VILLAGE SUPER MARKET INC

ITEM I. BUSINESS

General

Founded in 1937, 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 chains of greater size and geographic coverage.

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.

During fiscal 2026, same store sales were $62,841 per store and $1,562 per average square foot of selling space. 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.

The following table summarizes the size range of the Company's stores as of July 25, 2026:

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 following table shows the percentage of the Company's sales allocated to various product categories during each of the periods indicated:

A variety of factors affect the profitability of each of the Company's stores, including competition, size, access and parking, lease terms, management supervision and the strength of the applicable banner in the local community. The Company gives ongoing attention to the décor and format of its stores and tailors each store's product mix to the preferences of the local community. Village continually evaluates individual stores to determine if they should be closed, remodeled or replaced.

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 our 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 operations were not material to Village's consolidated financial statements.

Acquisitions, Development and Expansion

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.

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.

Additional store remodels and sites for new stores are in various stages of development. Village will also consider additional acquisitions should appropriate opportunities arise.

Capital Expenditures by Fiscal Year

Fiscal 2026 capital expenditures primarily included 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.

Fiscal 2025 capital expenditures primarily included costs associated with the construction of our Watchung, NJ replacement store that opened on April 9, 2025, construction costs for our East Orange, NJ replacement store that opened in fiscal 2026, the purchase of the real estate of our Springfield, NJ store, several smaller remodels and merchandising initiatives, and various technology, equipment and facility upgrades. The Company also acquired lease right-of-use assets for a potential future store location.

Fiscal 2024 capital expenditures primarily include costs associated with the construction of our Old Bridge, NJ replacement store that opened on March 17, 2024, initial construction costs for our Watchung, NJ and East Orange, NJ replacement stores that opened in fiscal 2025 and fiscal 2026, respectively, real estate purchases, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades.

Wakefern Food Corporation

The Company is the second largest member of Wakefern and owns 13.0% of Wakefern's outstanding stock as of July 25, 2026. Wakefern, which was organized in 1946, is the nation's largest retailer-owned food cooperative. Wakefern and its 38 shareholder members operate 379 supermarkets and other retail formats, including 98 stores operated by Wakefern. Only Wakefern and its members are entitled to use Wakefern branded names and trademarks, including ShopRite, Fairway, Gourmet Garage, PriceRite, The Fresh Grocer, Dearborn Market, Di Bruno Bros. and Morton Williams, and to participate in related advertising and promotional programs.

The principal benefits to the Company from its relationship with Wakefern are the use of the ShopRite, Fairway and Gourmet Garage names and trademarks, volume purchasing, store and own branded products, distribution and warehousing economies of scale, advertising and promotional programs and the development of advanced retail technology. The Company believes that the ShopRite and Fairway names are widely recognized by its customers and is a factor in their decisions about where to shop. Store and own branded products accounted for approximately 17% of sales in fiscal 2026.

Wakefern distributes as a "patronage dividend" to each of its stockholders a share of substantially all of its earnings in proportion to the dollar volume of purchases by the stockholder from Wakefern during each fiscal year.

While Wakefern has a substantial professional staff, it operates as a member owned cooperative. Executives of most members make contributions of time to the business of Wakefern. Executives of the Company spend a significant amount of their time working on various Wakefern committees, which oversee and direct Wakefern purchasing, merchandising and other programs. In addition, John J. Sumas, the Company's Chief Executive Officer, is a member of the Wakefern Board of Directors.

Most of the Company's advertising is developed and placed by Wakefern's professional advertising staff. Wakefern is responsible for all broadcast television, radio, print and digital advertisements. Wakefern bills its members using various formulas which allocate advertising costs in accordance with the estimated proportional benefits to each member from such advertising. The Company also places Wakefern developed materials with local newspapers. In addition, Wakefern and its affiliates provide the Company with other services including liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, including shoprite.com, gourmetgarage.com, fairwaymarket.com, branded apps and other store services.

Wakefern operates warehouses and distribution facilities in Elizabeth, Keasbey, Dayton, Newark and Jamesburg, New Jersey and Gouldsboro, Breinigsville and Hatfield, Pennsylvania. The Company and all other members of Wakefern are parties to the Wakefern Stockholders' Agreement which provides for certain commitments by, and restrictions on, all shareholders of Wakefern. This agreement extends until ten years from the date that stockholders representing 75% of Wakefern sales notify Wakefern that those stockholders request the Wakefern Stockholders' Agreement be terminated. Each member is obligated to purchase from Wakefern a minimum of 85% of its requirements for products offered by Wakefern. If this purchase obligation is not met, the member is required to pay Wakefern's profit contribution shortfall attributable to this failure. The Company fulfilled this obligation in fiscal 2026, 2025 and 2024. This agreement also requires that in the event of unapproved changes in control of the Company or a sale of the Company or of individual Company stores, except to a qualified successor, the Company in such cases must pay Wakefern an amount equal to the annual profit contribution shortfall attributable to the sale of a store or change in control. No payments are required if the volume lost by a shareholder as a result of the sale of a store is replaced by such shareholder by increased volume in existing or new stores. A "qualified successor" must be, or agree to become, a member of Wakefern, and may not own or operate any supermarkets, other than Wakefern branded stores in the states of New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, Maine or the District of Columbia, or own or operate more than 25 non-Wakefern branded stores in any other locations in the United States.

Wakefern, under circumstances specified in its by-laws, may refuse to sell merchandise to, and may repurchase the Wakefern stock of, any member. Such circumstances may include a member's bankruptcy filing, certain unapproved transfers by a member of its supermarket business or its capital stock in Wakefern, unapproved acquisition by a member of certain supermarket or grocery wholesale supply businesses, certain material breaches by a member of any provision of the by-laws of Wakefern or any agreement with Wakefern, or a failure to fulfill financial obligations to Wakefern.

Any material change in Wakefern's method of operation or a termination or material modification of the Company's relationship with Wakefern following termination of the above agreements, or otherwise, might have an adverse impact on the conduct of the Company's business and could involve additional expense for the Company. The failure of any Wakefern member to fulfill its obligations under these agreements or a member's insolvency or withdrawal from Wakefern could result in increased costs to remaining members.

Wakefern does not prescribe geographical franchise areas to its members. The specific locations at which the Company, other members of Wakefern, or Wakefern itself, may open new Wakefern branded store units are subject to the approval of Wakefern's Site Development Committee. This committee is composed of persons who are not employees or members of Wakefern. Committee decisions to deny a site application may be appealed to the Wakefern Board of Directors. Wakefern assists its members in their site selection by providing appropriate demographic data, volume projections and estimates of the impact of the proposed store on existing member supermarkets in the area.

Each of Wakefern's members is required to make capital contributions to Wakefern based on the number of stores operated by that member and the purchases from Wakefern generated by those stores. As additional stores are opened or acquired by a member, additional capital must be contributed by it to Wakefern. The Company's investment in Wakefern and affiliates was $32,207 as of July 25, 2026. The total amount of debt outstanding from all capital pledges to Wakefern is $396 as of July 25, 2026. The maximum per store investment is currently $975.

As required by the Wakefern by-laws, the Company's investment in Wakefern is pledged to Wakefern to secure the Company's obligations to Wakefern. In addition, four members of the Sumas family have guaranteed the Company's obligations to Wakefern. These personal guarantees are required of any 5% shareholder of the Company who is active in the operation of the Company. Wakefern does not own any securities of the Company or its subsidiaries. The Company's investment in Wakefern entitles the Company to enough votes to elect one member to the Wakefern Board of Directors due to cumulative voting rights.

Human Capital

Our employees are fundamental to our success and our ability to serve customers and the communities in which we operate. We strive to foster a workplace culture that emphasizes respect, teamwork, accountability, inclusion and opportunities for professional growth. We believe that attracting, developing and retaining a talented and engaged workforce is critical to executing our business strategy and delivering a positive shopping experience for our customers.

We focus on recruiting, retaining and developing employees through competitive compensation, training, career advancement opportunities and a supportive work environment. We provide onboarding, operational, leadership and job-specific training programs designed to enhance employee skills, support career development and promote internal advancement. Many of our store and corporate leaders began their careers in our stores, reflecting our commitment to developing talent from within the organization.

As of July 25, 2026, we had approximately 7,100 employees with approximately 70% working part-time. Approximately 91% of our employees are covered by collective bargaining agreements. Contracts with the Company's seven unions have expiration dates between March 2025 and August 2030. Approximately 12% of our associates are represented by unions whose contracts have expired or will expire within one year. Many of the Company's competitors are similarly unionized.

We are committed to supporting the health, wellness and financial well-being of our employees. Wages, healthcare, paid time off, retirement and other benefits are included in all of our collective bargaining agreements. Employees not covered by collective bargaining agreements are also offered a comprehensive benefits package. In addition, we promote workplace safety and provide resources intended to support the well-being of our employees.

Seasonality

The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year.

Regulatory Environment

The Company's business requires various licenses and the registration of facilities with state and federal health and drug regulatory agencies. These licenses and registration requirements obligate the Company to observe certain rules and regulations, and a violation of these rules and regulations could result in a suspension or revocation of licenses or registrations and fines or penalties. In addition, most licenses require periodic renewals. The Company has not experienced material difficulties with respect to obtaining or retaining licenses and registrations.

Competition

The grocery industry is highly competitive and characterized by narrow profit margins. Village 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. Some of the Company's principal competitors include Acme, Aldi, Amazon/Whole Foods, BJs, Costco, Foodtown, Giant, Kings, Lidl, Safeway, Stop & Shop, Target, Trader Joe's, Walmart, Wegmans and Weis. Competition with these outlets is based on price, product assortment and quality, store location, convenience, customer service, technology, digital offerings and promotional programs. Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.

Available Information

As a member of the Wakefern cooperative, Village relies upon our customer focused websites, shoprite.com, gourmetgarage.com and fairwaymarket.com, for interaction with customers and prospective employees. These websites are maintained by Wakefern for the benefit of all supermarkets under the Wakefern banners, and therefore do not contain any financial information related to the Company.

The Company will provide paper copies of the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and press releases free of charge upon request to any shareholder. In addition, electronic copies of these filings can be obtained at sec.gov.