NGVC 10-K & 10-Q changes, risk factors and insider trading

Economic conditions and consumer spending may also be adversely impacted by political instability. The outbreak or escalation of war, the occurrence of terrorist acts or other hostilities in or affecting the United States, or concerns regarding epidemics in the United States or in international markets could also lead to a decrease in spending by consumers or may cause our customers to avoid visiting our stores. In particular, recent global events, including ongoingthe conflicts in Ukraine and the Middle East, have disrupted commodity markets and have contributed to global supply chain disruption and inflation. Furthermore, government shutdowns or other federal funding disruptions may reduce access to federal food assistance or otherwise reduce household income for certain of our customers. We may experience continued volatility with respect to these trends. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new customers and to provide products that appeal to customers at prices they are willing and able to pay. Prolonged unfavorable economic conditions or political instability may have an adverse effect on our sales and profitability.

Inflation or deflationdisinflation could adversely affect our business.

Our financial performance could be adversely impacted by relative rates of inflation or deflation,disinflation, which are subject to market conditions. Inflationary or deflationarydisinflationary pressures on the products we sell could impact our net sales and earnings. If the cost of goods changes as a result of inflation or deflation,disinflation, we may be unable to adjust our retail prices accordingly, which could adversely impact our sales or earnings. In particular, deflation or disinflation impacting the products we sell could cause our competitors to aggressively lower retail pricing or adopt promotions, adversely affecting the competitiveness of our pricing and our profitability. In recent years, we experienced levels of inflation that were higher than we have historically experienced, resulting in part from various supply disruptions, geopolitical instability, including the conflicts in Ukraine and the Middle East, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, monetary policy actions, tariffs and trade restrictions, other disruptions and the uncertain economic environment. We have been able to mitigate this impact to date through our pricing strategies. While levels of inflation moderated during fiscal yearyears 2024,2024 and 2025, we are unable to predict the long-term impact of inflationary or deflationarydisinflationary trends on consumer behavior and our sales and profitability in the future. Additionally, commodities used in many of our products, including our Natural Grocers brand products, can be subject to availability constraints and price volatility caused by weather, supply conditions, political instability, government regulations, tariffs, energy prices and general economic conditions and other unpredictable factors. Changes in food and commodity prices could also negatively impact our sales and earnings if our competitors react more aggressively. Additionally, the cost of construction materials and labor we use to build and remodel our stores is also subject to price volatility based on market and economic conditions. Higher construction material and labor prices could increase the capital expenditures needed to construct a new store or remodel an existing store and, as a result, could increase the investment required and our rent obligations.

The markets for natural and organic groceries and dietary supplements are large, fragmented and highly competitive, with few barriers to entry. Our competition varies by market and includes supermarkets, natural, gourmet and specialty food markets, mass and discount retailers, foreign-based discount retailers, warehouse clubs, independent health food stores, dietary supplement retailers, drug stores, farmers’ markets, food co-ops, online retailers and multi-level marketers. These businesses compete with us on the basis of price, selection, quality, customer service, convenience, location, store format, shopping experience, ease of ordering and delivery or any combination of these or other factors. They also compete with us for products and locations. To the extent our competitors lower their prices, our ability to maintain sales levels and operating margins may be negatively impacted. In addition, some of our competitors are expanding their natural and organic food offerings, increasing the space allocated to natural and organic foods and enhancing options offor engaging with and delivering their products to customers. Many of our competitors are larger, more established and have greater financial, marketing and other resources than we do, and may be able to adapt to changes in consumer preferences more quickly, devote greater resources to the marketing and sale of their products, or generate greater brand recognition. Our competitors may also be able to market conventional food products in ways that appeal to health and wellness focused consumers, including through unregulated product claims or certifications, making it more difficult for us to differentiate our natural and organic product offerings. In addition, we may face internally generated competition when we open new stores in markets we already serve. An inability to compete effectively may cause us to lose market share to our competitors and could have a material adverse effect on our business, financial condition and results of operations.

UNFI is our single largest third-party supplier, accounting for approximately 68%69% of our total purchases in fiscal year 2024.2025. In fiscal year 2023, we extended our long-term relationship with UNFI as our primary supplier of products in the natural, fresh and produce categories through September 3, 2028, subject to automatic renewals thereafter for successive one-year periods unless otherwise terminated by either party. While we strive to maintain good relations with UNFI, if our distribution agreement with UNFI were terminated or not renewed, we may be unable to establish alternative distribution channels on reasonable terms or at all. Due to this concentration of purchases from a single third-party supplier, the cancellation or non-renewal of our distribution agreement with UNFI, or the disruption, delay or inability of UNFI to deliver product to our stores, could materially and adversely affect our business, financial condition and results of operations. In June 2025, UNFI experienced a cybersecurity incident that temporarily impacted its ability to fulfill orders and distribute products to our stores, resulting in product shortages in June and July 2025. While we successfully restored normalized levels of product distribution in the weeks following the incident in collaboration with UNFI, any similar cybersecurity incident in the future could materially and adversely affect our business, financial condition and results of operations. In addition, if UNFI or any of our other suppliers fail to comply with food safety, labeling or other laws and regulations, or face allegations of non-compliance, that supplier’s operations may be disrupted, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Our business requires disciplined execution at all levels of our organization. This execution requires an experienced and talented management team. The loss of any member of our senior management team could have a material adverse effect on our ability to operate our business, financial condition and results of operations, unless, and until, we are able to find a qualified replacement. Furthermore, our ability to manage our new store growth will require us to attract, motivate and retain qualified managers, NHCs and store employees who understand and appreciate our culture and are able to represent our brand effectively in our stores. Competition for such personnel is intense, and we may be unable to attract, assimilate and retain the personnel required to grow and operate our business profitably. Our ability to meet our labor needs, while controlling wage and labor-related costs, is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force in the markets in which we are located, unemployment levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation, including unemployment benefits. TheIn currentrecent years, the labor market has impacted our ability to retain and attract store Crew membersmembers, and in certain markets we continue to be challenged by labor shortages broadly impacting the retail industry. If we are unable to offer competitive wages, it may be more difficult for us to identify, hire and retain qualified personnel or the quality of our workforce could decline, causing customer service to be adversely impacted.

In May 2024, a majority of Crew members at one of our stores in Oklahoma voted in favor of representation by theThe United Food and Commercial Workers Union (the UFCW). The UFCW has previously sought unsuccessfully to organize at certain other of our stores from time to time, and we could face organizing activities at other of our locations in the future. While the number of our Crew members representedin byany unionssingle isstore-specific collective bargaining unit would not be individually significant, the unionization of a significant portion of our workforce could result in work slowdowns, increase our labor costs and reduce the efficiency of our operations at affected locations, adversely affect our flexibility to run our business competitively, and otherwise have a material adverse effect on our business, financial condition and results of operations. Furthermore, our response to any union organizing efforts could adversely impact our reputation, adversely impact our relationship with our Crew members, expose us to legal and regulatory actions, or require us to incur additional costs to defend any such actions.

Furthermore, independent third-party distribution and transportation companies deliver the majority of our merchandise to our stores and to our customers. Some of these third parties employ personnel represented by labor unions. Disruptions in the delivery of merchandise or work stoppages by employees of these third parties could delay the timely receipt of merchandise, which could result in reduced inventory levels and sales and a loss of customer loyalty, and adversely impact our profitability, financial condition, and results of operations.

In addition, our lease costs could increase because of changes in the real estate markets and supply or demand for real estate sites. We generally cannot cancel our leases, so if we decide to close or relocate a location,store, we may nonetheless be committed to perform our obligations under the applicable lease including paying the base rent for the remaining lease term. As each lease expires, we may fail to negotiate renewals, either on commercially acceptable terms or any terms at all, and may not be able to find replacement locations that will provide for the same success as current store locations.

We rely extensively on a variety of information systems to effectively manage the operations of our growing store base, including for point-of-sale processing in our stores, supply chain, financial reporting, human resources and various other processes and transactions. Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, cybersecurity incidents, catastrophic events and usage errors by our Crew members. In addition, our information technology systems may also fail to perform as anticipated, and we may encounter difficulties in implementing new systems, adapting these systems to changing technologies or expanding them to meet the future needs and growth of our business. If our information systems are breached, disrupted, damaged, encrypted by ransomware, or fail to perform as designed, we may have to make significant investments to repair or replace them; suffer interruptions in our operations; experience data loss; incur liability to our customers, Crew members and others; face costly litigation, enforcement actions and penalties; and suffer harm to our reputation with our customers. Furthermore, changes in technology could cause our information systems to become obsolete, as a result of which it may be necessary to incur additional costs to upgrade such systems. If our information systems prove inadequate to handle our growth, we could lose customers, which could have a material adverse effect on our business, financial condition and results of operations. We are also vulnerable to certain risks and uncertainties associated with our website and mobile app, including changes in required technology interfaces, downtime and other technical failures and consumer privacy concerns.

In addition, we receive and maintain certain personal information about our customers and Crew members. TheOur use of this information by us is regulated by applicable law. Privacy and information security laws and regulations change, and compliance with updates may result in cost increases due to necessary systems changes and the development of new administrative processes.

We believe that our trademarks or service marks, trade dress, copyrights, trade secrets, know-how and similar intellectual property are important to our success. In particular, we believe that the Natural Grocers name is important to our business, as well as to the implementation of our growth strategy. Our principal intellectual property rights include registered marks on Natural Grocers®, Vitamin Cottage®, Health Hotline®, Natural Grocers by Vitamin Cottage®, Vitamin Cottage Natural Grocers®, EDAP - Every Day Affordable Price®, {N}power®, Organic Headquarters®, Organic Month Headquarters®, Organic Produce Headquarters®, Natural Grocers Cottage Wine and Craft Beer®, Natural Grocers Cottage Craft Beer®, Resolution Reset Day®, Resolution Reset Week®, These Came First® and Natural Grocers Top 10 Nutrition Trends®, common law intellectual property rights in certain other marks used in our business, copyrights of our website content, rights to our domain names, including www.naturalgrocers.com and www.vitamincottage.com, and trade secrets and know-how with respect to our product sourcing, sales and marketing and other aspects of our business. As such, we rely on trademark or service mark and copyright law, trade secret protection and confidentiality agreements with our Crew members and certain of our consultants, suppliers and others to protect our proprietary rights. If we are unable to defend or protect or preserve the value of our trademarks or service marks, copyrights, trade secrets or other proprietary rights for any reason, our brand and reputation could be impaired and we could lose customers.

Our future effective tax rates could be adversely affected by our earnings mix being lower than historical results in states where we have lower statutory rates and higher than historical results in states where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities or by changes in tax laws or interpretations thereof. On July 4, 2025, the U.S. federal government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act (OBBBA). For additional information about OBBBA, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of our consolidated financial statements and notes thereto, which are included elsewhere in this Form 10-K. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service (IRS) and other state and local taxing authorities. Our results could be materially impacted by the determinations and expenses related to proceedings by the IRS and other state and local taxing authorities.

In addition, DSHEA differentiates between old dietary ingredients, or ODIs (i.e., those ingredients present in the food supply prior to October 15, 1994, which require no pre-market notification to the FDA), and new dietary ingredients, or NDIs (i.e., those ingredients not proven to be present in the food supply prior to October 15, 1994, which do require pre-market notification to the FDA). The FDA requires the submission of a premarket notification (NDIN) to the FDA at least 75 days before a product containing an NDI is sold. The FDA’s enforcement of the pre-market notification requirements for NDIs could result in the removal of certain dietary supplement products that we sell. In addition, the FDA has not yet promulgated a definitive list of ODIs, but if it does, such a list of ODIs could disrupt the supply of any dietary supplements made from ingredients that are currently believed to pre-date DSHEA but are not ultimately classified as ODIs. Accordingly, changes in dietary supplement regulation could also materially adversely affect the cost and availability of the dietary supplement products that we sell. Plaintiffs’ consumer class action lawyers have filed lawsuits alleging that companies marketing dietary supplements containing NDI’s that have not been through the pre-market notification process are liable for fraud and negligent misrepresentation, as well as engaging in unlawful business practices under state law, for selling adulterated products. If a dietary supplement that we market or sell contains an NDI that has not been submitted under FDA’s NDIN regulation, we could potentially be exposed to claims for substantial damages as well as the plaintiffs’ lawyers attorneys’ fees and the cost of defense.

Advertising and Products Claims Risks. We could also be the target of claims relating to false or deceptive advertising in connection with the marketing and advertising of the products we sell, including under the auspices of the FTC, the consumer protection statutes of some states as well as certain non-government watchdog groups and class action law firms. In addition, the FDA has aggressively enforced its regulations with respect to structure/function claims (e.g., “calcium builds strong bones”), nutrient content claims (e.g., “high in antioxidants”) and other claims that impermissibly suggest therapeutic benefits for certain foods or food components.components, as well as dietary supplements and cosmetics. In addition, the number of private consumer class actions relating to false or deceptive advertising against cosmetic,cosmetics, food, beverage and nutritionaldietary supplement manufacturers has increased in recent years. There has been a rise in the number of class action lawsuits alleging that the plaintiffs’ testing shows that the nutrition facts labels for foods or the supplement facts label for dietary supplements reports the amount of nutrients in the products inaccurately, particularly for beneficial nutrients. These events could interrupt the marketing and sales of products in our stores, including our private label products, severely damage our brand reputation and public image, increase the cost of products in our stores, result in product recalls or litigation, and impede our ability to deliver merchandise in sufficient quantities or quality to our stores, and potentially expose us to litigation seeking substantial damages, which could result in a material adverse effect on our business, financial condition, results of operations and cash flows.

Our reputation could also suffer from real or perceived issues involving the labeling or marketing of products we sell as “natural.” Although the FDA and the USDA have each issued non-binding statements regarding the appropriate use of the word “natural,” and the FDA has indicated it intends to define the term, there is currently no single U.S. government-regulated definition of the term “natural” for use in the foodfood, industry.dietary supplement, or cosmetics industries. The resulting uncertainty has led to consumer confusion, distrust and a growing number of legal challenges. Plaintiffs have commenced class action litigation against a number of food companies and retailers that market products as “naturalnatural,” products,“healthy” or with terms that convey a similar meaning, asserting false, misleading and deceptive advertising and labelinglabeling. claims.Recently, class action lawsuits have been filed against companies whose products are packaged in plastic alleging that the packaging has resulted in microplastics leaching into the products, and, therefore, alleging that the products are not “natural” or “healthy” as labeled or otherwise advertised. Should we become subject to similar lawsuits or claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is ultimately determined to be unfounded. Adverse publicity about these matters may discourage consumers from buying our products. Further, the cost of defending against any such class actions could be significant. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Such claims could expose us to the potential of substantial damages awards, particularly for private label products, as well as the costs of defending such claims.

“Healthy” Claims. Due to increased adherence by food and dietary supplement companies to FDA regulations regarding the current requirements for “healthy” claims, plaintiffs’ consumer class action lawyers have filed lawsuits asserting that certain advertising terms are equivalent to “healthy” (e.g., “nutritious”) and the challenged products either do not meet the FDA’s current requirements for “healthy,” or, even if they do, the products contain too much added sugar to qualify as healthy as set forth in draft regulations recently proposed by the FDA. Should we become subject to similar lawsuits or claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is ultimately determined to be unfounded. Adverse publicity about these matters may discourage consumers from buying our products. Further, the cost of defending against any such class actions could be significant and, to the extent we are found liable, result in substantial monetary damages. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Organic and Non-GMO Claims. We are also subject to the requirements of the USDA’s National Organic Program (NOP), which establishes federal standards for organically produced agricultural products. The NOP regulations assure our customers that products with the “USDA Organic” seal meet consistent and uniform standards. The failure of one or more of our suppliers to comply with the NOP regulations could cause a disruption in the supply of our product offerings. In addition, the USDA has recently set forthpromulgated final rules on the labeling of food produced with bioengineering called the National Bioengineered Food Disclosure Standard.Standard, Voluntaryalthough compliancecertain withprovisions these rules began in January 2020 andof the deadlinerule forhave mandatorybeen compliancesuccessfully was January 1, 2022.challenged. The Agricultural Marketing Service (AMS) of the USDA authorizes AMS to enforce compliance with the standard through records audits and examinations, hearings, and public disclosure of the summary of the results of audits, examinations, and similar activities. Public disclosure of our suppliers’ violations of the National Bioengineered Food Disclosure Standard could result in a loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims.

PFAS Statutes and Lawsuits. Many states have enacted laws prohibiting the intentional inclusion of PFAS in any amount or the unintentional inclusion of PFAS in defined amounts in certain of the products we sell, particularly packaged food products. If any of the products we sell violate these statutes, we may be subject to civil penalties, restitution, injunctive relief, or possibly criminal penalties. In addition, plaintiffs’ class action lawyers have begun filingfiled lawsuits relating to PFAS, either under the theory that the presence of PFAS renders certain advertising claims false or misleading or actual product liability claims for injury based on the presence of PFAS in human blood. Should we become subject to similar lawsuits or claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is ultimately determined to be unfounded. Adverse publicity about these matters may discourage consumers from buying our products. Further, the cost of defending against any such class actions could be significant and, to the extent we are found liable, result in substantial monetary damages. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredientmarketing claimsclaims, or in our products, themselves, would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

FSMA Implementation Risks. The FSMA significantly expanded food safety requirements and the FDA’s regulatory authority over food safety. VoluminousExtensive regulations and rules issued under the FSMA have been promulgated. In addition, the FSMA requires the FDA to establish science-based minimum standards for the safe production and harvesting of produce and increase inspection of foreign and domestic facilities. With respect to both food products and dietary supplements, the FSMA meaningfully augmented the FDA’s ability to access both producers’ and suppliers’ records and added new records that must be created and maintained. The FSMA also requires the implementation of enhanced tracking and tracing of food and dietary supplements through production and distribution and, as a result, added recordkeeping burdens upon our suppliers. In addition, under the FSMA, the FDA now has the authority to inspect facilities, certifications and supplier documentation to evaluate whether foods and ingredients from our suppliers are compliant with applicable regulatory requirements. Such FDA inspections, and regulatory actions resulting therefrom, may require product recalls, delay the supply of certain products or result in certain products being unavailable to us for sale in our stores. The implementation of the FSMA requirements may be too expensive or too complicated for some of our suppliers, which may increase the cost, or curtail or eliminate the supply, of certain products that we purchase from small and/or local suppliers.

Homeopathic Products. In recent years, the FDA and FTC have increased their regulatory scrutiny of homeopathic drug products. On December 6, 2022, theThe FDA has issued final guidance on homeopathic drugs, stating that the agency intends to take a risk-based approach to reviewing how some homeopathic drug products are marketed, under which it will prioritize enforcement and regulatory actions for homeopathic products posing the greatest risk to patients. According to the FDA, homeopathic products posing the greatest risk are those withthat have reported safety concerns, that contain or purport to contain ingredients associated with potentially significant safety concerns, that are administered via routes other than orally or topically, that claim to treat or prevent serious and/or life-threatening diseases and conditions, are marketed to vulnerable populations (e.g., children, pregnant women, and the elderly), or that have significant quality issues. This guidance and related enforcement action may adversely impact the availability of certain homeopathic products for sale in our stores. In addition, class action lawsuits have been brought against homeopathic product manufacturers and retailers alleging that the science behind homeopathy is not credible. Should such a lawsuit be brought against us regarding one or more of the homeopathic products we sell, it could adversely affect our reputation and potentially result in substantial damages and attorneys’ fees.

The Agricultural Improvement Act of 2018 (the 2018 Farm Bill) legalized the cultivation, processing and sale of “industrial hemp” (i.e., cannabis containing no more than 0.3% tetrahydrocannabinol, or THC). Industrial hemp contains CBD, a non-psychoactive compound. Despite the provisions of the 2018 Farm Bill and subsequent U.S. Department of Agriculture rules, uncertainty exists concerning the legal and regulatory status of finished products containing CBD. The FDA prohibits the inclusion of CBD in the food supply and dietary supplements even if they are derived from industrial hemp on the basis that CBD is an active ingredient in FDA-approved drugs, and, therefore, its addition to foods and dietary supplements is unlawful under the federal Food, Drug, and Cosmetic Act (the FDCA).FDCA. The FDA has yet to establish a regulatory framework for the manufacture and sale of products containing CBD, and has sent warning letters, sometimes in concert with the Federal Trade Commission (FTC),FTC, to certain CBD manufacturers that are alleged to have marketed their products in violation of the FDCA. The warning letters focus on allegations that the CBD manufacturers have marketed the products through unsubstantiated health claims. The FDA also announced that it cannot conclude based on current published studies that CBD is generally recognized as safe (GRAS) for use in human and animal food products. Food and beverage products, including nutritional supplements, which contain non-GRAS ingredients are considered to be adulterated under the FDCA. In addition, certain state and local governments have taken action to restrict or prohibit the sale of products containing CBD. Further, class action lawsuits have been filed against certain CBD manufacturers alleging that their products are misbranded, mislabeled and falsely advertised under state consumer protection laws. In November 2025, new federal legislation was signed into law that, effective November 13, 2026, significantly restricts the levels of THC permitted in hemp products, including prohibiting hemp products that contain greater than 0.4 milligrams of THC per container.

Some of the activities of our NHCs, who, among other duties, provide nutrition oriented educational services to our customers, may be subject to state and federal regulation and oversight by professional organizations, or may be misconstrued by our customers as medical advice. In the past, the FDA has expressed concerns regarding summarized health and nutrition-related information that: (i) does not, in the FDA’s view, accurately present such information; (ii) diverts a consumer’s attention and focus from FDA-required nutrition labeling and information; or (iii) impermissibly promotes drug-type disease-related benefits. Although we provide training to our NHCs on relevant regulatory requirements, we cannot control the actions of such individuals, and our NHCs may not act in accordance with such regulations. If our NHCs or other Crew members do not act in accordance with regulatory requirements, we may become subject to penalties or litigation, which could have a material adverse effect on our business. We believe we are currently compliant with relevant regulatory requirements, and we maintain professional liability insurance on behalf of our NHCs in order to mitigate risks associated with our NHCs’ nutrition oriented educational activities. However, we cannot predict the nature of future government regulation and oversight, including the potential impact of any such regulation on the services currently provided by our NHCs. Furthermore, the availability of professional liability insurance or the scope of such coverage may change, or our insurance coverage may prove inadequate, which may adversely impact the ability of our NHCs to provide some services to our customers. The occurrence of any such developments could negatively impact the perception of our brand, our sales, our ability to attract new customers and liability for governmental or third partythird-party claims.

Our reputation could also suffer from real or perceived issues involving the labeling or marketing of the products we sell. Products that we sell may carry claims as to the origin, purity, potency, and identify of ingredients, and claims regarding efficacy or health benefits, one example is the use of the term “natural.” Although the FDA and USDA each has issued statements regarding the appropriate use of the word “natural,” there is no single United States government-regulated definition of the term “natural” for use in the food industry. The resulting uncertainty has led to consumer confusion, distrust and legal challenges. PlaintiffsClass action lawyers have commenced legal actions against a number of foodconsumer product companies that market “natural” products, asserting false, misleading and deceptive advertising and labeling claims, including claims related to genetically modified ingredients. In limited circumstances, the FDA and state attorneys general have taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components. Another example is products not made from animal ingredients but identified on their labels as “meat” or “milk” or similar terms may also be subject to current state regulatory constraints and new regulatory constraints or legal challenges regarding the accuracy and legality of these terms. Should we become subject to similar claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded. Adverse publicity about these matters may discourage consumers from buying the products we sell. The cost of defending against any such claims could be significant. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims could be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which could have a material adverse effect on our business, financial condition and results of operations.

We could be materially, adversely affected if consumers lose confidence in the safety and quality of products we sell. There is substantial governmental scrutiny of and public awareness regarding food, cosmetics and dietary supplement safety. We believe that many customers hold us to a higher quality standard than other retailers. Many of the products we sell are vitamins, herbs and other ingredients that are classified as foods or dietary supplements and are not subject to pre-market regulatory approval in the United States. The products we sell could contain contaminated substances, and some of the products we sell contain ingredients or residual substances that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human use or consumption of these ingredients could occur. Unexpected side effects, illness, injury or death caused by the products we sell could result in the discontinuance of sales of the products we sell or prevent us from achieving market acceptance of the affected products. Such side effects, illnesses, injuries and death could also expose us to product liability or negligence lawsuits. Any claims brought against us may exceed our existing or future insurance policy coverage or limits. Any judgment against us that is in excess of our policy limits would have to be paid from our cash reserves, which would reduce our capital resources. Further, we may not have sufficient capital resources to pay a judgment in which case our creditors could levy against our assets. The real or perceived sale of contaminated or harmful products could result in government enforcement action, private litigation and product recalls. Such an occurrence could also cause negative publicity regarding our Company, brand or products, including negative publicity in social media. The real or perceived sale of contaminated or harmful products could therefore harm our reputation and net sales, have a material adverse effect on our business, financial condition and results of operations, or result in our insolvency.

In May 2016, our Board of Directors (the Board) authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of our common stock. Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate (unless further extended) on May 31, 2026. Potential future share repurchases under the share repurchase program could be funded by operating cash flow, excess cash balances or borrowings under our Credit Facility. The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. During fiscal year 2024,2025, we did not repurchase any shares of common stock. Such borrowings will reduce the amount of capital available under our Credit Facility for other purposes, including our working capital needs, capital expenditures and funding the execution of our growth strategy. Repurchases under the share repurchase program may therefore adversely affect our liquidity, which in turn could impact our profitability, financial condition and results of operations. In addition, repurchases under the share repurchase program will reduce the number of shares of our common stock available for purchase and sale in the public market, which could affect the market price of our common stock. Furthermore, the Inflation Reduction Act of 2022, which was signed into law in August 2022, imposes a non-deductible 1% excise tax on the fair market value of stock repurchases that exceed $1.0 million in a taxable year, which may impact the tax efficiency of our share repurchase program.

We paid a quarterly cash dividend of $0.12 and $0.10 per share of common stock during each quarter of fiscal years 20242025 and 2023,2024, and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024. On November 20,19, 2024,2025, our Board approved the payment of a quarterly cash dividend of $0.12$0.15 per share of common stockstock, towhich bewas paid on December 18,10, 20242025 to stockholders of record as of the close of business on December 2,1, 2024.2025. The timing, declaration, amount and payment of any future cash dividends are at the discretion of the Board and will depend on many factors, including our available cash, working capital, financial condition, earnings, results of operations and capital requirements; the covenants in our credit agreement; applicable law; and other business considerations that our Board considers relevant. A reduction in the amount of cash dividends on our common stock, the suspension of those dividends or a failure to meet market expectations regarding our dividends could have a material adverse effect on the market price of our common stock. If we do not pay cash dividends on our common stock in the future, realization of a gain on an investment in our common stock will depend entirely on the appreciation of the price of our common stock, which may not occur.

The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business. One analyst currently covers our stock. If theone analystor ceasesmore of these analysts cease to cover our Company or failsfail to publish reports on us regularly, we may lose visibility in the financial markets, which could cause our stock price or trading volume to decline. Moreover, if one or more of the analystanalysts who coverscover our Company downgradesdowngrade our common stock, or if our operating results do not meet itstheir expectations, our common stock price could decline.

The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five fiscal years ended September 30, 2024,2025, we increased our store count at a compound annual growth rate of 2.0%.1.2%. In fiscal year 2024,2025, we opened fourtwo new stores, relocated/remodeled three existing stores and relocated/remodeledclosed four existingtwo stores. We plan to open foursix to sixeight new stores and relocate/remodel two to fourthree existing stores in fiscal year 2025.2026. We intend to continue to target an annual new store unit growth rate of 4% to 5% for the foreseeable future. Between October 1, 20242025 and the date of this Form 10-K, we relocateddid not open any new stores or relocate/remodeledremodel twoany existing stores and closed twoone stores.store.

Our cost of goods sold and occupancy costs include the cost of inventory sold during the period (net of discounts and allowances), shipping and handling costs, distribution and supply chain costs (including the costs of our bulk food repackaging facility), buying costs, shrink expense, third-party delivery fees and store occupancy costs. Store occupancy costs include operating lease expense,rent, common area maintenance and real estate taxes. Depreciation expense included in cost of goods sold relates to depreciation of assets directly used at our bulk food repackaging facility. The components of our cost of goods sold and occupancy costs may not be identical to those of our competitors, and, as a result, our cost of goods sold and occupancy costs data included in this Form 10-K may not be identical to those of our competitors and may not be comparable to similar data made available by our competitors. Occupancy costs as a percentage of net sales typically decrease as new stores mature and sales increase. Lease payments for leases classified as finance lease obligations are not recorded in cost of goods sold and occupancy costs. Rather, these lease payments are recognized as a reduction of the related obligations and as interest expense.

Store expenses consist of store-level expenses, such as salary and benefits, share-based compensation, supplies, utilities, depreciation, advertising, bank credit card charges and other related costs associated with operations and purchasing support. Depreciation expense included in store expenses relates to depreciation for assets directly used at the stores, including depreciation on land improvements, leasehold improvements, fixtures and equipment and technology. Depreciation expenses on the lease assets related to the finance leases of the stores are also considered store expenses. Additionally, store expenses include any gain or loss recorded on the disposal of fixed assets and lease terminations, primarily related to store relocations, as well as store closing costs. Store expenses also include long-lived asset impairment charges. The majority of store expenses consistsconsist of labor-related expenses, which we closely manage and which trend closely with sales. Labor-related expenses as a percentage of net sales tend to be higher at new stores compared to comparable stores, as new stores require a minimum level of staffing in order to maintain adequate levels of customer service combined with lower sales. As new stores increase their sales, labor-related expenses as a percentage of net sales typically decrease.

Administrative expenses consist of home office-related expenses, such as salary and benefits, share-based compensation, office supplies, hardware and software expenses, depreciation and amortization expense, occupancy costs (including rent, common area maintenance, real estate taxes and utilities), software services expenses, professional services expenses, expenses associated with our Board, expenses related to compliance with the requirements of regulations applicable to publicly traded companies, and other general and administrative expenses. Depreciation expense included in administrative expenses relates to depreciation for assets directly used at the home office including depreciation on land improvements, leasehold improvements, fixtures and equipment, and computer hardware and software.

Pre-opening expenses for new stores and relocations/remodels may include rent expense, salaries, advertising, supplies, and other miscellaneous costs incurred prior to the store opening. Rent expense is generally incurred from three to six months prior to a store’s opening date for store leases classified as operating. For store leases classified as finance leases, we recognize pre-opening interest and depreciation expense. Other pre-opening expenses are generally incurred in the four to seven months prior to the store opening. Certain advertising and promotional costs associated with opening a new store may be incurred both before and after the store opens. All pre-opening costs are expensed as incurred. Pre-opening expenses for remodels are incurred if the store is required to be closed due to the remodel.

EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP. We define EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company’s actual operating performance, including certain items such as impairment charges, store closing costs, share-based compensationcompensation, amortization of software hosting arrangement (SaaS) implementation costs and non-recurring items.

Our ongoing primary sources of liquidity are cash generated from operations, current balances of cash and cash equivalents and borrowings under our Credit Facility. Our primary uses of cash are for purchases of merchandise inventory, operating expenses, SaaS implementation costs, capital expenditures predominantly in connection with opening, relocating and remodeling stores, property acquisitions, debt service, cash dividends, share repurchases and corporate taxes. As of September 30, 2024,2025, we had $8.9$17.1 million in cash and cash equivalents and $72.8$70.1 million available for borrowing under our Credit Facility.

We paid a quarterly cash dividendsdividend of $0.10$0.12 per share of common stock in each quarter of fiscal year 2024 and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024. The special cash dividend was funded through available cash and borrowings under our Credit Facility.2025. On November 20,19, 2024,2025, our Board approved the payment of a quarterly cash dividend of $0.12$0.15 per share of common stock, which will bewas paid on December 18,10, 20242025 to stockholders of record as of the close of business on December 2,1, 2024.2025.

The aggregate revolving commitment amount under the Credit FacilityFacility, as of the date of this report, is $72.5$70.0 million, including a $5.0 million sub-limit for standby letters of credit. We borrowed $35.0 million under a term loan in December 2020 (the Term Loan). As of September 30, 2024, we had fully repaid all remaining amounts outstanding under the Term Loan. Our wholly owned subsidiary, Vitamin Cottage Natural Food Markets, Inc. (the operating company), is the borrower under the Credit Facility, and its obligations under the Credit Facility are guaranteed by usus, (the holding company) and Vitamin Cottage Two Ltd. Liability Company (VC2).company. The Credit Facility is secured by a lien on substantially all of the Company’s assets. The Company has the right to borrow, prepay and re-borrow revolving amounts under the Credit Facility at any time prior to the maturity date without premium or penalty. On November 16, 2023, we amended the Credit Facility to: (i) increase our aggregate revolving commitments from $50.0 million to $75.0 million; (ii) extend the maturity date of the revolving commitments under the Credit Facility to November 16, 2028; (iii) permit payment of a one-time cash dividend of up to $25.0 million no later than December 31, 2023; and (iv) increase the Company’s restricted payment capacity by $2.5 million, allowing the Company to repurchase shares of common stock and pay dividends on its common stock in an aggregate amount not to exceed $15.0 million during any fiscal year. The aggregate revolving commitment amount will be automatically and permanently reduced by $2.5 million on each anniversary date until the Credit Facility matures on November 16, 2028, unless we have previously exercised our option to reduce the aggregate revolving commitments to a lower amount.

We had no revolving loan amounts outstanding under the Credit Facility as of September 30, 20242025 and 2023. We had no amounts and $7.7 million outstanding under the Term Loan as of September 30, 2024 and 2023, respectively.2024. As of September 30, 20242025 and 2023,2024, we had undrawn, issued and outstanding letters of credit of $2.2$2.4 million and $1.5$2.2 million, respectively, which were reserved against the amount available for borrowing under the Credit Facility. We had $72.8$70.1 million and $48.5$72.8 million available for borrowing under the Credit Facility as of September 30, 20242025 and 2023,2024, respectively.

We assess our goodwill and indefinite-lived intangible assets, primarily consisting of trademarks, for possible impairment on an annual basis during our fourth fiscal quarter, orand more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In performing the Company’s analysis of goodwill, the Company first evaluates qualitative factors, including relevant events and circumstances, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value should be recognized; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. There are significant judgments and estimates within the processes; it is therefore possible that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change. The Company has determined that its business, for purposes of impairment evaluation for goodwill and indefinite-lived intangible assets, consists of a single reporting unit. As of September 30, 2024,2025, the Company has recorded no impairment charges related to goodwill and indefinite-lived intangible assets.

We assess our long-lived assets, principally property and equipment, lease assets, and intangible and other assets subject to amortization, primarily internal-use software and implementation costs for software hosting arrangements, respectively, for possible impairment at least annually, orand whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. These events or changes primarily include a significant change in current period performance combined with a history of losses and a projection of continuing losses, or a decision to close or relocate a store. The Company assesses the recoverability of the property and equipment and lease assets at the individual store level, and the intangible and other assets at the consolidated entity level. If the carrying value of such assets over their respective remaining lives is not recoverable through projected undiscounted future cash flows, impairment is recognized for any excess of the carrying value over the estimated fair value of the asset group. The fair value of the asset group is estimated based on either: (i) discounted future cash flows; (ii) an appropriate third-party market appraisal; or (iii) other valuation technique.

We operate natural and organic grocery and dietary supplement stores that are focused on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach. We offer a variety of natural and organic groceries, dietary supplements and body care products that meet our strict quality standards. We believe we have been at the forefront of the natural and organic foods movement since our founding. We are headquartered in Lakewood, Colorado. As of MarchJune 31,30, 2026, we operated 169172 stores in 2122 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, WashingtonWashington, Wisconsin and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.

The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five fiscal years ended September 30, 2025, we increased our store count at a compound annual growth rate of 1.2%. In fiscal year 2025, we opened two new stores, relocated/remodeled three existing stores and closed two stores. We plan to open six to eightseven new stores and relocate/remodel two to three existing stores in fiscal year 2026. We intend to target an annual new store unit growth rate of 4% to 5% for the foreseeable future. During the sixnine months ended MarchJune 31,30, 2026, we opened onefour new store,stores, relocated onetwo existing storestores and closed one store. Between AprilJuly 1, 2026 and the date of this Form 10-Q, we opened onetwo new store and relocated one existing store.stores.

Key highlights of our performance for the three and sixnine months ended MarchJune 31,30, 2026 are discussed briefly below and in further detail throughout this MD&A. Key financial metrics, including, but not limited to, daily average comparable store sales, are defined in the section “Key Financial Metrics in Our Business,” presented later in this MD&A.

Administrative expenses consist of home office-related expenses, such as salary and benefits, share-based compensation, office supplies, hardware and software expenses, depreciation and amortization expense, occupancy costs (including rent, common area maintenance, real estate taxes and utilities), software services expenses, professional services expenses, expenses associated with our Board, expenses related to compliance with the requirements of regulations applicable to publicly traded companies, rental income, business interruption insurance recovery gain, and other general and administrative expenses and income. Depreciation expense included in administrative expenses relates to depreciation for assets directly used at the home office including depreciation on land improvements, leasehold improvements, fixtures and equipment, and computer hardware and software.

Interest expense consists of the interest associated with our finance lease obligationsobligations, Credit Facility and ourCo-PACE Credit Facility,Financing, net of capitalized interest.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

Net sales increased $1.6$6.0 million, or 0.5%,1.8%, to $337.4$334.7 million for the three months ended MarchJune 31,30, 2026 compared to $335.8$328.7 million for the three months ended MarchJune 31,30, 2025, due to a $1.7$4.0 million increase in comparable store sales and a $1.1$3.1 million increase in new store sales, partially offset by a $1.1 million decrease in net sales related to closed stores. Daily average comparable store sales increased 0.5%1.2% for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The daily average comparable store sales increase resulted from a 1.6%3.1% increase in daily average transaction size, partially offset by a 1.1%1.8% decrease in daily average transaction count. Comparable store average transaction size was $49.67$49.48 for the three months ended MarchJune 31,30, 2026.

Gross profit increaseddecreased $0.7$0.3 million, or 0.7%,0.3%, to $102.4$98.0 million for the three months ended MarchJune 31,30, 2026 compared to $101.7$98.3 million for the three months ended MarchJune 31,30, 2025. Gross profit reflects earnings after product and store occupancy costs. Gross margin increaseddecreased to 30.4%29.3% for the three months ended MarchJune 31,30, 2026 compared to 30.3%29.9% for the three months ended MarchJune 31,30, 2025. The increasedecrease in gross margin during the three months ended March 31, 2026 was driven by lower storeproduct occupancymargin costsprimarily due to an unfavorable change in sales mix, as awell percentageas higher merchandise inventory shrink and freight costs. The Company’s primary distributor’s cybersecurity incident in the third quarter of sales.fiscal 2025 affected the year-over-year comparability of product margin mix and shrink for the current period.

Store expenses decreasedincreased $1.2$0.5 million, or 1.6%,0.7%, to $71.6$72.2 million for the three months ended MarchJune 31,30, 2026 compared to $72.8$71.7 million for the three months ended MarchJune 31,30, 2025. The decrease in store expenses was primarily driven by expense management. Store expenses as a percentage of net sales were 21.2%21.6% and 21.7%21.8% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in store expenses as a percentage of net sales was driven by expense management.

Administrative expenses increaseddecreased $1.1$1.4 million, or 10.0%,13.2%, to $12.1$9.5 million for the three months ended MarchJune 31,30, 2026 compared to $11.0$10.9 million for the three months ended MarchJune 31,30, 2025. The increase in administrative expenses was primarily driven by higher technology expenses. Administrative expenses as a percentage of net sales were 3.6%2.8% and 3.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Administrative expenses for the three months ended June 30, 2026 included a business interruption insurance recovery gain of $2.0 million related to the Company’s primary distributor’s cybersecurity incident in June and July 2025.

Pre-opening expenses were $0.6$1.3 million for the three months ended MarchJune 31,30, 2026 compared to $0.4less than $0.1 million for the three months ended MarchJune 31,30, 2025.

Interest expense, net of capitalized interest, was $0.6$0.7 million for each of the three months ended MarchJune 31,30, 2026 compared to $0.8 million for the three months ended March 31,and 2025.

Income tax expense increasedwas $0.3$3.3 million for each of the three months ended MarchJune 31,30, 2026 to $4.0 million compared to $3.7 million for the three months ended March 31,and 2025. The Company’s effective income tax rate was 23.1%22.7% and 22.0%22.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Net income was $13.4$11.1 million, or $0.58$0.48 diluted earnings per share, for the three months ended MarchJune 31,30, 2026 compared to $13.1$11.6 million, or $0.56$0.50 diluted earnings per share, for the three months ended MarchJune 31,30, 2025.

SixNine months ended MarchJune 31,30, 2026 compared to the sixnine months ended MarchJune 31,30, 2025

Net sales increased $7.0$13.0 million, or 1.0%,1.3%, to $673.0$1,007.7 million for the sixnine months ended MarchJune 31,30, 2026 compared to $666.0$994.7 million for the sixnine months ended MarchJune 31,30, 2025, due to aan $7.4$11.3 million increase in comparable store sales and a $3.5$6.6 million increase in new store sales, partially offset by a $3.9$5.0 million decrease in net sales related to closed stores. Daily average comparable store sales increased 1.1% for the sixnine months ended MarchJune 31,30, 2026 compared to the sixnine months ended MarchJune 31,30, 2025. The daily average comparable store sales increase forresulted thefrom sixa months ended March 31, 2026 was primarily driven by an1.8% increase in daily average transaction size.size, partially offset by a 0.6% decrease in daily average transaction count. Comparable store average transaction size was $49.51$49.50 for the sixnine months ended MarchJune 31,30, 2026.

Gross profit increased $0.7$0.5 million, or 0.4%,0.2%, to $201.3$299.3 million for the sixnine months ended MarchJune 31,30, 2026 compared to $200.6$298.9 million for the sixnine months ended MarchJune 31,30, 2025. Gross profit reflects earnings after product and store occupancy costs. Gross margin decreased to 29.9%29.7% for the sixnine months ended MarchJune 31,30, 2026 compared to 30.1%30.0% for the sixnine months ended MarchJune 31,30, 2025. The decrease in gross margin during the sixnine months ended MarchJune 31,30, 2026 was driven by lower product margin primarily due to unfavorable sales mix and higher merchandise inventory shrink during the three months ended December 31, 2025.shrink.

Store expenses decreased $1.7$1.2 million, or 1.2%,0.5%, to $144.6$216.8 million for the sixnine months ended MarchJune 31,30, 2026 compared to $146.3$218.0 million for the sixnine months ended MarchJune 31,30, 2025. The decrease in store expenses was primarily driven by expense management. Store expenses as a percentage of net sales were 21.5% and 22.0%21.9% for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.

Administrative expenses increaseddecreased $0.4$1.0 million, or 1.9%,3.1%, to $23.0$32.5 million for the sixnine months ended MarchJune 31,30, 2026 compared to $22.5$33.5 million for the sixnine months ended MarchJune 31,30, 2025. The increasedecrease in administrative expenses was primarily driven by higherthe technologybusiness expensesinterruption insurance recovery gain of $2.0 million recorded during the three months ended June 30, 2026 and lower compensation expenses, partially offset by lowerhigher compensationtechnology expenses. Administrative expenses as a percentage of net sales was 3.2% and 3.4% for each of the sixnine months ended MarchJune 31,30, 2026 and 2025.2025, respectively.

Pre-opening expenses were $1.0$2.3 million for the sixnine months ended MarchJune 31,30, 2026 compared to $0.9 million for the sixnine months ended MarchJune 31,30, 2025.

Interest expense, net of capitalized interest, was $1.3$2.0 million for the sixnine months ended MarchJune 31,30, 2026 compared to $1.7$2.4 million for the sixnine months ended MarchJune 31,30, 2025.

Income tax expense increased $0.5$0.4 million for the sixnine months ended MarchJune 31,30, 2026 to $6.6$9.9 million compared to $6.2$9.5 million for the sixnine months ended MarchJune 31,30, 2025. The Company’s effective income tax rate was 21.1%21.6% and 21.2%21.5% for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.

Net income was $24.8$35.8 million, or $1.07$1.54 diluted earnings per share, for the sixnine months ended MarchJune 31,30, 2026 compared to $23.0$34.6 million, or $0.99$1.49 diluted earnings per share, for the sixnine months ended MarchJune 31,30, 2025.

EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP. We define EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company’s actual operating performance, including certain items such as impairment charges, store closing costs, share-based compensation, amortization of SaaS implementation costscosts, business interruption insurance recovery gain, and non-recurring items.

EBITDA increaseddecreased 3.2%0.9% to $26.3$23.3 million for the three months ended MarchJune 31,30, 2026 compared to $25.4$23.5 million for the three months ended MarchJune 31,30, 2025. EBITDA increased 4.6%2.7% to $48.9$72.2 million for the sixnine months ended MarchJune 31,30, 2026 compared to $46.7$70.3 million for the sixnine months ended MarchJune 31,30, 2025. EBITDA as a percentage of net sales was 7.8%7.0% and 7.6%7.2% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. EBITDA as a percentage of net sales was 7.3%7.2% and 7.0%7.1% for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.

Adjusted EBITDA increaseddecreased 4.0%7.6% to $27.4$22.5 million for the three months ended MarchJune 31,30, 2026 compared to $26.3$24.4 million for the three months ended MarchJune 31,30, 2025. Adjusted EBITDA increaseddecreased 3.6%0.1% to $50.9$73.4 million for the sixnine months ended MarchJune 31,30, 2026 compared to $49.1$73.5 million for the sixnine months ended MarchJune 31,30, 2025. Adjusted EBITDA as a percentage of net sales was 8.1%6.7% and 7.8%7.4% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Adjusted EBITDA as a percentage of net sales was 7.6%7.3% and 7.4% for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively.

Our ongoing primary sources of liquidity are cash generated from operations, current balances of cash and cash equivalents and borrowings under our Credit Facility. Our primary uses of cash are for purchases of merchandise inventory, operating expenses, SaaS implementation costs, capital expenditures predominantly in connection with opening, relocating and remodeling stores, property acquisitions, debt service, cash dividends, share repurchases and corporate taxes. As of MarchJune 31,30, 2026, we had $20.7$17.5 million in cash and cash equivalents and $67.6$67.3 million available for borrowing under our Credit Facility.

In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of the Company’s common stock. Our Board subsequently extended the share repurchase program – most recently in May 2026 – and the current program will terminate on May 31, 2028. We did not repurchase any shares of our common stock during the three months ended MarchJune 31,30, 2026. The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. Potential future share repurchases under the share repurchase program could be funded by operating cash flow, excess cash balances or borrowings under our Credit Facility. The timing and the number of shares repurchased, if any, will be dictated by our capital needs and stock market conditions.

We paid a quarterly cash dividend of $0.15 per share of common stock in each of the first twothree quarters of fiscal year 2026. On MayAugust 6,5, 2026, our Board approved the payment of a quarterly cash dividend of $0.15 per share of common stock to be paid on JuneSeptember 3,2, 2026 to stockholders of record as of the close of business on MayAugust 18,17, 2026.

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, impairment of long-lived assets and store closures, share-based compensation, and changes in deferred taxes, and the effect of changes in operating assets and liabilities. Cash provided by operating activities increased $7.1$15.4 million, or 19.3%,38.9%, to $43.8$55.1 million for the sixnine months ended MarchJune 31,30, 2026 compared to $36.7$39.7 million for the sixnine months ended MarchJune 31,30, 2025. The increase in cash provided by operating activities was the result of increases in cash provided by net income as adjusted for non-cash items and inincreased cash provided by operating assets and liabilities, primarily attributable to the timing of merchandiseaccounts inventorypayable purchasespayments and lower capitalized SaaS implementation costs.costs, and an increase in cash provided by net income, including the business interruption insurance recovery of $2.0 million, as adjusted for non-cash items.

Net cash used in investing activities increased $14.5$17.4 million, or 91.1%,75.8%, to $30.3$40.3 million for the sixnine months ended MarchJune 31,30, 2026 compared to $15.9$22.9 million for the sixnine months ended MarchJune 31,30, 2025. This increase was primarily the result of increases in acquisitions of property and equipment of $13.9$16.8 million and other intangibles of $0.3 million during the sixnine months ended MarchJune 31,30, 2026 compared to the sixnine months ended MarchJune 31,30, 2025, and was attributedprimarily attributable to real property acquisitions and the increased number of new store developments.developments and real property acquisitions.

Acquisition of property and equipment not yet paid increased $3.2 million to $5.9$5.4 million for the sixnine months ended MarchJune 31,30, 2026 compared to $2.7$2.2 million for the sixnine months ended MarchJune 31,30, 2025 due to the timing of payments related to the development of new store openingsstores and relocations/remodels.

Net cash used in financing activities consists primarily of borrowings and repayments under our Credit Facility and dividends paid to stockholders. Net cash used in financing activities was $9.9$14.4 million for the sixnine months ended MarchJune 31,30, 2026 compared to $8.5$12.4 million for the sixnine months ended MarchJune 31,30, 2025.

The Credit Facility requires compliance with certain customary operational and financial covenants, including a consolidated leverage ratio. The Credit Facility also contains certain other customary limitations on the Company’s ability to incur additional debt, guarantee other obligations, grant liens on assets and make investments or acquisitions, among other limitations. Additionally, the Credit Facility prohibits the payment of cash dividends to the holding company from the operating company without the requiredadministrative lenders’agent’s consent, provided that so long as no default exists or would arise as a result thereof, the operating company may pay cash dividends to the holding company in an amount sufficient to allow the holding company to: (i) pay various audit, accounting, tax, securities, indemnification, reimbursement, insurance and other reasonable expenses incurred in the ordinary course of business and (ii) repurchase shares of common stock and pay dividends on our common stock in an aggregate amount not to exceed $15.0 million during any fiscal year.

We had no revolving loan amounts outstanding under the Credit Facility as of MarchJune 31,30, 2026 and September 30, 2025. As of MarchJune 31,30, 2026 and September 30, 2025, we had undrawn, issued and outstanding letters of credit of $2.7 million and $2.4 million, respectively, which were reserved against the amount available for borrowing under the Credit Facility. We had $67.6$67.3 million and $70.1 million available for borrowing under the Credit Facility as of MarchJune 31,30, 2026 and September 30, 2025, respectively.

As of MarchJune 31,30, 2026 and September 30, 2025, the Company was in compliance with all covenants under the Credit Facility.

On January 21, 2026, in connection with the acquisition of an office building,building landand land, which we intend to use as our future corporate headquarters, and related tenant lease intangibles, we assumed Co-PACE Financing of $1.5 million, with semi-annual payments of $0.1 million each, a fixed annual interest rate of 5.9% and a maturity date of June 15, 2038. As part of the asset acquisition transaction, the seller prepaid both of the scheduled calendar year 2026 payments. The assumed Co-PACE Financing is secured by an assessment lien on the acquired land and building. We had $1.5 million outstanding under the Co-PACE Financing as of MarchJune 31,30, 2026.