,898,443		26,898,443
Cash dividends per share	$	0.34	$	0.34	$	0.68	$	0.68
Basic and diluted earnings per share	$	0.98	$	1.27	$	1.84	$	2.23
See accompanying notes to Condensed Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	13 Weeks Ended				26 Weeks Ended
(amounts in thousands)		June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net income	$	26,259	$	34,265	$	49,424	$	60,079
Other comprehensive income (loss) by component, net of tax:
Available-for-sale marketable securities
Unrealized holding gains (losses) arising during period (Net of deferred taxes of $83 and $48, respectively for the thirteen weeks ended, and $81 and $584, respectively for the twenty-six weeks ended)		229		(133)		(225)		1,575
Other comprehensive income gain (loss), net of tax		229		(133)		(225)		1,575
Comprehensive income, net of tax	$	26,489	$	34,132	$	49,199	$	61,654
See accompanying notes to Condensed Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


						Accumulated
(amounts in thousands, except shares)						Other						Total
For the Thirteen Weeks Ended	Common Stock			Retained		Comprehensive		Treasury Stock				Shareholders’
June 29, 2024 and July 1, 2023	Shares	Amount		Earnings		Income (Loss)		Shares		Amount		Equity
Balance at March 30, 2024	33,047,807	$	9,949	$	1,530,458	$	(1,648)		6,149,364	$	(150,857)	$	1,387,902
Net income	—		—		26,259		—		—		—		26,259
Other comprehensive income (loss), net of tax	—		—		-		229		—		—		229
Dividends paid	—		—		(9,146)		—		—		—		(9,146)
Balance at June 29, 2024	33,047,807	$	9,949	$	1,547,571	$	(1,419)		6,149,364	$	(150,857)	$	1,405,244

Balance at April 1, 2023	33,047,807	$	9,949	$	1,465,860	$	(4,741)		6,149,364	$	(150,857)	$	1,320,211
Net income	—		—		34,265		—		—		—		34,265
Other comprehensive income (loss), net of tax	—		—		—		(133)		—		—		(133)
Dividends paid	—		—		(9,146)		—		—		—		(9,146)
Balance at July 1, 2023	33,047,807	$	9,949	$	1,490,979	$	(4,874)		6,149,364	$	(150,857)	$	1,345,198


						Accumulated
(amounts in thousands, except shares)						Other					Total
For the Twenty-Six Weeks Ended	Common Stock			Retained		Comprehensive		Treasury Stock			Shareholders’
June 29, 2024 and July 1, 2023	Shares	Amount		Earnings		Income (Loss)		Shares	Amount		Equity
Balance at December 30, 2023	33,047,807	$	9,949	$	1,516,438	$	(1,193)	6,149,364	$	(150,857)	$	1,374,337
Net income	—		—		49,424		—	—		—		49,424
Other comprehensive income (loss), net of tax	—		—		—		(225)	—		—		(225)
Dividends paid	—		—		(18,291)		—	—		—		(18,291)
Balance at June 29, 2024	33,047,807	$	9,949	$	1,547,571	$	(1,419)	6,149,364	$	(150,857)	$	1,405,244

Balance at December 31, 2022	33,047,807	$	9,949	$	1,449,191	$	(6,449)	6,149,364	$	(150,857)	$	1,301,834
Net income	—		—		60,079		—	—		—		60,079
Other comprehensive income (loss), net of tax	—		—		—		1,575	—		—		1,575
Dividends paid	—		—		(18,291)		—	—		—		(18,291)
Balance at July 1, 2023	33,047,807	$	9,949	$	1,490,979	$	(4,874)	6,149,364	$	(150,857)	$	1,345,198
See accompanying notes to Condensed Consolidated Financial Statements.

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WEIS MARKETS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	26 Weeks Ended
(amounts in thousands)		June 29, 2024		July 1, 2023
Cash flows from operating activities:
Net income	$	49,424	$	60,079
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		55,353		54,104
(Gain) loss on disposition of fixed assets		126		(4)
Unrealized (gain) loss in value of equity securities		(385)		378
Deferred income taxes		(963)		2,421
Unrealized (gain) loss in SERP		(1,670)		(2,061)
Changes in operating assets and liabilities:
Inventories		(363)		(1,752)
Accounts receivable and prepaid expenses		(12,166)		(7,218)
Accounts payable and other liabilities		(17,138)		(36,676)
Income taxes		2,311		9,346
Other		(32)		1,813
Net cash provided by operating activities		74,498		80,430
Cash flows from investing activities:
Purchase of property and equipment		(65,606)		(49,946)
Proceeds from the sale of property and equipment		63		57
Purchase of marketable securities		(83,675)		(57,700)
Proceeds from the sale and maturities of marketable securities		74,172		27,057
Purchase of intangible assets		(419)		(29)
Change in SERP investment		(1,456)		(237)
Net cash used in investing activities		(76,921)		(80,798)
Cash flows from financing activities:
Dividends paid		(18,291)		(18,291)
Net cash used in financing activities		(18,291)		(18,291)
Net increase (decrease) in cash and cash equivalents		(20,714)		(18,659)
Cash and cash equivalents at beginning of year		184,217		157,997
Cash and cash equivalents at end of period	$	163,502	$	139,338
See accompanying notes to Condensed Consolidated Financial Statements. In the first twenty-six weeks of 2024, there was $16.5 million cash paid for income taxes compared to $10.5 million in 2023 for the same period. Cash paid for interest related to long-term debt was $28 thousand and $17 thousand in the first twenty-six weeks of 2024 and 2023, respectively.

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WEIS MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) Significant Accounting Policies

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring deferrals and accruals) considered necessary for a fair presentation have been included. The operating results for the periods presented are not necessarily indicative of the results to be expected for the full year. The Company has evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited Condensed Consolidated Financial Statements and there were no material subsequent events which require additional disclosure. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s latest Annual Report on Form 10-K.

(2) Current Relevant Accounting Standards

The Company regularly monitors recently issued accounting standards and assesses their applicability and impact.

The Financial Accounting Standards Board (FASB) issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), that is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disclosures of reconciliation of the expected tax at the applicable statutory federal income tax rate to the reported tax in a tabular format, using both percentages and amounts, broken out into specific categories with certain reconciling items of five percent or greater of the expected tax further broken out by nature and/or jurisdiction, disclosure of income taxes paid, net of refunds received, broken out between federal and state and local income taxes and payments to individual jurisdictions representing five percent or more of the total income tax payments must also be separately disclosed.

The disclosures required by ASU 2023-09 are required in the Company’s annual financial statements beginning with the year ended December 28, 2024, with early adoption permitted.

(3) Marketable Securities

The Company’s marketable securities are all classified as available-for-sale within “Current Assets” in the Company’s Condensed Consolidated Balance Sheets. The FASB has established three levels of inputs that may be used to measure fair value:

Level 1Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s marketable securities valued using Level 1 inputs include highly liquid equity securities, for which quoted market prices are available. The Company’s bond and commercial paper portfolio is valued using a combination of pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models utilizing observable inputs, which are considered Level 2 inputs.

For Level 2 investment valuation, the Company utilizes standard pricing procedures of its investment advisory firm which includes various third-party pricing services. These procedures also require specific price monitoring practices as well as pricing review reports, valuation oversight and pricing challenge procedures to maintain the most accurate representation of investment fair market value.

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WEIS MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The Company accrues interest on its bond and commercial paper portfolio throughout the life of each bond and commercial paper held. Unrealized gains and losses on debt securities are recognized in “Accumulated other comprehensive income (loss)” on the Company’s Condensed Consolidated Balance Sheets. Dividends from the equity securities are recognized as received. Interest, dividends and unrealized gains and losses on equity securities are recognized in “Investment income (loss) and interest expense” on the Company’s Condensed Consolidated Statements of Income. The Company recognized investment gain of $3.7 million in the thirteen weeks ended June 29, 2024, which included an unrealized gain in equity securities of $151 thousand. In the thirteen weeks ended July 1, 2023, the Company recognized investment income of $1.6 million, which included an unrealized loss in equity securities of $703 thousand. In the twenty-six weeks ended June 29, 2024, the Company recognized investment income of $7.8 million, which included an unrealized gain in equity securities of $385 thousand. In the twenty-six weeks ended July 1, 2023, the Company recognized investment income of $4.2 million, which included unrealized losses in equity securities of $378 thousand.

Marketable securities, as of June 29, 2024 and December 30, 2023, consisted of:


			Gross		Gross
(amounts in thousands)	Amortized		Unrealized		Unrealized		Fair
June 29, 2024	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities							$	5,296
Level 2
Corporate and municipal bonds	$	168,440	$	3,371	$	(6,943)		164,867
Commercial Paper		63,344		1,642		—		64,986
Total	$	231,784	$	5,013	$	(6,943)	$	235,149


			Gross		Gross
(amounts in thousands)	Amortized		Unrealized		Unrealized		Fair
December 30, 2023	Cost		Holding Gains		Holding Losses		Value
Available-for-sale:
Level 1
Equity securities							$	4,910
Level 2
Corporate and municipal bonds	$	177,972	$	3,853	$	(6,553)		175,272
Commercial paper		44,732		1,076		—		45,808
Total	$	222,704	$	4,929	$	(6,553)	$	225,991

Maturities of marketable securities classified as available-for-sale at June 29, 2024, were as follows:


	Amortized		Fair
(amounts in thousands)	Cost		Value
Available-for-sale:
Due within one year	$	110,727	$	113,142
Due after one year through five years		63,813		60,815
Due after five years through ten years		15,030		13,988
Due after ten years		42,214		41,908
Total	$	231,784	$	229,853

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WEIS MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

SERP Investments

The Company also maintains a non-qualified supplemental executive retirement plan for certain of its associates which allows them to defer income to future periods. Participants in the plans earn a return on their deferrals based on mutual fund investments. The Company chooses to invest in the underlying mutual fund investments to offset the liability associated with the non-qualified deferred compensation plans. Such investments are reported on the Company’s Condensed Consolidated Balance Sheets as “SERP investment,” are classified as trading securities and are measured at fair value using Level 1 inputs with gains and losses included in “Investment income (loss) and interest expense” on the Company’s Condensed Consolidated Statements of Income. The Company recognized investment income of $407 thousand and $915 thousand in the thirteen weeks ended June 29, 2024 and July 1, 2023, respectively. The Company recognized investment income of $1.8 million and $2.2 million in the twenty-six weeks ended June 29, 2024 and July 1, 2023, respectively. The changes in the underlying liability to the associates are recorded in “Other income (expense).”

(4) Accumulated Other Comprehensive Income

All balances in accumulated other comprehensive income are related to available-for-sale marketable debt securities. The following table sets forth the balance of the Company’s accumulated other comprehensive income, net of tax.


	Unrealized Gains (Losses)
	on Available-for-Sale
(amounts in thousands)	Marketable Debt Securities
Accumulated other comprehensive income (loss) balance as of December 30, 2023	$	(1,193)
Other comprehensive income (loss)		(225)
Net current period other comprehensive income (loss)		(225)
Accumulated other comprehensive income (loss) balance as of June 29, 2024	$	(1,419)

(5) Long-Term Debt

On September 1, 2016, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, N.A. (the “Credit Agreement”), which was last amended on September 29, 2023, and matures on October 1, 2027. The Credit Agreement provides for an unsecured revolving credit facility with an aggregate principal amount not to exceed $30.0 million with an additional discretionary amount available of $70.0 million. As of June 29, 2024, the availability under the Credit Agreement was $13.2 million, net of $16.8 million letters of credit. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company has not had an obligation on the Credit Agreement since the second quarter of 2018.

Interest expense related to long-term debt was $13 thousand in the thirteen weeks ended June 29, 2024, and $9 thousand in the thirteen weeks ended July 1, 2023. Interest expense related to long-term debt was $28 thousand and $17 thousand in the twenty-six weeks ended June 29, 2024 and July 1, 2023, respectively.

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WEIS MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(6) Revenue Recognition

The Chief Operating Officer, the Company’s chief operating decision maker, analyzes store operational revenues by geographical area but each area offers customers similar products, has similar distribution methods, and is supported by centralized management processes. The Company’s operations are reported as a single reportable segment.

The following tables represent net sales by type of product for the thirteen and twenty-six weeks ended June 29, 2024, and July 1, 2023:


	13 Weeks Ended
(amounts in thousands)	June 29, 2024				July 1, 2023
Grocery	$	967,437	81.9	%	$	985,559	83.6	%
Pharmacy		148,592	12.6			128,999	11.0
Fuel		64,320	5.4			61,553	5.2
Manufacturing		1,107	0.1			2,584	0.2
Total net sales	$	1,181,456	100.0	%	$	1,178,695	100.0	%



	26 Weeks Ended
(amounts in thousands)	June 29, 2024				July 1, 2023
Grocery	$	1,948,449	82.6	%	$	1,955,372	84.2	%
Pharmacy		291,441	12.3			247,628	10.6
Fuel		117,718	5.0			115,244	5.0
Manufacturing		2,762	0.1			5,425	0.2
Total net sales	$	2,360,370	100.0	%	$	2,323,669	100.0	%

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WEIS MARKETS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(7) Leases

As of June 29, 2024, the Company leased approximately 47% of its open store facilities under operating leases that expire at various dates through 2036, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment.

The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen and twenty-six weeks ended June 29, 2024, and July 1, 2023.


	13 Weeks Ended				26 Weeks Ended
(amounts in thousands)		June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Operating lease cost	$	11,542	$	11,780	$	23,194	$	23,572
Variable lease cost		2,780		2,817		5,539		5,656
Lease or sublease income		(2,611)		(2,625)		(5,231)		(5,106)
Net lease cost	$	11,710	$	11,972	$	23,502	$	24,122

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WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of Weis Markets, Inc.’s (the “Company”) financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q, the Company’s audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023, filed with the U.S. Securities and Exchange Commission, as well as the cautionary statement captioned "Forward-Looking Statements" immediately following this analysis.

Company Summary

Weis Markets is a conventional supermarket chain that operates 196 retail stores with over 23 thousand associates located in Pennsylvania and six surrounding states: Delaware, Maryland, New Jersey, New York, Virginia and West Virginia. Approximately 95% of Weis Markets associates are paid an hourly wage. Its products sold include groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services at certain locations, deli products, prepared foods, bakery products, beer and wine, fuel, and general merchandise items, such as health and beauty care and household products. The store product selection includes national, local and private brands and the Company promotes competitive pricing by using Everyday Lower Price; Low Price Guarantee; Low, Low Price; 3 Day Sale; senior and military discounts; and Loyalty programs. The Loyalty program includes reward points that may be redeemed for discounts on items in store, at one of the Company’s fuel stations or one of its third-party fuel station partners.

Utilizing its own strategically located distribution center and transportation fleet, Weis Markets self distributes approximately 53% of products with the remaining being supplied by direct store delivery vendors and regional wholesalers. In addition, the Company has three manufacturing facilities which process milk, ice cream and fresh meat products. The corporate offices are located in Sunbury, PA where the Company was founded in 1912.

The Company has provided additional product offerings and customer conveniences such as “Weis 2 Go Online,” currently offered at 188 store locations. “Weis 2 Go Online” allows the customer to order on-line and have their order delivered or picked up at an expedient store drive-thru. The Company also currently offers home delivery to customers in all 196 of its locations via multiple grocery delivery partners.

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WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)

Two-Year Stacked Comparable Store Sales Analysis

Management is providing Comparable Store Sales Two-Year Stacked analysis, a non-GAAP measure, because management believes this metric is useful to investors and analysts. A Comparable Store Sales Two-Year Stacked analysis presents a comparison of results and trends over a longer period of time to demonstrate the effect of fluctuating economic activity on the operating results of the Company. Information presented in the tables below is not intended for use as an alternative to any other measure of performance. It is not recommended that this table be considered a substitute for the Company’s operating results as reported in accordance with GAAP.

Year-over-year and sequential comparisons are the primary calculations used to analyze operating results, however, due to fluctuations caused by declining government benefits, pharmacy sales growth, the Easter holiday shift to the first quarter of fiscal 2024 from the second quarter of fiscal 2023 and inflationary trends in the food retail industry, management believes it is necessary to provide a Two-Year Stacked Comparable Store Sales analysis. The following tables provide the two-year stacked comparable store sales, including and excluding fuel, for the periods ended June 29, 2024, and July 1, 2023, as well as periods ended July 1, 2023, and June 25, 2022, respectively. Comparable store sales increased 0.5 percent on an individual year-over-year basis and increased 4.0 percent on a two-year stacked basis for the thirteen weeks ended June 29, 2024. Comparable store sales increased 1.8 percent on an individual year-over-year basis and increased 5.1 percent on a two-year stacked basis in the twenty-six weeks ended June 29, 2024.


	Percentage Change
	13 Weeks Ended
		2024 vs. 2023		2023 vs. 2022
Comparable store sales (individual year)		0.5	%	3.5	%
Comparable store sales (two-year stacked)		4.0
Comparable store sales, excluding fuel (individual year)		0.3		4.8	%
Comparable store sales, excluding fuel (two-year stacked)		5.1
Comparable store sales, adjusted for Easter shift (individual year)		1.7	%

	Percentage Change
	26 Weeks Ended
		2024 vs. 2023		2023 vs. 2022
Comparable store sales (individual year)		1.8	%	3.3	%
Comparable store sales (two-year stacked)		5.1
Comparable store sales, excluding fuel (individual year)		1.8		4.2	%
Comparable store sales, excluding fuel (two-year stacked)		6.0

When calculating the percentage change in comparable store sales, the Company defines a new store to be comparable after it has been in operation for five full fiscal quarters. Relocated stores and stores with expanded square footage are included in comparable store sales since these units are located in existing markets and are open during construction. Planned store dispositions are excluded from the calculation. The Company only includes retail food stores in the calculation.

Table of Contents

WEIS MARKETS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)

Results of Operations

Analysis of Consolidated Statements of Income


													Percentage Change
	13 Weeks Ended						26 Weeks Ended						13 Weeks Ended		26 Weeks Ended
(amounts in thousands, except per share amounts)		June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023		2024 vs. 2023		2024 vs. 2023
Net sales	$	1,181,456		$	1,178,695		$	2,360,370		$	2,323,669		0.2	%	1.6	%
Cost of sales, including advertising, warehousing and distribution expenses		886,695			879,650			1,774,636			1,738,834		0.8		2.1
Gross profit on sales		294,761			299,045			585,734			584,835		(1.4)		0.2
Gross profit margin		24.9	%		25.4	%		24.8	%		25.2	%
Operating, general and administrative expenses		262,272			253,422			525,882			506,594		3.5		3.8
O, G & A, percent of net sales		22.2	%		21.5	%		22.3	%		21.8	%
Income from operations		32,489			45,623			59,852			78,241		(28.8)		(23.5)
Operating margin		2.7	%		3.9	%		2.5	%		3.4	%
Investment income (loss) and interest expense		4,062			2,508			9,613			6,306		62.0		52.4
Investment income (loss) and interest expense, percent of net sales		0.3	%		0.2	%		0.4	%		0.3	%
Other income (expense)		(407)			(915)			(1,808)			(2,173)		(55.5)		16.8
Other income (expense), percent of net sales		(0.0)	%		(0.1)	%		(0.1)	%		(0.1)	%
Income before provision for income taxes		36,144			47,216			67,657			82,374		(23.4)		(17.9)
Income before provision for income taxes, percent of net sales		3.1	%