Village Super Market Inc: Form 10-K for the period ended Jul 25, 2026

An investment in our common stock involves risks and uncertainties. The following risk factors should be considered carefully, together with the other information included in this Annual Report on Form 10-K and the forward-looking statements contained herein. Any of the following risks could materially adversely affect our business, financial condition, results of operations, cash flows, liquidity, prospects and the trading price of our common stock. Additional risks and uncertainties that are not currently known to us, or that we currently deem immaterial, may also adversely affect our business.

Risks Related to General Economic Conditions

Adverse economic conditions could reduce customer spending and negatively impact our operating results.

Our business is affected by economic and market conditions beyond our control, including inflation; recessions; interest rate fluctuations; commodity, fuel and energy costs; employment levels and wage rates; consumer debt levels; the availability of consumer credit and government assistance programs; housing and financial market conditions; taxation, trade policies and tariffs; geopolitical events; acts of terrorism; military conflicts; man-made or natural disasters, including pandemic diseases; and adverse weather conditions. Unfavorable economic conditions may reduce consumer purchasing power, cause customers to limit discretionary spending or increase demand for lower-margin products and promotional offerings. These factors could adversely affect our sales, profitability, financial condition and cash flows.

Inflationary pressures and other increases in operating costs may materially adversely affect our business and profitability.

We are subject to increases in product costs, labor costs, employee healthcare expenses, utility expenses, transportation expenses, property taxes, insurance costs, technology expenditures and other operating expenses. While we may seek to offset increases in these costs through pricing actions, cost reductions and operational efficiencies, our ability to do so may be limited by competitive pressures. In addition, we experience inventory losses, or "shrink," resulting from theft, including organized retail crime, as well as damage, spoilage, administrative error and fraud. Theft and organized retail crime have increased across the retail industry in recent years, and our efforts to reduce shrink, including investments in security personnel, technology and other loss-prevention measures, may increase our operating costs and may not be successful. Continued inflationary pressures, increases in shrink or disruptions in economic conditions could reduce consumer purchasing power, alter consumer spending patterns and negatively impact our sales, margins and profitability.

Risks Related to the Grocery Industry

We operate in a highly competitive industry and may be unable to compete effectively.

The grocery industry is highly competitive and characterized by narrow profit margins. We compete directly with multiple retail formats both in-store and online, including, but not limited to, national, regional and local supermarket chains, warehouse clubs, supercenters, pharmacies, discount retailers, dollar stores, convenience stores, specialty retailers, online retailers, fast food chains, restaurants and meal delivery services. Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do. Competition is based on price, product assortment and quality, store location, convenience, customer service, technology, digital offerings and promotional programs. The operating environment continues to be characterized by aggressive expansion, entry of non-traditional competitors and market consolidation. Evolving customer preferences and the advancement of online, delivery and mobile channels have increased competition in our industry. The emergence of artificial intelligence-powered agentic shopping tools could further disrupt traditional grocery retail. Increased competitive pressures could reduce customer traffic and require responses such as additional promotions, increased advertising, additional capital investment in digital offerings or price reductions, which could adversely affect our profitability, cash flows and results of operations.

Disruptions within the food supply chain could adversely affect our operations and profitability.

Our business depends on the availability of high-quality products from suppliers and distributors. Product shortages, transportation disruptions, labor shortages, vendor financial distress, severe weather events, public health emergencies, geopolitical events, tariffs and trade disruptions, cyber incidents affecting suppliers and other disruptions could negatively affect product availability, increase costs and reduce sales. Current or proposed tariffs on products imported from certain countries may increase commodity prices, and we may be unable to fully pass on such cost increases to customers without adversely affecting sales volume. Many of our products include ingredients such as dairy, proteins, oils, grains and other commodities whose prices can be volatile and can be impacted by geopolitical risks and international trade disputes. Increased fuel and energy costs could also increase our distribution expenses and affect the costs of our suppliers, which may impact our cost of goods. Because many of our products are perishable, prolonged disruptions could have a material adverse effect on our business and operating results.

Food safety incidents, product contamination or product recalls could damage our reputation and adversely affect our business.

We are subject to risks associated with food safety, product quality, contamination, adulteration, mislabeling and product recalls. Actual or perceived food safety issues involving products sold in our stores, including private-label products manufactured by us or for us, could result in lost sales, litigation, regulatory actions, increased costs and damage to our reputation and customer relationships. We source products from vendors and suppliers who may be subject to regulatory actions or face criticism due to actual or perceived labor, environmental, health and safety or ethical sourcing concerns. A disruption in our supply chain due to any regulatory action or such concerns could have an adverse impact on our operations and reputation. Such events may adversely affect our business, financial condition and results of operations.

Risks Related to our Business, Operations and Strategic Initiatives

Our business is highly dependent on Wakefern. Changes in Wakefern's operations, financial condition or our relationship with Wakefern could adversely affect our business.

We are the second-largest member of Wakefern Food Corporation, a retailer-owned cooperative, from whom we purchase substantially all of our merchandise. Wakefern also provides support services in numerous areas, including advertising, insurance programs, procurement, technology, financial systems, coupon processing and other operational services. Our ability to compete effectively depends in part on the purchasing power, technology capabilities, operational support and marketing programs provided through Wakefern.

We also receive patronage dividends and other product incentives from Wakefern and maintain demand deposits and notes receivable with Wakefern. As of July 25, 2026, we held variable rate notes receivable due from Wakefern of $119,290 and demand deposits invested at Wakefern of $111,776. As a result, our business, financial condition and results of operations are significantly influenced by Wakefern's operations and financial performance.

Changes in Wakefern's business practices, membership requirements, governance, strategic initiatives, capital contribution requirements or relationships among member companies could increase our costs or adversely affect our operations. In addition, a reduction in the benefits provided by Wakefern, an increase in the costs of participation, a deterioration in Wakefern's financial condition, the insolvency, withdrawal or failure of other Wakefern members to fulfill their obligations, or the termination or material modification of our relationship with Wakefern could adversely affect our competitive position, profitability, financial condition and results of operations.

In addition, we are currently engaged in litigation with Wakefern. Given the significance of our relationship with Wakefern, adverse developments in this litigation could materially adversely affect our business, competitive position, operations, financial condition and results of operations. See "We are subject to litigation and other legal proceedings" below, Item 3, "Legal Proceedings" and Note 10 to the consolidated financial statements for additional information regarding this litigation.

Our operations are geographically concentrated and are therefore more susceptible to adverse developments affecting our primary markets.

Our stores are located in New Jersey, New York, Pennsylvania and Maryland, with a significant concentration of sales in New Jersey and the New York metropolitan area. Accordingly, we are vulnerable to economic downturns in these states, as well as adverse macroeconomic conditions that may affect the country as a whole. Our stores and other facilities are also concentrated in a region that is susceptible to severe weather events, including hurricanes, tropical storms, nor'easters, flooding, extreme heat and snow and ice storms, the frequency and severity of which may increase as a result of climate change. Such events could cause physical damage to our stores, loss or spoilage of inventory, power outages, temporary store closures, disruptions in the delivery of products to our stores and increased insurance, energy and repair costs. Because of our geographic concentration, a single severe weather event or natural disaster could affect a significant number of our stores at the same time. In addition, climate-related laws and regulations, including those relating to refrigerants and energy usage, may increase our compliance and capital costs. Any adverse development within our operating regions could have a disproportionate impact on our sales, financial condition and operating results.

We may not successfully execute our strategic initiatives.

Our future growth depends on our ability to successfully implement strategic initiatives, including store remodels, expansion projects, digital commerce initiatives, promotional programs, technology upgrades, operational efficiency initiatives and merchandising strategies. These initiatives require significant capital investment and management attention and may not deliver the anticipated results. In addition, many of our stores are located on leased premises. Upon expiration of our leases, we may be unable to renew them on acceptable terms or at all, and we may face increased rent and occupancy costs. We may also be unable to identify and secure suitable locations for new or relocated stores on acceptable terms due to competition for sites, zoning restrictions, real estate costs or other factors, and if we close a leased store, we may remain obligated for rent and other costs under the lease. Failure to successfully execute these initiatives, or to maintain and secure suitable store locations on acceptable terms, could adversely affect our growth prospects and profitability.

Our success depends on our ability to attract, retain and develop qualified employees. Our inability to maintain adequate employee levels and/or manage labor costs could adversely affect our business and operating results.

Our operations depend upon our ability to attract, train and retain qualified employees, including store associates, management personnel, technology professionals and other skilled workers. As of July 25, 2026, we had approximately 7,100 employees, of which approximately 91% are covered by collective bargaining agreements. Labor shortages, including those resulting from strikes, public health crises or otherwise, could adversely affect our customer service, store operations and financial performance. Furthermore, wage increases, minimum wage legislation, healthcare cost increases, changes in employment laws, paid leave requirements and other labor-related developments may increase our operating expenses and reduce profitability. Our success also depends to a significant degree on the continued contributions of our senior management team and other key employees. The loss of the services of any of these individuals, or our failure to effectively plan for and manage management succession, could disrupt our business and impair our ability to execute our business strategy, and it may be difficult to find qualified replacements with the industry experience and knowledge of our business necessary to succeed them.

We are also exposed to the risk that our employees, contractors or other agents may engage in misconduct or other improper activities, including failing to comply with laws and regulations applicable to our business, such as those governing pharmacy operations and the sale of alcohol and tobacco, failing to report financial or other information accurately, misappropriating cash or inventory, or improperly using or disclosing confidential information, including customer, patient and payment card data. Although we maintain policies, training and controls designed to deter and detect such conduct, these measures may not be effective in all cases. Employee misconduct could result in regulatory sanctions, litigation, financial losses and harm to our reputation, any of which could adversely affect our business, financial condition and results of operations.

Certain of the multi-employer pension plans to which we contribute are underfunded. As a result, we expect that contributions to these plans may increase. Additionally, 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 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. See Note 9 to the consolidated financial statements for additional information regarding our participation in these plans.

Our insurance and self-insurance programs may not adequately protect us against losses.

We use a combination of insurance and self-insurance to provide for potential liability for workers' compensation, automobile, general liability, property, director and officers' liability, cyber risk and certain employee healthcare benefits. Certain of these insurance programs are through Insure-Rite, a Wakefern affiliated company in which Village has an ownership interest of 9%. For insured losses, we are liable for retention amounts that vary by the nature of the claim, and some losses may not be covered by insurance. Our reserves for self-insured or high deductible programs are based upon assumptions and estimates of future claims development. Actual claims experience may differ materially from these estimates due to factors such as 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. If actual claims exceed our reserves or insurance coverage, our operating results and cash flows could be adversely affected.

We may be required to record impairment charges related to our long-lived assets.

Changing economic conditions, increased competition, store underperformance, changing consumer preferences, declining market values or revisions to expected future cash flows could require us to recognize impairment charges related to property and equipment, lease assets, goodwill, trademarks or other long-lived assets. Such charges could materially reduce reported earnings during the period in which they are recognized.

Our Credit Facility contains financial and other covenants that may restrict our operations, and our failure to comply with these covenants could adversely affect our liquidity and financial condition.

We maintain a credit agreement with Wells Fargo (the "Credit Facility"), which contains financial covenants requiring us to maintain a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio, as well as other covenants that may limit our ability to incur additional indebtedness, grant liens, make certain investments or engage in certain other transactions. Certain term loans under the Credit Facility are secured by certain of our real properties. Our ability to comply with these covenants may be affected by events beyond our control, including adverse economic conditions, increased competition and the other risks described herein. A breach of any of these covenants could result in an event of default, which could permit the lender to accelerate repayment of outstanding indebtedness, terminate its commitments to extend further credit and, with respect to secured term loans, foreclose on the real properties securing such loans. In addition, increases in interest rates would increase our borrowing costs on any variable rate indebtedness, and we may be unable to refinance or extend the Credit Facility on favorable terms or at all when it matures. Any of these events could adversely affect our liquidity, financial condition and results of operations.

Failure to maintain effective internal control over financial reporting, including information technology controls, could adversely affect our ability to accurately report our financial results.

We are required to maintain effective internal control over financial reporting and disclosure controls and procedures. Our control environment is dependent upon the effectiveness of our financial reporting processes and information technology systems, including controls over system access, change management, data integrity, cybersecurity, and the processing and reporting of financial information. Because we rely on Wakefern for certain systems, infrastructure, applications and services that support our operations and financial reporting processes, certain elements of our internal control over financial reporting depend, in part, on the design and operating effectiveness of controls maintained by Wakefern, as well as our ability to appropriately monitor and evaluate those controls.

If our internal controls, including information technology general controls, or those maintained by Wakefern are deficient, circumvented, unavailable, disrupted or otherwise fail to operate effectively, we may be unable to accurately process transactions, safeguard information assets, or prepare timely and reliable financial statements and SEC reports. Any such failure could result in material misstatements of our financial statements, delays in financial reporting, restatements of previously issued financial statements, deficiencies or material weaknesses in internal control over financial reporting, increased audit and compliance costs, regulatory inquiries or enforcement actions, litigation, reputational harm, loss of investor confidence, and a decline in the market price of our Class A common stock.

Risks Related to Information Technology, Cybersecurity and Data Privacy

Our business is dependent on information technology systems and networks. Disruptions to our information technology systems, including systems provided and maintained by Wakefern, could adversely affect our operations.

Our operations depend on information technology systems and related services provided by Wakefern and various third-party vendors, including systems used for merchandising, distribution, inventory management, point-of-sale processing (both in-store and online), financial reporting, communications and other business functions. These systems may be vulnerable to damage, interruption, degradation or failure resulting from power outages, telecommunications disruptions, software or hardware failures, human error, natural disasters, acts of terrorism or other events beyond our control. Because of our dependence on technology infrastructure of others, including Wakefern, any significant disruption affecting such systems or services could impair our ability to operate our stores, process transactions, manage inventory, fulfill customer orders or otherwise conduct business efficiently. Any prolonged interruption could adversely affect our business, financial condition and results of operations.

In addition, rapidly evolving developments relating to artificial intelligence ("AI") and other emerging technologies may increase competitive, operational, legal and cybersecurity risks. Although we utilize AI and machine learning capabilities in our business, competitors and other third parties may adopt these technologies more effectively, which could weaken our competitive position, reduce operational efficiencies or adversely affect our results of operations. To remain competitive, we may need to make significant investments in AI-related technologies and related processes, controls and safeguards. Additionally, evolving laws and regulations governing AI may increase compliance costs and legal risks, and our failure to adapt to new requirements in a timely and cost-effective manner could result in regulatory scrutiny, litigation or reputational harm.

Cybersecurity incidents or data security breaches could result in significant costs, liability and reputational harm.

In the normal course of business, we collect, process, store and transmit proprietary business information and personal information relating to customers, associates and vendors. Our computer systems and those of Wakefern, our contract service providers and other third parties are vulnerable to damage from cyberattacks, malicious intrusion, computer viruses, unauthorized access, data breaches, phishing attacks, ransomware, denial-of-service attacks, natural disasters, terrorism, war and telecommunication or electrical failures. The risks of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, threat actors, personnel (such as through theft, inadvertent mistake or misuse), nation-state-supported actors, sovereign governments and cyber terrorists, have generally increased over time, including for geopolitical reasons and in conjunction with military conflicts and defense activities. AI systems and related technologies could result in an increased risk of cybersecurity threats impacting our information technology systems. Despite the security measures maintained by us and our service providers (including Wakefern) to protect our systems and data, there can be no assurance that such measures will be effective or that a cybersecurity incident will not occur. Although we have network security and cyber liability insurance to provide a level of financial protection should a data breach occur, such insurance may not cover us against all claims or costs associated with such a breach, and we cannot be certain that such insurance will continue to be available to us on economically reasonable terms or at all, or that our insurers will not deny coverage as to any future claim.

A cybersecurity incident could result in the loss, disclosure, corruption or misuse of sensitive information; operational disruptions; remediation and recovery costs; regulatory investigations and penalties; litigation and indemnification obligations; increased cybersecurity expenditures; and reputational damage. In addition, cybersecurity incidents affecting Wakefern or critical third-party service providers could have similar effects on our operations. Any such incident could materially adversely affect our business, financial condition, results of operations and reputation.

Risks Related to Laws and Regulations

Changes in laws, regulations and governmental policies, or our failure to comply with applicable requirements, could adversely affect our business and results of operations.

We are subject to a wide range of federal, state and local laws and regulations governing food manufacturing, labeling and safety, prescriptions, controlled substances, employment practices, consumer protection, data privacy and cybersecurity, environmental matters, healthcare, taxation, public company reporting, licensing for the sale of food, drugs and alcoholic beverages, and other aspects of our operations. Changes in existing laws and regulations, the enactment of new requirements or shifts in governmental policies could increase our operating and compliance costs, require modifications to our business practices, impose additional reporting obligations or otherwise adversely affect our business, financial condition and results of operations. In addition, we are subject to audits, inspections, investigations and enforcement actions by governmental authorities. Our pharmacy operations are subject to additional and extensive regulation, including federal and state laws governing pharmacy licensing, the dispensing of prescription drugs and controlled substances, patient privacy and the security of protected health information, and participation in Medicare, Medicaid and other government and third-party payor programs. The operation of retail pharmacies also exposes us to professional liability claims, including those arising from dispensing errors, and to reimbursement pressures from pharmacy benefit managers and government payors, and our insurance may not be adequate to cover all such claims. Failure, or alleged failure, to comply with applicable laws and regulations could result in fines, penalties, remediation costs, litigation, operational restrictions, loss of licenses or exclusion from government payor programs, reputational harm or other liabilities. Any of these developments, whether arising from regulatory changes or compliance matters, could materially and adversely affect our business, financial condition and results of operations.

Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results.

We are subject to U.S. federal, state and local income taxes, with the applicable tax rates varying by jurisdiction. Our income tax expense and liabilities are based on estimates and judgments that may differ from actual results. In addition, multiple tax years may be subject to examination by taxing authorities. Changes in tax laws, regulations, administrative interpretations or tax rates, as well as unfavorable outcomes from tax audits, examinations or other tax proceedings, could increase our tax liability and result in additional taxes, interest and penalties. Any such developments could adversely affect our business, financial condition and results of operations.

We are subject to litigation and other legal proceedings.

From time to time, we are involved in legal proceedings, regulatory investigations, employment claims, consumer claims, tax disputes, contractual disputes and other matters arising in the ordinary course of business. Adverse judgments, settlements, penalties or defense costs could adversely affect our business, financial condition and results of operations. We are currently engaged in litigation with Wakefern and certain members of its senior management. Given our significant business relationship with Wakefern, adverse developments in this litigation could materially adversely affect our business relationship with Wakefern, our competitive position, our operations, our financial condition and our results of operations. See Item 3, "Legal Proceedings" and Note 10 to the consolidated financial statements for additional information for further discussion of Village's legal matters.

Risks Related to Ownership of Our Common Stock

Future dividend payments are subject to the discretion of our Board of Directors.

Although we have historically paid dividends, future dividend declarations are subject to the discretion of our Board of Directors and will depend upon, among other things, our financial condition, results of operations, capital requirements, contractual restrictions, provisions in any future debt agreements, our tax status, applicable laws, general economic conditions and other factors. There can be no assurance that future dividends will be declared or paid or that any dividend we may pay will not be reduced or eliminated. Any failure to pay dividends at historical levels, or any reduction or elimination of dividends, could adversely affect the market price of our Class A common stock and diminish investor confidence in the Company.

Concentrated ownership may limit the influence of other shareholders.

Our Class B common stock has ten votes per share, while our Class A common stock has one vote per share. Certain members of the Sumas family and related trusts beneficially own a significant percentage of our Class B common stock and, as a result of the dual-class voting structure, control a majority of the combined voting power of all classes of our common stock. As a result, these shareholders have the ability to influence or control matters requiring shareholder approval, including the election and removal of directors, amendments to our certificate of incorporation and by-laws, approval of equity compensation plans, strategic transactions such as mergers, acquisitions, consolidations or sales of all or substantially all of our assets, and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control or other transaction that might otherwise be beneficial to our shareholders, regardless of whether other shareholders approve of such a transaction, and may deprive shareholders of Class A common stock of an opportunity to sell their shares at a premium over prevailing market prices. The difference in voting rights and concentration of ownership may also adversely affect the market price of our Class A common stock to the extent that investors or any prospective purchaser of the Company views the superior voting rights of the Class B common stock to have value or perceives that conflicts of interest may exist or arise. Shares of Class B common stock are convertible into Class A common stock on a one-for-one basis at any time at the option of the holder, and any future conversions will further concentrate voting power among the remaining holders of Class B common stock.

The market price of our Class A common stock may be volatile and limited trading volume may make it difficult for shareholders to sell their shares.

The market price of our Class A common stock may fluctuate significantly in response to many factors, some of which are beyond our control, including variations in our quarterly operating results, changes in financial estimates or recommendations by securities analysts, announcements by us, Wakefern or our competitors, developments in pending litigation, sales of our common stock by significant shareholders, changes in dividend policy, general economic and stock market conditions and the other risks described herein. Because a significant portion of our outstanding common stock is held by a limited number of shareholders, the public float and trading volume of our Class A common stock are relatively limited, which may increase price volatility and make it more difficult for shareholders to sell their shares at or near prevailing market prices or at all.

Risk Management and Strategy

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. As a member of a cooperative, Wakefern conducts an annual risk assessment that summarizes high-level threats, which are applicable to all cooperative members. The assessment considers potential cybersecurity threats, including, but not limited to, interruptions, outages and breaches affecting operational and financial systems. Wakefern maintains and publishes the majority of policies, processes and tools designed to assess, identify and manage risks associated with potential cybersecurity threats. We utilize a combination of cybersecurity awareness training, tools provided by Wakefern and annual assessments performed by third parties to manage cybersecurity-related risks. Village also maintains internal cybersecurity policies designed to establish procedures for incident escalation and communication, define the roles and responsibilities of relevant personnel in managing and responding to cybersecurity incidents, and support related incident response activities.

As of the date of this report, no cybersecurity incident has had a material adverse effect on our business, financial condition or results of operations. However, we recognize that no information system can be fully protected from cybersecurity threats. Although Village maintains insurance that may cover liabilities arising from certain disruptions, security breaches and other cybersecurity incidents, there can be no assurance that such coverage will be sufficient to fully compensate Village for any resulting losses.

For additional information regarding risks associated with cybersecurity threats, see Item 1A, "Risk Factors."

Governance

Board of Directors Oversight

Our Board of Directors is responsible for providing oversight and strategic guidance to management to support the long-term interests of Village's shareholders. The Audit Committee is the lead committee of the Board of Directors responsible for oversight of the Company's risk-based cybersecurity program and bears the primary responsibility for this aspect of the business. Cybersecurity incidents are summarized and reported to the Audit Committee of the Board of Directors, which cover any identified cybersecurity incidents, results of third-party vulnerability testing and key developments in policies.

Management's Role in Managing Risk

Villages' cybersecurity risk management is managed by Village's Information Technology organization led by the Vice President of Information Technology. In order to effectively manage risks to information systems that support the members of the cooperative, Wakefern maintains an Information Security Organization led by its Chief Information Officer and its Director of Cybersecurity. Wakefern has a Security Incident Response Plan and Village coordinates with Wakefern on all cyber incidents. Wakefern engages regularly with a range of third-party experts, including consultants, cyber experts and others to test and evaluate its systems, including annual penetration testing. Where possible, these findings are then provided to leadership within the cooperative both in a quarterly Information Security update and an annual Cyber Risk update to enable management to leverage insights and specialized knowledge to make informed decisions regarding Village's cyber strategies, processes and risk exposure.

As of July 25, 2026, Village owns the sites of nine of its supermarkets (containing 576,000 square feet of total space). The remaining 28 stores (containing 1,553,000 square feet of total space), the central commissary and the corporate headquarters are leased, with initial lease terms generally ranging from 20 to 30 years, usually with renewal options. The stores are freestanding or are located in shopping centers or city storefronts. Most of the Company's leases contain renewal options at increased rents of five years each at the Company's sole discretion. These options enable Village to retain the use of facilities in desirable operating areas. Each renewal option is evaluated when recognizing the lease right-of-use assets and liabilities, and the Company utilizes the lease term for which it is reasonably certain to use the underlying asset. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company is obligated under all leases to pay for real estate taxes, utilities and liability insurance, and under certain leases to pay additional amounts based on maintenance and a percentage of sales in excess of stipulated amounts. The Company accounts for rent holidays, escalating rent provisions and construction allowances on a straight-line basis over the term of the lease. The Company owns all trade fixtures and equipment in its stores and several other properties including retail shopping centers and parcels of vacant land, which are available as locations for possible future stores or other development.

As of July 25, 2026, finance lease right-of-use assets of $8,070 are included in property, equipment and fixtures, net in the Company's consolidated balance sheet.

The annual rental payment, including finance leases, for all of the Company's leased facilities for the year ended July 25, 2026 was approximately $38,969. For additional information on lease obligations, see Note 7 to the consolidated financial statements.

The Company holds a 30% interest in the development of a retail center in Old Bridge, New Jersey, which includes the Village Old Bridge replacement store. As of July 25, 2026, the Company had an operating lease obligation of $4,279 related to the project and had invested $17,694 in the real estate partnership. The investment is accounted for under the equity method and is included in Investments in Real Estate Partnerships on the consolidated balance sheets. No additional equity investment is expected for this project.

Village is a limited partner in two additional partnerships, one of which owns a shopping center in which one of our leased stores is located. The Company is also a general partner in a partnership that is a lessor of one of the Company's freestanding stores.

On May 2, 2025, the Company filed a Verified Complaint for Declaratory and Injunctive Relief (the "Complaint") against Wakefern and certain members of its senior management ("Wakefern Management," and together with Wakefern, the "Defendants") in the Superior Court of New Jersey, Chancery Division, Middlesex County (the "Chancery Court"). The matter was captioned Village Super Market, Inc., et al. v. Wakefern Food Corp., et al. In the Complaint, the Company sought to enjoin Wakefern's acquisition of Morton Williams Supermarkets (the "Acquisition") on the basis that the Acquisition violates Wakefern's governing documents, which the Company believes prohibits Wakefern from acquiring and operating a retail chain that competes directly with its members. It also challenged certain actions and inactions by the Defendants in connection with the Acquisition. Subsequently, the Company filed an amended complaint in the Chancery Court on September 19, 2025 (the "First Amended Complaint") to include additional claims concerning the Defendant's actions against the Company that occurred beginning in 2025. The Court declined to enjoin the Acquisition and it closed on or about October 1, 2025.

On January 16, 2026, the Chancery Court denied Wakefern Management's motion to dismiss the claims asserted against them for breach of fiduciary duty. The Chancery Court also entered an Order granting the Company's motion to transfer the matter to the Superior Court of New Jersey, Law Division, Middlesex County (the "Law Division"). Subsequently, the Company filed a second amended complaint and Jury Demand with the Law Division on February 6, 2026 (the "Second Amended Complaint") to seek monetary and punitive damages, and removed the request for injunctive relief as a result of the consummation of the Acquisition.

In response to the Company's Second Amended Complaint, on March 19, 2026, Wakefern sought to file an Answer, Separate Defenses, Jury Demand, Counterclaims, and Third-Party Complaint with the Law Division. The Counterclaims sought, among other things, a declaration from the Court that good cause exists under the Wakefern By-Laws to compel the Company to sell its stock in Wakefern and to exit the cooperative. Although not dismissed with prejudice, on March 23, 2026, Wakefern's Counterclaims and Third-Party Complaint were rejected as procedurally deficient for filing by the Civil Division Manager's Office. The Company believes that all claims therein were frivolous and were filed in response to the Company seeking to assert its rights.

On June 15, 2026, the Company filed a Third Amended Complaint adding additional allegations concerning Defendants' retaliation against the Company and affiliated parties, including John J. Sumas, who is the Company's Chief Executive Officer and a director of Wakefern. Subsequently, Wakefern filed its First Amended Counterclaims and Third-Party Complaint on June 17, 2026, and the declaratory judgment claim described above was not included. Wakefern asserted claims against the Company and certain subsidiaries, as well as the Company's Chief Executive Officer, John J. Sumas, and President, Nicholas J. Sumas II.

On March 20, 2026, Village was served with a Complaint entitled Wakefern Food Corp. v. Village Super Market, Inc., VSM NY Holdings, LLC and VSM Gourmet, LLC filed in the United States District Court for the District of New Jersey. The Complaint alleges Trademark Infringement, Unfair Competition, False Endorsement, False Association, False Designation of Origin and Trademark Dilution of the Fairway and Gourmet Garage marks under the Lanham Act 15 U.S.C. §1113(1). Village denies the allegations in this lawsuit and is defending against the claims. A Pretrial Scheduling Order was entered on June 17, 2026, setting discovery deadlines.

The Company believes that all claims asserted by Wakefern are without legal and factual merit.

The Company continues to evaluate its options for relief with respect to Wakefern and the Acquisition. Notwithstanding the above, the Company's claims are pending resolution on the merits. To date, the Company believes the dispute with Wakefern has not materially impacted the Company's operations or financial performance. At this time, the Company is unable to determine the probability of the outcome of these matters, or the range of reasonably possible loss, if any.

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.

(Dollars in thousands, except per share data)

The following management's discussion and analysis of financial condition and results of operations ("MD&A") should be read together with our audited consolidated financial statements and notes thereto, which are included elsewhere in this Form 10-K. The Company's MD&A contains forward-looking statements. Refer to the "Special Note Regarding Forward-Looking Statements" section at the beginning of this Form 10-K for risks, uncertainties and other information regarding forward-looking statements.

Included in the MD&A section of this Form 10-K is a discussion related to the results of operations and changes in our cash flows for fiscal 2026 compared to fiscal 2025. For discussion related to the results of operations and changes in our cash flows for fiscal 2025 compared to fiscal 2024, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our fiscal 2025 Form 10-K.

OVERVIEW

Village Super Market, Inc. (the "Company" or "Village") operates a chain of 34 supermarkets in New Jersey (26), New York (6), Maryland (1) and Pennsylvania (1) under the ShopRite and Fairway banners and three Gourmet Garage specialty markets in New York City. Village is the second largest member of Wakefern Food Corporation ("Wakefern"), the nation's largest retailer-owned food cooperative and owner of the ShopRite, Fairway and Gourmet Garage names. This ownership interest in Wakefern provides Village with many of the economies of scale in purchasing, distribution, advanced retail technology, marketing and advertising associated with larger chains.

The grocery industry is highly competitive and characterized by narrow profit margins. The Company competes directly with multiple retail formats both in-store and online, including, but not limited to, national, regional and local supermarket chains, warehouse clubs, supercenters, pharmacies, discount retailers, dollar stores, convenience stores, specialty retailers, online retailers, fast food chains, restaurants and meal delivery services. The Company competes by providing a superior customer service experience, competitive pricing and a broad range of consistently available quality products. The ShopRite Price Plus and Fairway Insider customer loyalty programs enable Village to offer continuity programs, focus on targeted marketing initiatives and to offer discounts and attach digital coupons directly to a customer's loyalty card.

Online grocery ordering for in-store pick up or home delivery is available in all of our ShopRite stores through either shoprite.com, the ShopRite app or through third-party service providers. Online ordering for home delivery is available in all Fairway stores through fairwaymarket.com, the Fairway app or through third-party service providers. Online ordering for home delivery is available in all Gourmet Garage stores through gourmetgarage.com, the Gourmet Garage app or through third-party service providers. Additionally, the ShopRite and Fairway Order Express apps enable customers to pre-order deli, catering, specialty occasion cakes and other items.

To promote production efficiency, product quality and consistency, the Company operates a centralized commissary supplying certain products in deli, bakery, prepared foods and other perishable product categories to all stores.

The Company's stores, nine of which are owned, average 58,000 total square feet. These larger store sizes enable the Company to offer a wide variety of national branded and locally sourced food products, including grocery, meat, produce, dairy, deli, seafood, prepared foods, bakery and frozen foods, as well as non-food product offerings, including health and beauty care, general merchandise, liquor and 21 in-store pharmacies. Most product departments include high-quality, competitively priced own-brand offerings under the Wholesome Pantry, Bowl & Basket, Paperbird, Fairway and Gourmet Garage brands. Our Fairway markets offer a one-stop destination shopping experience with an emphasis on fresh, unique, and high quality offerings paired with an expansive variety of natural, organic, specialty and gourmet products. Our Gourmet Garage specialty markets offer organic produce, signature soups and prepared foods, high-quality meat and seafood, charcuterie and gourmet cheeses, artisan baked bread and pastries, chef-prepared meals to go and pantry staples.

The Company has an ongoing program to evaluate, upgrade and expand its supermarket chain. This program has included store remodels, as well as the opening or acquisition of additional stores. When remodeling, Village has sought, whenever possible, to increase the amount of selling space in its stores.

On May 27, 2026, we opened a 69,000 square foot ShopRite store in East Orange, NJ that replaced our existing 50,000 square foot store.

On April 9, 2025, we opened a 72,000 square foot ShopRite store in Watchung, NJ that replaced an existing 44,000 square foot store.

On March 17, 2024, we opened an 83,000 square foot ShopRite store in Old Bridge, NJ that replaced our existing 32,000 square foot store.

We operated an automated micro-fulfillment center to facilitate online order fulfillment for our south New Jersey stores. The facility was closed on September 1, 2024 and the related real estate was subsequently sold in fiscal 2026.

On November 1, 2023, we closed an 8,400 square foot Gourmet Garage store located in New York City. The impact associated with the closure and ongoing results of operating were not material to Village's consolidated financial statements.

We consider a variety of indicators to evaluate our performance, such as same store sales; percentage of total sales by department (mix); shrink; departmental gross profit percentage; sales per labor hour; units per labor hour; and hourly labor rates.

The Company utilizes a 52-53 week fiscal year ending on the last Saturday in the month of July. Fiscal 2026, 2025 and 2024 each contain 52 weeks.

NON-GAAP MEASURES

The accompanying consolidated financial statements, including the related notes, are presented in accordance with generally accepted accounting principles ("GAAP"). We provide non-GAAP measures, including Adjusted net income and Adjusted operating and administrative expenses as management believes these supplemental measures are useful to investors and analysts. These non-GAAP financial measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP, nor as an alternative to net income, operating and administrative expense or any other GAAP measure of performance. Management believes Adjusted net income and Adjusted operating and administrative expense are useful to investors because they provide supplemental measures that exclude the financial impact of certain items that affect period-to-period comparability. Management and the Board of Directors use these measures as they provide greater transparency in assessing ongoing operating performance on a period-to-period basis. Other companies may have different definitions of non-GAAP measures and provide for different adjustments, and comparability to the Company's results of operations may be impacted by such differences. The Company's presentation of non-GAAP measures should not be construed as an implication that its future results will be unaffected by unusual or non-recurring items.

The following table reconciles Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses:

(1) Fiscal 2026 pension settlement charge relates to the termination of a Company-sponsored plan. Fiscal 2025 pension settlement gain relates to lump payments made under an unfunded, non-qualified company sponsored defined benefit plan.

(2) Fiscal 2025 includes income related to rent concessions received on one store location to compensate for disruption in operations during redevelopment of the retail center.

(3) Fiscal 2025 includes non-cash impairment charges on the long-lived assets of one Gourmet Garage store and real estate assets classified as held for sale. Fiscal 2024 includes non-cash impairment charges for long-lived assets due to the closure of the automated micro-fulfillment center in south New Jersey.

RESULTS OF OPERATIONS

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

Sales

Sales were $2,405,707 in fiscal 2026 compared to $2,320,690 in fiscal 2025. Sales increased due primarily to same store sales growth of 2.2% and the openings of the Watchung, NJ and East Orange, NJ replacement stores on April 9, 2025 and May 27, 2026, respectively. Same store sales increased due primarily to digital sales growth, strong performance in fresh and pharmacy departments, and continued growth in remodeled and replacement stores. These increases were partially offset by egg price deflation and sales cannibalization from the Watchung replacement store. New stores, replacement stores and stores with banner changes are included in same store sales in the quarter after the store has been in operation for four full quarters. Store renovations and expansions are included in same store sales immediately.

Gross Profit

Gross profit as a percentage of sales decreased to 28.17% in fiscal 2026 compared to 28.57% in fiscal 2025. The decline was due primarily to lower patronage dividends and other rebates received from Wakefern (.32%), an unfavorable change in product mix (.07%) and increased promotional spending (.05%), partially offset by increased departmental gross margin percentages (.07%).

Operating and Administrative Expense

Operating and administrative expense as a percentage of sales increased to 24.06% in fiscal 2026 compared to 23.92% in fiscal 2025. Adjusted operating and administrative expense as a percentage of sales increased to 24.05% in fiscal 2026 compared to 23.98% in fiscal 2025. The increase in Adjusted operating and administrative expense is due primarily to higher legal and other professional fees (.12%), utility, repair and maintenance costs (.10%), facility insurance costs (.06%) and store pre-opening costs (.06%). These increases were largely offset by lower employee costs (.13%), lower advertising costs (.10%) and short-term rental income (.05%).

Depreciation and Amortization Expense

Depreciation and amortization expense increased in fiscal 2026 compared to fiscal 2025 due primarily to capital expenditures.

Impairment of Assets

No impairment charges were recorded in fiscal 2026. In fiscal 2025, Company recognized non-cash impairment charges of $1,462 on the long-lived assets of one Gourmet Garage store and real estate assets classified as held for sale.

Interest Expense

Interest expense decreased in fiscal 2026 compared to fiscal 2025 due primarily to lower average outstanding debt balances.

Interest Income

Interest income decreased in fiscal 2026 compared to fiscal 2025 due primarily to lower interest rates earned on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.

Income Taxes

The effective income tax rate was 28.8% in fiscal 2026 compared to 31.1% in fiscal 2025. The decline in the effective income tax rate was primarily due to the excess tax benefit from vested stock-based compensation in fiscal 2026.

Net Income

Net income was $52,455 in fiscal 2026 compared to $56,380 in fiscal 2025. Adjusted net income was $52,688 in fiscal 2026 compared to $56,429 in fiscal 2025. Adjusted net income decreased approximately 7% compared to the prior fiscal year due primarily to the decline in gross margin and increase in operating and administrative expense, partially offset by the decline in the effective income tax rate, all as previously discussed.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company's financial condition and results of operations. These policies require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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

Impairment

The Company reviews the carrying values of its long-lived assets, such as property, equipment and fixtures and operating lease assets on an individual store basis for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Factors considered by the Company that could result in an impairment triggering event include a current period operating or cash flow loss, underperformance of a store relative to historical or expected operating results, and significant negative industry or economic trends. If an impairment triggering event is identified, the Company analyzes the undiscounted estimated future net cash flows from asset groups at the store level to determine if the carrying value of such assets are recoverable from their respective cash flows. If impairment is indicated, it is measured by comparing the fair value of the long-lived asset groups to their carrying value.

Goodwill and indefinite-lived intangible assets are tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment. The Company utilizes valuation techniques, such as earnings multiples, in addition to the Company's market capitalization, to assess goodwill for impairment. Calculating the fair value of a reporting unit requires the use of estimates. Management believes the fair value of Village's one reporting unit exceeds its carrying value as of July 25, 2026. Should the Company's carrying value of its one reporting unit exceed its fair value, the amount of any resulting goodwill impairment may be material to the Company's financial position and results of operations. The fair value of indefinite-lived intangible assets are estimated based on the discounted cash flow model using the relief from royalty method.

Patronage Dividends

As a stockholder of Wakefern, Village earns a share of Wakefern's earnings, which are distributed as a "patronage dividend." This dividend is based on a distribution of substantially all of Wakefern's operating profits for its fiscal year (which ends on or about September 30) in proportion to the dollar volume of purchases by each member from Wakefern during that fiscal year. Patronage dividends are recorded as a reduction of cost of sales as merchandise is sold. Village accrues estimated patronage dividends due from Wakefern quarterly based on an estimate of the annual Wakefern patronage dividend and an estimate of Village's share of this annual dividend based on Village's estimated proportional share of the dollar volume of business transacted with Wakefern that year. The patronage dividend receivable based on these estimates was $14,870 and $14,144 as of July 25, 2026 and July 26, 2025, respectively.

RECENTLY ISSUED ACCOUNTING STANDARDS

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

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following table details our cash flows in fiscal 2026 compared to fiscal 2025:

Net Cash Provided by Operating Activities. Net cash provided by operating activities was $108,800 in fiscal 2026 compared to $93,277 in fiscal 2025. The $15,523 net increase in cash provided by operating activities was due to a net favorable change related to our operating assets and liabilities, including our working capital.

The net favorable change related to our operating assets and liabilities, including our working capital, was due primarily to favorable changes in income tax receivables and payables due to a lower effective tax rate and timing of payments, a lower increase in merchandise inventories and favorable changes in accounts payable (including to Wakefern) and accrued expenses largely driven by timing of payments. These favorable changes were partially offset by lower patronage dividends received in fiscal 2026 compared to the prior fiscal year.

Net Cash Used In Investing Activities. Net cash used in investing activities was $61,753 in fiscal 2026 compared to $75,578 in fiscal 2025. The $13,825 net decline in cash used in investing activities was due primarily to a $5,024 decrease in capital expenditures, proceeds from the sales of assets of $4,504 in fiscal 2026 primarily attributable to the sale of real estate assets of our closed automated micro-fulfillment center in south New Jersey and acquisition costs of $8,133 to purchase right-of-use assets in fiscal 2025. These decreases in cash used in investing activities were partially offset by an investment of $4,431 in notes receivable in fiscal 2026 related to a New Markets Tax Credit financing transaction associated with our replacement store in East Orange, NJ.

During fiscal 2026, we invested $53,741 on capital expenditures including costs associated with the construction of our East Orange replacement store that opened on May 27, 2026, construction costs for a future replacement store in Galloway, NJ expected to open in fiscal 2027, one major remodel, several smaller remodels and merchandising initiatives, and various technology, equipment and facility upgrades, including initial costs to install solar panels at four locations.

Net Cash Used In Financing Activities. Net cash used in financing activities was $26,907 in fiscal 2026 compared to $24,261 in fiscal 2025. The $2,646 net increase in cash used in financing activities was due primarily to repurchases of shares surrendered for withholding tax purposes of $8,163 associated with the vesting of restricted stock awards in fiscal 2026, partially offset by $5,563 in proceeds from the issuance of long-term debt, net of debt issuance costs, in fiscal 2026 associated with a New Markets Tax Credit financing transaction associated with our replacement store in East Orange, NJ.

During fiscal 2026 and 2025, we made dividend payments of $13,336 and $13,308, respectively.

Liquidity and Debt

Working capital was $27,108 as of July 25, 2026 compared to $23,840 as of July 26, 2025. Working capital ratios at the same dates were 1.14 and 1.13 to one, respectively. The Company's working capital needs are reduced, since inventories are generally sold by the time payments to Wakefern and other suppliers are due.

We have budgeted $80,000 for capital expenditures in fiscal 2027. Planned expenditures include costs for construction of a replacement store in Galloway, NJ expected to open in mid-fiscal 2027, a new Fairway store in Manhattan expected to open in late fiscal 2027, several smaller store remodels, merchandising initiatives and various technology, equipment and facility upgrades, including installation of solar panels at certain of our locations. The Company's primary sources of liquidity in fiscal 2027 are expected to be cash and cash equivalents on hand as of July 25, 2026 and operating cash flows generated in fiscal 2027.

The Company holds a 30% interest in the development of a retail center in Old Bridge, New Jersey, which includes the Village Old Bridge replacement store. As of July 25, 2026, the Company had an operating lease obligation of $4,279 related to the project and had invested $17,694 in the real estate partnership. The investment is accounted for under the equity method and is included in Investments in Real Estate Partnerships on the consolidated balance sheets. No additional equity investment is expected for this project.

As of July 25, 2026, the Company held variable rate notes receivable due from Wakefern of $39,460 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $40,733 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $39,097 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

As of July 25, 2026, Village had demand deposits invested at Wakefern in the amount of $111,776. These deposits earn overnight money market rates.

Credit Facility

The Company has a credit facility (the "Credit Facility") with Wells Fargo National Bank, National Association ("Wells Fargo"). The principal purpose of the Credit Facility is to finance general corporate and working capital requirements, Village's fiscal 2020 acquisition of certain Fairway assets and certain capital expenditures. Among other things, the Credit Facility provides for:

• An unsecured revolving line of credit providing a maximum amount available for borrowing of $75,000. Indebtedness under this agreement bears interest at the applicable Secured Overnight Financing Rate ("SOFR") plus 1.25% and expires on April 30, 2030.
• An unsecured $25,500 term loan issued on May 12, 2020, repayable in equal monthly installments based on a seven-year amortization schedule through May 4, 2027 and bearing interest at the applicable SOFR plus 1.46%. An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .26% per annum through May 4, 2027, resulting in a fixed effective interest rate of 1.72% on the term loan.
• A secured $50,000 term loan issued on September 1, 2020 repayable in equal monthly installments based on a fifteen-year amortization schedule through September 1, 2035 and bearing interest at the applicable SOFR plus 1.61%. An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at .57% per annum through September 1, 2035, resulting in a fixed effective interest rate of 2.18% on the term loan. The term loan is secured by real properties of Village Super Market, Inc. and its subsidiaries, including the sites of three Village stores.
• A secured $7,350 term loan issued on January 28, 2022 repayable in equal monthly installments based on a fifteen-year amortization schedule through January 28, 2037 and bearing interest at the applicable SOFR plus 1.50%. An interest rate swap with notional amounts equal to the term loan fixes the base SOFR at 1.41% per annum through January 28, 2037, resulting in a fixed effective interest rate of 2.91% on the term loan. The term loan is secured by the Galloway store shopping center.
• An unsecured $10,000 term loan issued on September 1, 2022 repayable in equal monthly installments based on a seven-year amortization schedule through September 4, 2029 and bearing interest at the applicable SOFR plus 1.35%. An interest rate swap for a notional amount equal to the term loan fixes the base SOFR at 2.95% per annum through September 4, 2029, resulting in a fixed effective interest rate of 4.30% on the term loan. This loan qualified for an interest rate subsidy program with Wakefern on financing related to certain capital expenditure projects. Net of the subsidy, the Company will pay interest at a fixed effective rate of 2.30%.
• A secured $7,125 term loan issued on January 27, 2023 repayable in equal monthly installments based on a fifteen-year amortization schedule through January 27, 2038 and bearing interest at the applicable SOFR plus 1.75%. An interest rate swap for a notional amount equal to the term loan fixes the base SOFR at 3.59% per annum through January 27, 2038, resulting in a fixed effective interest rate of 5.34% on the term loan. The term loan is secured by the Vineland store shopping center.

The Credit Facility also provides for up to $25,000 of letters of credit ($9,021 outstanding as of July 25, 2026), which secure obligations for store leases and construction performance guarantees to municipalities. The Credit Facility contains covenants that, among other conditions, require a minimum tangible net worth, a minimum fixed charge coverage ratio and a maximum adjusted debt to EBITDAR ratio. The Company was in compliance with all covenants of the credit agreement as of July 25, 2026. As of July 25, 2026, $65,979 remained available under the unsecured revolving line of credit.

Based on current trends, the Company believes cash and cash equivalents on hand as of July 25, 2026, operating cash flows and availability under our Credit Facility are sufficient to meet our liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months.

Village paid cash dividends of $13,336, $13,308 and $13,341 during fiscal 2026, 2025 and 2024, respectively. Dividends during each of these fiscal years consisted of $1.00 per Class A common share and $.65 per Class B common share. The Board's current intention is to continue to pay quarterly dividends in fiscal 2027 at the most recent rate of $.25 per Class A and $.1625 per Class B share. However, any decision to declare and pay dividends in the future will ultimately be made at the discretion of our Board of Directors and will depend on our results of operations, cash requirements, financial condition and other factors that the Board of Directors may deem relevant, including economic and market conditions.

Contractual Obligations and Commitments

Firm Commitments

The following table summarizes certain of our aggregate material cash requirements as of July 25, 2026, and the estimated timing and effect that such obligations are expected to have on our liquidity and cash flows in future periods. We expect to fund these contractual obligations with operating cash flows generated in the normal course of business and, if necessary, through availability under our credit facility or other accessible sources of financing.

The following is a description of our material, firmly committed obligations as of July 25, 2026:

• Lease obligations represent fixed payments due over the lease term of our noncancelable leases of real estate. Information has been presented separately for operating and finance leases.
• Debt represents the principal amounts due on our outstanding secured term loans, unsecured term loans and New Market Tax Credit Financing arrangement, all as described in Note 4 to the consolidated financial statements. Amounts do not include unamortized debt issuance costs or interest payments.

Excluded from the above contractual obligations table is the following: (i) amounts recorded in current liabilities in our consolidated balance sheet as of July 25, 2026, which will be paid within one year, other than lease obligations and current portion of debt; (ii) non-current pension liabilities of $2,590 as of July 25, 2026, as we cannot make a reliable estimate of the period in which the liabilities will be settled; (iii) future contributions to be made to various multi-employer benefit plans due to the uncertainty of the cash outflows associated with such contributions; and (iv) non-current liabilities that have no cash outflows associated with them or the cash outflows associated with them are uncertain or do not represent a "purchase obligation" as such term is used herein (e.g., deferred taxes and other miscellaneous items).

We are also obligated to purchase 85% of our primary merchandise requirements from Wakefern, as described in Note 3 to the consolidated financial statements.

Off-balance Sheet Arrangements

In addition to the commitments included in the above table, our other off-balance sheet firm commitments relating to our outstanding letters of credit amounted to $9,021 as of July 25, 2026. We do not maintain any other off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect on our consolidated financial statements.

OUTLOOK

Summarized below are the Company's current expectations of certain operating metrics for its fiscal 2027. Refer to the "Special Note Regarding Forward-Looking Statements" section at the beginning of this Form 10-K for risks, uncertainties and other information regarding forward-looking statements.

• We expect the increase in same store sales to range from 0.5% to 2.0% in fiscal 2027.
• We have budgeted $80,000 for capital expenditures in fiscal 2027. Planned expenditures include costs for construction of a replacement store in Galloway, NJ expected to open in mid-fiscal 2027, a new Fairway store in Manhattan expected to open in late fiscal 2027, several smaller store remodels, merchandising initiatives and various technology, equipment and facility upgrades, including installation of solar panels at certain of our locations. The Company's primary sources of liquidity in fiscal 2027 are expected to be cash and cash equivalents on hand as of July 25, 2026 and operating cash flows generated in fiscal 2027.
• The Board's current intention is to continue to pay quarterly dividends in fiscal 2027 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 flows and the Company's Credit Facility will be adequate to meet anticipated requirements for working capital, capital expenditures and debt payments for the foreseeable future.
• We expect our effective income tax rate in fiscal 2027 to be in the range of 31.0% to 32.0%.

RELATED PARTY TRANSACTIONS

The Company holds an investment in Wakefern, its principal supplier. Village purchases substantially all of its merchandise from Wakefern in accordance with the Wakefern Stockholder Agreement. As part of this agreement, Village is required to purchase certain amounts of Wakefern common stock. As of July 25, 2026, the Company's indebtedness to Wakefern for the outstanding amount of this stock subscription was $396. The maximum per store investment is currently $975. Wakefern distributes as a "patronage dividend" to each member a share of its earnings in proportion to the dollar volume of purchases by the member from Wakefern during the year. Wakefern provides the Company with support services in numerous areas including advertising, supplies, liability and property insurance, technology support and other store services. Additional information is provided in Note 3 to the consolidated financial statements.

On February 15, 2024, notes receivable due from Wakefern of $33,338 that earned interest at the prime rate plus .75% matured. The Company invested all of the proceeds received in variable rate notes receivable from Wakefern that earn interest at the SOFR plus 2.25% and mature on February 15, 2029.

As of July 25, 2026, the Company held variable rate notes receivable due from Wakefern of $39,460 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $40,733 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $39,097 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

As of July 25, 2026, Village had demand deposits invested at Wakefern in the amount of $111,776. These deposits earn overnight money market rates.

As disclosed under the heading "Legal Proceedings," we are currently engaged in litigation with Wakefern. To date, the Company believes the dispute with Wakefern has not materially impacted the Company's operations or financial performance. At this time, the Company is unable to determine the probability of the outcome of this matter, or the range of reasonably possible loss, if any.

The Company leases a supermarket from a realty firm 30% owned by certain Village officers and members of the Board of Directors. The Company paid rent to related parties under this lease of $812, $735 and $735 in fiscal 2026, 2025 and 2024, respectively, and has a related lease obligation of $9,140 as of July 25, 2026. This lease agreement was extended in fiscal 2026 and expires in fiscal 2041, with options to extend at increasing annual rents.

The Company has ownership interests in four real estate partnerships. Village paid aggregate rents to three of these partnerships for leased stores of $2,223, $2,159 and $1,827 in fiscal 2026, 2025 and 2024, respectively, and has aggregate lease obligations of $14,279 as of July 25, 2026 related to these leases.

In connection with our participation in a New Markets Tax Credit program related to the construction of a replacement store in East Orange, New Jersey, on December 19, 2025, the Company and its Chief Executive Officer, John J. Sumas, entered into a joint venture agreement to form the Leverage Lender (as defined in Note 4 to the accompanying consolidated financial statements), an affiliate of the Company. The Company and Mr. Sumas have a 95% and 5% ownership interest in the Leverage Lender, respectively. In connection with this joint venture, Mr. Sumas loaned the Company $222. See Note 4 to the accompanying consolidated financial statements for additional discussion regarding this related party transaction.

In addition to the risks inherent in our operations, we are exposed to certain market risks, including interest rate risk associated with our credit facility, interest rate swaps and variable rate notes receivable due from Wakefern.

The Company is exposed to interest rate risk arising from fluctuations in SOFR related to the Company's Credit Facility. The Credit Facility includes an unsecured revolving line of credit providing a maximum amount available for borrowing of $75,000 that bears interest at the applicable SOFR plus 1.25% and expires on April 30, 2030. The unsecured revolving line of credit is exposed to interest rate fluctuations to the extent of changes in the SOFR. The Company believes this exposure is not material due to availability of liquid assets to eliminate the outstanding credit facility.

The Credit Facility includes variable-rate term loans that bear interest at SOFR plus an applicable spread. The Company manages exposure to this risk and the variability of related cash flows primarily by the use of derivative financial instruments, specifically, interest rate swaps. The Company's objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The interest rate swaps eliminate the economic interest rate exposure on the term loans within the Credit Facility, however the value of the interest rate swaps is exposed to interests rate risk. Generally, the fair market value of our interest rate swaps will decrease as interest rates fall and increase as interest rates rise.

As of July 25, 2026, the Company had five interest rate swaps with an aggregate initial notional value of $99,975 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility. The interest rate swaps were executed for risk management and are not held for trading purposes. The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the reference rate. The swaps replaced the applicable reference rate with fixed interest rates and payments are settled monthly when payments are made on the variable-rate loans. The Company's derivatives qualify and have been designated as cash flow hedges of interest rate risk. The gain or loss on the derivative is recorded in accumulated other comprehensive income ("AOCI") and subsequently reclassified to interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives are reclassified to interest expense as interest payments are made on the variable-rate loans. The Company reclassified $1,483, $2,240 and $3,027 during fiscal 2026, 2025 and 2024, respectively, from AOCI to interest expense.

The notional value of the interest rate swaps was $48,803 as of July 25, 2026. The fair value of interest rate swaps recorded in other assets in the consolidated balance sheets was $5,228 as of July 25, 2026.

As of July 25, 2026, the Company held variable rate notes receivable due from Wakefern of $39,460 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $40,733 that earn interest at the prime rate plus .50% and mature on September 28, 2027, and $39,097 that earn interest at the SOFR plus 2.25% and mature on February 15, 2029. Changes in interest rates would impact the amount of interest income we realize on the variable rate notes receivable due from Wakefern. Wakefern has the right to prepay these notes at any time. Under certain conditions, the Company can require Wakefern to prepay the notes, although interest earned since inception would be reduced as if it was earned based on overnight money market rates as paid by Wakefern on demand deposits.

Included in cash and cash equivalents as of July 25, 2026 and July 26, 2025 are $111,776 and $92,003, respectively, of demand deposits invested at Wakefern at overnight money market rates, which are exposed to the impact of interest rate changes.

As required by Rule 13a-15 of the Exchange Act, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision, and with the participation, of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Company's Chief Executive Officer, along with the Company's Chief Financial Officer, concluded that the Company's disclosure controls and procedures are effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that the Company's internal control over financial reporting was effective as of July 25, 2026.

The Company's independent registered public accounting firm has audited the accompanying consolidated financial statements and the Company's internal control over financial reporting, as stated in their report, which is included in Item 8 of this Form 10-K.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Company's internal control over financial reporting during the fourth quarter of fiscal 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.