Village Super Market Inc.

03/04/2026 | Press release | Distributed by Public on 03/04/2026 15:59

Quarterly Report for Quarter Ending January 24, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in Thousands)
OVERVIEW
Village Super Market, Inc. (the "Company" or "Village") was 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. As further described in the Company's Form 10-K, 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 supermarket industry is highly competitive and characterized by narrow profit margins. The Company competes directly with multiple retail formats, both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. 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 target 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. Additionally, the ShopRite and Fairway Order Express apps enable customers to pre-order deli, catering, specialty occasion cakes and other items. 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.
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 57,000 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 April 9, 2025, we opened a 72,000 square foot replacement ShopRite store in Watchung, NJ, that replaced an existing 44,000 square foot store.
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.
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. We believe 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 tables reconciles Net income to Adjusted net income and Operating and administrative expenses to Adjusted operating and administrative expenses:
26 Weeks Ended
January 24,
2026 		January 25,
2025
Net Income $ 29,873 $ 29,697
Adjustments to Operating and Administrative Expenses:
Pension settlement charge (1)
338 -
Adjustments to Income Taxes:
Tax impact of special items (105) -
Adjusted net income $ 30,106 $ 29,697
Operating and administrative expenses $ 289,332 $ 276,774
Adjustments to operating and administrative expenses (338) -
Adjusted operating and administrative expenses $ 288,994 $ 276,774
Adjusted operating and administrative expenses as a % of sales 23.62 % 23.91 %
(1)Fiscal 2026 pension settlement charges relate to the termination of a company-sponsored plan.
RESULTS OF OPERATIONS
The following table sets forth the major components of the Consolidated Statements of Operations as a percentage of sales:
13 Weeks Ended 26 Weeks Ended
January 24, 2026 January 25, 2025 January 24, 2026 January 25, 2025
Sales 100.00% 100.00% 100.00% 100.00%
Cost of sales 71.94% 71.65% 71.82% 71.32%
Gross profit 28.06% 28.35% 28.18% 28.68%
Operating and administrative expense 23.07% 23.22% 23.65% 23.91%
Depreciation and amortization expense 1.33% 1.44% 1.38% 1.47%
Operating income 3.66% 3.69% 3.15% 3.30%
Interest expense 0.13% 0.16% 0.14% 0.17%
Interest income (0.50%) (0.56%) (0.53%) (0.60%)
Income before income taxes 4.03% 4.09% 3.54% 3.73%
Income taxes 1.24% 1.27% 1.10% 1.16%
Net income 2.79% 2.82% 2.44% 2.57%
Sales. Sales were $640,959 in the 13 weeks ended January 24, 2026, an increase of 6.9% compared to the 13 weeks ended January 25, 2025. Sales increased due to an increase in same store sales of 4.8% and the opening of the Watchung, NJ replacement store on April 9, 2025. Same store sales increased due primarily to significantly higher sales in the last week of the second quarter of fiscal 2026 as customers prepared for Winter Storm Fern, as well as digital sales growth, continued growth in recently replaced or remodeled stores and higher fresh and pharmacy sales. These increases were partially offset by cannibalization of existing stores from the Watchung replacement store opening and recent competitive store openings. Excluding the estimated impact of Winter Storm Fern, same store sales increased 1.4% in the 13 weeks ended January 24, 2026 compared to the 13 weeks ended January 25, 2025. 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.
Sales were $1,223,552 in the 26 weeks ended January 24, 2026, an increase of 5.7% compared to the 26 weeks ended January 25, 2025. Sales increased due to an increase in same store sales of 3.7% and the opening of the Watchung, NJ replacement store on April 9, 2025. Same store sales increased due primarily to significantly higher sales in the last week of the second quarter of fiscal 2026 as customers prepared for Winter Storm Fern, as well as digital sales growth, continued growth in recently replaced or remodeled stores and higher fresh and pharmacy sales. These increases were partially offset by cannibalization of existing stores from the Watchung replacement store opening and recent competitive store openings. Excluding the estimated impact of Winter Storm Fern, same store sales increased 2.0% in the 26 weeks ended January 24, 2026 compared to the 26 weeks ended January 25, 2025.
Gross Profit. Gross profit as a percentage of sales decreased .29% in the 13 weeks ended January 24, 2026 compared to the 13 weeks ended January 25, 2025 due primarily to lower patronage dividends and other rebates received from Wakefern (.42%), an unfavorable change in product mix (.07%) and increased promotional spending (.03%), partially offset by increased departmental gross margin percentages (.21%) and decreased warehouse assessment charges from Wakefern (.02%). Gross profit in both the 13 weeks ended January 24, 2026 and January 25, 2025 were favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2026 (.32%) and fiscal 2025 (.62%).
Gross profit as a percentage of sales decreased .50% in the 26 weeks ended January 24, 2026 compared to the 26 weeks ended January 25, 2025 due primarily to lower patronage dividends and other rebates received from Wakefern (.36%), an unfavorable change in product mix (.08%) and increased promotional spending (.05%). Gross profit in both the 26 weeks ended January 24, 2026 and January 25, 2025 were favorably impacted by receipt of patronage dividends from Wakefern greater than estimated amounts accrued in both the second quarter of fiscal 2026 (.17%) and fiscal 2025 (.32%).
Operating and Administrative Expense.Operating and administrative expense as a percentage of sales decreased .15% in the 13 weeks ended January 24, 2026 compared to the 13 weeks ended January 25, 2025. The decrease in Operating and administrative expenses is due primarily to lower employee costs (.40%), lower advertising costs (.15%) and lower occupancy costs (.08%), partially offset by increased external service, technology, legal and other professional fees (.15%), increased weather-related maintenance costs (.13%), higher facility insurance costs (.11%) and increased store pre-opening costs (.06%). Employee and occupancy costs as a percentage of sales decreased due primarily to operating leverage as a result of significantly higher sales in the last week of the second quarter as a result of Winter Storm Fern.
Operating and administrative expense as a percentage of sales decreased 0.26% in the 26 weeks ended January 24, 2026 compared to the 26 weeks ended January 25, 2025. Adjusted operating and administrative expenses decreased .29% in the 26 weeks ended January 24, 2026 compared to the 26 weeks ended January 25, 2025. The decrease in Adjusted operating and administrative expenses is due primarily to lower employee costs (.37%), lower short-term rental income (.10%), lower advertising costs (.10%) and lower occupancy costs (.09%), partially offset by increased external service, technology, legal and other professional fees (.13%), increased repair and weather-related maintenance costs (.13%), increased store pre-opening costs (.09%) and higher facility insurance costs (.05%). Employee and occupancy costs as a percentage of sales decreased due primarily to operating leverage as a result of significantly higher sales in the last week of the second quarter as a result of Winter Storm Fern.
Depreciation and Amortization. Depreciation and amortization expense decreased in the 13 and 26 weeks ended January 24, 2026 compared to the comparative prior year fiscal periods due primarily to timing of capital expenditures.
Interest Expense. Interest expense decreased in the 13 and 26 weeks ended January 24, 2026 compared to the comparative prior year fiscal periods due primarily to lower average outstanding debt balances.
Interest Income. Interest income decreased in the 13 and 26 weeks ended January 24, 2026 compared to the comparative prior year fiscal periods due primarily to lower interest rates on variable rate notes receivable from Wakefern and demand deposits invested at Wakefern.
Income Taxes.The effective income tax rate was 30.7% in the 13 weeks ended January 24, 2026 compared to 31.1% in the 13 weeks ended January 25, 2025. The effective income tax rate was 31.0% in the 26 weeks ended January 24, 2026 compared to 31.1% in the 26 weeks ended January 25, 2025.
Net Income. Net income was $17,872 in the 13 weeks ended January 24, 2026 compared to $16,896 in the 13 weeks ended January 25, 2025. Net income was $29,873 in the 26 weeks ended January 24, 2026 compared to $29,697 in the 26 weeks ended January 25, 2025.
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 Company's critical accounting policies relating to the impairment of long-lived assets, goodwill and indefinite-lived intangible assets and accounting for patronage dividends earned as a stockholder of Wakefern, are described in the Company's Annual Report on Form 10-K for the year ended July 26, 2025. As of January 24, 2026, there have been no changes to the critical accounting policies contained therein.
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.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following table details our cash flows for the 26 weeks ended January 24, 2026 and January 25, 2025:
26 Weeks Ended
January 24,
2026 		January 25,
2025 		$
Change
Net cash provided by operating activities $ 78,780 $ 60,952 $ 17,828
Net cash used in investing activities (21,798) (32,185) 10,387
Net cash used in financing activities (6,469) (12,099) 5,630
Net increase in cash, cash equivalents and restricted cash $ 50,513 $ 16,668 $ 33,845
Net Cash Provided by Operating Activities.Net cash provided by operating activities was $78,780 in the 26 weeks ended January 24, 2026 compared to $60,952 in the 26 weeks ended January 25, 2025. The $17,828 net increase in cash provided by operating activities was due primarily 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 the favorable changes in our merchandise inventories driven by higher sales associated with Winter Storm Fern and income tax receivables and payables driven by lower tax payments due to tax benefits resulting from bonus depreciation, partially offset by lower patronage dividends received in the 26 weeks ended January 24, 2026 compared to the prior fiscal year period.
Net Cash Used In Investing Activities.Net cash used in investing activities was $21,798 in the 26 weeks ended January 24, 2026 compared to $32,185 in the 26 weeks ended January 25, 2025. The $10,387 net decrease in cash used in investing activities was due primarily to a $9,839 decrease in capital expenditures and proceeds of $4,494 in 26 weeks ended January 24, 2026 in connection to the sale of real estate assets related to our closed automated micro-fulfillment center in south NJ. These increases in cash used in investing activities were partially offset by an investment of $4,431 in notes receivable related to a New Markets Tax Credit financing transaction associated with our replacement store in East Orange, NJ.
During the 26 weeks ended January 24, 2026, we invested $17,709 on capital expenditures related primarily to the construction of replacement stores in East Orange, NJ and Galloway, NJ, several smaller remodels and merchandising initiatives, and various technology, equipment and facility upgrades.
Net Cash Used In Financing Activities.Net cash used in financing activities was $6,469 in the 26 weeks ended January 24, 2026 compared to $12,099 in the 26 weeks ended January 25, 2025. The $5,630 net decrease in cash used in financing activities was due primarily to $5,563 in proceeds from the issuance of long-term debt, net of debt issuance costs, associated with a New Markets Tax Credit financing transaction associated with our replacement store in East Orange, NJ.
During each of the 26 weeks ended January 24, 2026 and January 25, 2025, we made dividend payments of $6,652.
Liquidity and Debt
Working capital was $43,140 at January 24, 2026 compared to $23,840 at July 26, 2025. Working capital ratios at the same dates were 1.23 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 revised our budgeted capital expenditures downward from prior estimates to approximately $65,000 in fiscal 2026 due to delays in the timing of certain projects. Planned expenditures include costs for construction of a replacement store in East Orange, NJ expected to open in fiscal 2026, construction of a replacement store in Galloway, NJ expected to open in fiscal 2027, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades. The Company's primary sources of liquidity in fiscal 2026 are expected to be cash and cash equivalents on hand at January 24, 2026 and operating cash flow generated in fiscal 2026.
At January 24, 2026, the Company held variable rate notes receivable due from Wakefern of $38,078 that earn interest at the prime rate plus .50% and mature on August 15, 2027, $39,307 that earn interest at the prime rate plus .50% and mature on
September 28, 2027, and $37,972 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.
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 pays 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 at January 24, 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 at January 24, 2026. As of January 24, 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 at January 24, 2026, operating cash flow 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.
There have been no other substantial changes as of January 24, 2026 to the contractual obligations and commitments discussed in the Company's Annual Report on Form 10-K for the year ended July 26, 2025.
OUTLOOK
This Form 10-Q contains certain forward-looking statements about Village's future performance. These statements are based on management's assumptions and beliefs in light of information currently available. Such statements relate to, for example: same store sales; economic conditions; expected pension plan contributions; projected capital expenditures; cash flow requirements; inflation expectations; and legal matters; and are indicated by words such as "will," "expect," "should," "intend," "anticipates," "believes" and similar words or phrases. The Company cautions the reader that there is no assurance that actual results or business conditions will not differ materially from the results expressed, suggested or implied by such forward-looking statements. The Company undertakes no obligation to update forward-looking statements to reflect developments or information obtained after the date hereof. Readers should carefully review the risk factors identified in "Risk Factors" in this Form 10-Q.
•We expect the increase in same store sales to range from 1.0% to 3.0% in fiscal 2026.
•We have revised our budgeted capital expenditures downward from prior estimates to approximately $65,000 in fiscal 2026 due to delays in the timing of certain projects. Planned expenditures include costs for construction of a replacement store in East Orange, NJ expected to open in fiscal 2026, construction of a replacement store in Galloway, NJ expected to open in fiscal 2027, several smaller store remodels and merchandising initiatives and various technology, equipment and facility upgrades. The Company's primary sources of liquidity in fiscal 2026 are expected to be cash and cash equivalents on hand at January 24, 2026 and operating cash flows generated in fiscal 2026.
•The Board's current intention is to continue to pay quarterly dividends in fiscal 2026 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 2026 to be in the range of 30.5% to 31.5%.
Various uncertainties and other factors could cause actual results to differ from the forward-looking statements contained in this report. These include:
•The supermarket business is highly competitive and characterized by narrow profit margins. Results of operations may be materially adversely impacted by competitive pricing and promotional programs, industry consolidation and competitor store openings. Village competes directly with multiple retail formats both in-store and online, including national, regional and local supermarket chains as well as warehouse clubs, supercenters, drug stores, discount general merchandise stores, fast food chains, restaurants, dollar stores and convenience stores. Some of these competitors have greater financial resources, lower merchandise acquisition costs and lower operating expenses than we do.
•The Company's stores are concentrated in New Jersey, New York, Pennsylvania and Maryland. We are vulnerable to economic downturns in these states in addition to those that may affect the country as a whole. Results of operations may be materially adversely impacted by inflation, deflation, interest rate fluctuations, movements in energy costs, social programs, minimum wage legislation, labor shortages, changing demographics, natural disasters, terrorist attacks, the outbreak of pandemics or other illnesses, disruptions to supply chains and disturbances due to social unrest, geopolitical conflict and political instability.
•Village purchases substantially all of its merchandise from Wakefern. In addition, Wakefern provides the Company with support services in numerous areas including advertising, liability and property insurance, supplies, certain equipment purchasing, coupon processing, certain financial accounting applications, retail technology support, and other store services. Further, Village receives patronage dividends and other product incentives from Wakefern and also has demand deposits and notes receivable due from Wakefern.
Any material change in Wakefern's method of operation or a termination or material modification of Village's relationship with Wakefern could have an adverse impact on the conduct of the Company's business and could involve additional expense for Village. The failure of any Wakefern member to fulfill its obligations to Wakefern or a member's insolvency or withdrawal from Wakefern could result in increased costs to the Company. Additionally, an adverse change in Wakefern's results of operations could have an adverse effect on Village's results of operations.
•Approximately 91% of our employees are covered by collective bargaining agreements. Any work stoppages could have an adverse impact on our financial results. If we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs.
•The Company could be adversely affected if consumers lose confidence in the safety and quality of the food supply chain. The real or perceived sale of contaminated food products by us could result in a loss of consumer confidence and product liability claims, which could have a material adverse effect on our sales and operations.
•Certain of the multi-employer plans to which we contribute are underfunded. As a result, we expect that contributions to these plans may increase. Additionally, the 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 very 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.
•The Company uses a combination of insurance and self-insurance to provide for potential liability for workers' compensation, automobile, general liability, property, employment practices, director and officers' liability, and certain employee health care benefits. Any projection of losses is subject to a high degree of variability. 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 could all affect our financial condition, results of operations, or cash flows.
•Our long-lived assets, primarily store property, equipment and fixtures, are subject to periodic testing for impairment. Failure of our asset groups to achieve sufficient levels of cash flow could result in impairment charges on long-lived assets.
•Our goodwill and indefinite-lived intangible assets are tested at the end of each fiscal year, or more frequently if circumstances dictate, for impairment. Failure of acquired businesses to achieve their forecasted expectations could result in impairment charges to goodwill and indefinite-lived intangible assets.
•Our effective tax rate may be impacted by the results of tax examinations and changes in tax laws.
•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. These information systems are subject to damage or interruption from power outages, computer or telecommunications failures, computer viruses and related malicious software, catastrophic weather events, or human error. Any material interruption of our or Wakefern's information systems could have a material adverse impact on our results of operations.
Due to the nature of our business, personal information about our customers, vendors and associates is received and stored in these information systems. In addition, confidential information is transmitted through our online business at shoprite.com and through the ShopRite app. Unauthorized parties may attempt to access information stored in or to sabotage or disrupt these systems. Wakefern and the Company maintain substantial security measures to prevent and detect unauthorized access to such information, including utilizing third-party service providers for monitoring our networks, security reviews, and other functions. It is possible that computer hackers, cyber terrorists and others may be able to defeat the security measures in place at the Company, Wakefern or those of third-party service providers.
Any breach of these security measures and loss of confidential information, which could be undetected for a period of time, could damage our reputation with customers, vendors and associates, cause Wakefern and Village to incur significant costs to protect any customers, vendors and associates whose personal data was compromised, cause us to make changes to our information systems and could result in government enforcement actions and litigation against Wakefern and/or Village from outside parties. Any such breach could have a material adverse impact on our operations, consolidated financial condition, results of operations, and liquidity if the related costs to Wakefern and Village are not covered or are in excess of carried insurance policies. In addition, a security breach could require Wakefern and Village to devote significant management resources to address problems created by the security breach and restore our reputation.
RELATED PARTY TRANSACTIONS
As previously disclosed, we are currently engaged in litigation with Wakefern. At this time, we are unable to assess the impact of the litigation on our results of operations. See Note 5 of the accompanying consolidated financial statements for additional discussion regarding this litigation.
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 6 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 the Company $222. See Note 6 to the accompanying consolidated financial statements for additional discussion regarding this related party transaction.
There have been no other significant changes in the Company's relationships or nature of transactions with related parties during the 26 weeks ended January 24, 2026.
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