VILLAGE SUPER MARKET INC

Village Super Market, Inc. operates in the grocery industry, which is highly competitive and characterized by narrow profit margins ¹. The Company competes directly with multiple retail formats both in-store and online, including 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 ². The operating environment continues to be characterized by aggressive expansion, entry of non-traditional competitors and market consolidation ³. Evolving customer preferences and the advancement of online, delivery and mobile channels have increased competition in the industry ⁴. The emergence of artificial intelligence-powered agentic shopping tools could further disrupt traditional grocery retail ⁵. The Company's 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 ⁶.

Village is the second largest member of Wakefern Food Corporation, the nation's largest retailer-owned food cooperative and owner of the ShopRite, Fairway and Gourmet Garage names ⁷. 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 ⁸. The Company owns 13.0% of Wakefern's outstanding stock as of July 25, 2026 ⁹. Wakefern and its 38 shareholder members operate 379 supermarkets and other retail formats, including 98 stores operated by Wakefern ¹⁰. The Company competes by providing a superior customer service experience, competitive pricing and a broad range of consistently available quality products ¹¹. 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 ¹². Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than the Company does ¹³.

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 ¹⁴. The Company generates revenue through the sale of 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 ¹⁵. Most product departments include high-quality, competitively priced own-brand offerings under the Wholesome Pantry, Bowl & Basket, Paperbird, Fairway and Gourmet Garage brands ¹⁶. Store and own branded products accounted for approximately 17% of sales in fiscal 2026 ¹⁷. 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 ¹⁸. Online grocery ordering for in-store pick up or home delivery is available in all of the Company's ShopRite stores through either shoprite.com, the ShopRite app or through third-party service providers ¹⁹. Online ordering for home delivery is available in all Fairway stores through fairwaymarket.com, the Fairway app or through third-party service providers ²⁰. 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 ²¹. 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 ²².

The Company's sales are allocated across various product categories. During fiscal 2026, groceries accounted for 34.5% of sales ²³, dairy and frozen 16.9% ²⁴, produce 13.3% ²⁵, meats 10.1% ²⁶, deli and prepared food 7.7% ²⁷, non-foods 6.6% ²⁸, pharmacy 4.3% ²⁹, bakery 2.7% ³⁰, seafood 2.6% ³¹, liquor 0.7% ³², and other 0.6% ³³. The Company's 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 ³⁴. The Company's 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 ³⁵. The Company's stores average 58,000 total square feet ³⁶, with 19 stores greater than 60,000 square feet, 9 stores between 50,001 and 60,000 square feet, 3 stores between 40,001 and 50,000 square feet, 3 stores between 20,000 and 40,000 square feet, and 3 stores less than 20,000 square feet ³⁷.

During fiscal 2026, the Company opened a 69,000 square foot ShopRite store in East Orange, NJ on May 27, 2026 that replaced an existing 50,000 square foot store ³⁸. On April 9, 2025, the Company opened a 72,000 square foot ShopRite store in Watchung, NJ that replaced an existing 44,000 square foot store ³⁹. On March 17, 2024, the Company opened an 83,000 square foot ShopRite store in Old Bridge, NJ that replaced an existing 32,000 square foot store ⁴⁰. The Company operated an automated micro-fulfillment center to facilitate online order fulfillment for its south New Jersey stores; the facility was closed on September 1, 2024 and the related real estate was subsequently sold in fiscal 2026 ⁴¹. On November 1, 2023, the Company closed an 8,400 square foot Gourmet Garage store located in New York City ⁴². The Company has budgeted $80,000 for capital expenditures in fiscal 2027 ⁴³. 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 the Company's locations ⁴⁴. During fiscal 2026, the Company invested $53,741 on capital expenditures ⁴⁵.

Sales were $2,405,707 in fiscal 2026 compared to $2,320,690 in fiscal 2025 ⁴⁶. 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 ⁴⁷. Gross profit as a percentage of sales decreased to 28.17% in fiscal 2026 compared to 28.57% in fiscal 2025 ⁴⁸. Operating and administrative expense as a percentage of sales increased to 24.06% in fiscal 2026 compared to 23.92% in fiscal 2025 ⁴⁹. Net income was $52,455 in fiscal 2026 compared to $56,380 in fiscal 2025 ⁵⁰. Adjusted net income was $52,688 in fiscal 2026 compared to $56,429 in fiscal 2025 ⁵¹. Adjusted net income decreased approximately 7% compared to the prior fiscal year ⁵². The effective income tax rate was 28.8% in fiscal 2026 compared to 31.1% in fiscal 2025 ⁵³. Net cash provided by operating activities was $108,800 in fiscal 2026 compared to $93,277 in fiscal 2025 ⁵⁴. Working capital was $27,108 as of July 25, 2026 compared to $23,840 as of July 26, 2025 ⁵⁵.

The Company expects the increase in same store sales to range from 0.5% to 2.0% in fiscal 2027 ⁵⁶. The Company expects its effective income tax rate in fiscal 2027 to be in the range of 31.0% to 32.0% ⁵⁷.

The Company's growth vectors include store expansion and replacement. The Company has budgeted $80,000 for capital expenditures in fiscal 2027 ⁵⁸. 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 the Company's locations ⁵⁹. 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 ⁶⁰. Additional store remodels and sites for new stores are in various stages of development ⁶¹. Village will also consider additional acquisitions should appropriate opportunities arise ⁶².

The Company's digital commerce initiatives represent another growth vector. Online grocery ordering for in-store pick up or home delivery is available in all of the Company's ShopRite stores through either shoprite.com, the ShopRite app or through third-party service providers ⁶³. Online ordering for home delivery is available in all Fairway stores through fairwaymarket.com, the Fairway app or through third-party service providers ⁶⁴. 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 ⁶⁵. The ShopRite and Fairway Order Express apps enable customers to pre-order deli, catering, specialty occasion cakes and other items ⁶⁶. 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 ⁶⁷.

The Company's margin and cost outlook is shaped by its gross profit and operating expense trends. Gross profit as a percentage of sales decreased to 28.17% in fiscal 2026 compared to 28.57% in fiscal 2025 ⁶⁸. 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%) ⁶⁹. Operating and administrative expense as a percentage of sales increased to 24.06% in fiscal 2026 compared to 23.92% in fiscal 2025 ⁷⁰. Adjusted operating and administrative expense as a percentage of sales increased to 24.05% in fiscal 2026 compared to 23.98% in fiscal 2025 ⁷¹. 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%) ⁷². These increases were largely offset by lower employee costs (.13%), lower advertising costs (.10%) and short-term rental income (.05%) ⁷³.

The Company's operational outlook includes its supply chain and workforce strategy. The Company is the second largest member of Wakefern and owns 13.0% of Wakefern's outstanding stock as of July 25, 2026 ⁷⁴. Wakefern operates warehouses and distribution facilities in Elizabeth, Keasbey, Dayton, Newark and Jamesburg, New Jersey and Gouldsboro, Breinigsville and Hatfield, Pennsylvania ⁷⁵. As of July 25, 2026, the Company had approximately 7,100 employees with approximately 70% working part-time ⁷⁶. Approximately 91% of the Company's employees are covered by collective bargaining agreements ⁷⁷. Contracts with the Company's seven unions have expiration dates between March 2025 and August 2030 ⁷⁸. Approximately 12% of the Company's associates are represented by unions whose contracts have expired or will expire within one year ⁷⁹.

The Company's capital allocation strategy includes capital expenditures, dividends and debt management. The Company has budgeted $80,000 for capital expenditures in fiscal 2027 ⁸⁰. 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 ⁸¹. Village paid cash dividends of $13,336, $13,308 and $13,341 during fiscal 2026, 2025 and 2024, respectively ⁸². Dividends during each of these fiscal years consisted of $1.00 per Class A common share and $.65 per Class B common share ⁸³. As of July 25, 2026, $65,979 remained available under the unsecured revolving line of credit ⁸⁴. The Company believes cash and cash equivalents on hand as of July 25, 2026, operating cash flows and availability under its Credit Facility are sufficient to meet its liquidity needs for the next twelve months and for the foreseeable future beyond the next twelve months ⁸⁵.

The Company faces headwinds and constraints including inflationary pressures and other increases in operating costs. The Company is 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 ⁸⁶. The Company experiences inventory losses, or "shrink," resulting from theft, including organized retail crime, as well as damage, spoilage, administrative error and fraud ⁸⁷. Theft and organized retail crime have increased across the retail industry in recent years, and the Company's efforts to reduce shrink, including investments in security personnel, technology and other loss-prevention measures, may increase its operating costs and may not be successful ⁸⁸. Disruptions within the food supply chain could adversely affect the Company's operations and profitability ⁸⁹. Current or proposed tariffs on products imported from certain countries may increase commodity prices, and the Company may be unable to fully pass on such cost increases to customers without adversely affecting sales volume ⁹⁰.

The Company is subject to litigation and other legal proceedings. On May 2, 2025, the Company filed a Verified Complaint for Declaratory and Injunctive Relief against Wakefern and certain members of its senior management ⁹¹. The Company sought to enjoin Wakefern's acquisition of Morton Williams Supermarkets on the basis that the Acquisition violates Wakefern's governing documents ⁹². The Court declined to enjoin the Acquisition and it closed on or about October 1, 2025 ⁹³. On January 16, 2026, the Chancery Court denied Wakefern Management's motion to dismiss the claims asserted against them for breach of fiduciary duty ⁹⁴. 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 ⁹⁵. 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) ⁹⁶. To date, the Company believes the dispute with Wakefern has not materially impacted the Company's operations or financial performance ⁹⁷. 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 ⁹⁸.

The Company's business is highly dependent on Wakefern, from whom it purchases substantially all of its merchandise. As of July 25, 2026, the Company held variable rate notes receivable due from Wakefern of $119,290 ⁹⁹ and demand deposits invested at Wakefern of $111,776 ¹⁰⁰. Changes in Wakefern's business practices, membership requirements, governance, strategic initiatives, capital contribution requirements or relationships among member companies could increase the Company's costs or adversely affect its operations ¹⁰¹. The Company is currently engaged in litigation with Wakefern and certain members of its senior management ¹⁰². Adverse developments in this litigation could materially adversely affect the Company's business relationship with Wakefern, its competitive position, operations, financial condition and results of operations ¹⁰³. The Company's operations are geographically concentrated, with a significant concentration of sales in New Jersey and the New York metropolitan area ¹⁰⁴. The Company's stores and other facilities are concentrated in a region susceptible to severe weather events, including hurricanes, tropical storms, nor'easters, flooding, extreme heat and snow and ice storms ¹⁰⁵. The grocery industry is highly competitive and characterized by narrow profit margins ¹⁰⁶. Some of the Company's competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than the Company does ¹⁰⁷. The Company is 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 ¹⁰⁸. The Company experiences inventory losses, or "shrink," resulting from theft, including organized retail crime ¹⁰⁹. Certain of the multi-employer pension plans to which the Company contributes are underfunded ¹¹⁰. The Company's Credit Facility contains financial and other covenants that may restrict its operations, and its failure to comply with these covenants could adversely affect its liquidity and financial condition ¹¹¹.

Management's message to shareholders emphasizes the Company's ongoing program to evaluate, upgrade and expand its supermarket chain, with a focus on store remodels, replacement stores and digital commerce initiatives. The Company expects the increase in same store sales to range from 0.5% to 2.0% in fiscal 2027 ¹¹². The Company has budgeted $80,000 for capital expenditures in fiscal 2027 ¹¹³. 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 the Company's locations ¹¹⁴. The Company expects its effective income tax rate in fiscal 2027 to be in the range of 31.0% to 32.0% ¹¹⁵. 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 ¹¹⁶. Management's strategic priorities include executing its store expansion and replacement program, growing digital sales, and managing costs and margins in a highly competitive environment. The Company believes 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 ¹¹⁷.