# EDGAR Filing Document

**Accession Number:** 0001547459
**File Stem:** 0001437749-25-025419
**Filing Date:** 2025-8
**Character Count:** 128555
**Document Hash:** 657f67a2089daf3370b0e7256ccd58ba
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-025419.hdr.sgml**: 20250807

**ACCESSION NUMBER**: 0001437749-25-025419

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 65

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250807

**DATE AS OF CHANGE**: 20250807

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Natural Grocers by Vitamin Cottage, Inc.
- **CENTRAL INDEX KEY:** 0001547459
- **STANDARD INDUSTRIAL CLASSIFICATION:** RETAIL-GROCERY STORES [5411]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 841444517
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35608
- **FILM NUMBER:** 251193926

**BUSINESS ADDRESS:**
- **STREET 1:** 12612 W. ALAMEDA PARKWAY
- **CITY:** LAKEWOOD
- **STATE:** CO
- **ZIP:** 80228
- **BUSINESS PHONE:** 877-986-4600

**MAIL ADDRESS:**
- **STREET 1:** 12612 W. ALAMEDA PARKWAY
- **CITY:** LAKEWOOD
- **STATE:** CO
- **ZIP:** 80228

?xml version='1.0' encoding='ASCII'? ngvc20250630_10q.htm

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**UNITED STATES**

 **SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025**

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**COMMISSION FILE NUMBER: 001-35608**![ng01.jpg](ng01.jpg)

**Natural Grocers by Vitamin Cottage, Inc.**

(Exact name of registrant as specified in its charter)

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| | |
|:---|:---|
| **Delaware** | **45-5034161** |
| (State or other jurisdiction of<br> incorporation or organization) | (I.R.S. Employer<br> Identification No.) |

---

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| | |
|:---|:---|
| **12612 West Alameda Parkway** | **80228** |
| **Lakewood, Colorado**<br> (Address of principal executive offices) | (Zip code) |

---

**(303) 986-4600**

(Registrant's telephone number, including area code)

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **<u>Title of each class</u>** | **<u>Trading symbol</u>**  | **<u>Name of each exchange on which registered</u>** |
| **Common Stock, $0.001 par value** | **NGVC** | **New York Stock Exchange** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | |
|:---|:---|
| Large accelerated filer ☐ | Accelerated filer ☒ |
| Non –accelerated filer ☐ | Smaller reporting company ☒ |
|  | Emerging growth company ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of August 4, 2025 was 22,954,109.

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**Natural Grocers by Vitamin Cottage, Inc.**

**Quarterly Report on Form 10-Q**

**For the Quarterly Period Ended June 30, 2025**

**Table of Contents**

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| | | |
|:---|:---|:---|
|  |  | **Page** <br> **Number** |
|  | [PART I. Financial Information](#parti) |  |
| Item 1. | [Financial Statements](#parti) | [4](#parti) |
|  | [Consolidated Balance Sheets as of June 30, 2025 and September 30, 2024 (unaudited)](#parti) | [4](#parti) |
|  | [Consolidated Statements of Income for the three and nine months ended June 30, 2025 and 2024 (unaudited)](#soi) | [5](#soi) |
|  | [Consolidated Statements of Cash Flows for the nine months ended June 30, 2025 and 2024 (unaudited)](#cf) | [6](#cf) |
|  | [Consolidated Statements of Changes in Stockholders' Equity for the nine months ended June 30, 2025 and 2024 (unaudited)](#se) | [7](#se) |
|  | [Notes to Unaudited Interim Consolidated Financial Statements](#notes) | [8](#notes) |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#mdanda) | [18](#mdanda) |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#qandq) | [29](#qandq) |
| Item 4. | [Controls and Procedures](#controls) | [29](#controls) |
|  | [PART II. Other Information](#partii) |  |
| Item 1. | [Legal Proceedings](#legal) | [30](#legal) |
| Item 1A. | [Risk Factors](#risk) | [30](#risk) |
| Item 6. | [Exhibits](#exhibits) | [31](#exhibits) |
| [SIGNATURES](#signatures) | [SIGNATURES](#signatures) | [32](#signatures) |

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*Except where the context otherwise requires or where otherwise indicated: (i) all references herein to* ''*we,*'' ''*us,*'' ''*our,*'' ''*Natural Grocers*'' *and the* "*Company*'' *refer collectively to Natural Grocers by Vitamin Cottage, Inc. and its consolidated subsidiaries and (ii) all references to a* "*fiscal year*" *refer to a year beginning on October 1 of the previous year and ending on September 30 of such year (for example,* "*fiscal year 2025*" *refers to the year from October 1, 2024 to September 30, 2025).*

**Forward-Looking Statements**

This Quarterly Report on Form 10-Q (this Form 10-Q) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 in addition to historical information. These forward-looking statements are included throughout this Form 10-Q, including in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." All statements that are not statements of historical fact, including those that relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, future growth, pending legal proceedings and other financial and operating information, are forward-looking statements. We may use the words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "target" and similar terms and phrases to identify forward-looking statements in this Form 10-Q.

The forward-looking statements contained in this Form 10-Q are based on management's current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, national, regional or local political, economic, inflationary, deflationary, recessionary, business, interest rate, labor market, competitive, market, regulatory, trade policy and other factors, many of which are beyond our control. We believe that these factors include those referenced in Item 1A - "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the Form 10-K). Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

Any forward-looking statement made by us in this Form 10-Q speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws. You are advised, however, to consult any disclosures we may make in our future reports filed with the Securities and Exchange Commission (the SEC). Our reports and other filings with the SEC are available at the SEC's website at *www.sec.gov*. Our reports and other filings with the SEC are also available, free of charge, through our website at *www.naturalgrocers.com*.

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[**Table of Contents**](#toc)

**PART I. Financial Information**

**Item 1. Financial Statements**

**NATURAL GROCERS BY VITAMIN COTTAGE, INC.**

**Consolidated Balance Sheets** 

**(Unaudited)**

***(Dollars in thousands, except per share data)***

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2025** | **September 30,** <br> **2024** |
| **Assets** |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $13178 | 8871 |
| Accounts receivable, net | 12810 | 12610 |
| Merchandise inventory | 124626 | 120672 |
| Prepaid expenses and other current assets | 6362 | 4905 |
| Total current assets | 156976 | 147058 |
| Property and equipment, net | 181037 | 178609 |
| Other assets: |  |  |
| Operating lease assets, net | 263928 | 275111 |
| Finance lease assets, net | 40643 | 40752 |
| Other assets | 4218 | 458 |
| Goodwill and other intangible assets, net | 12195 | 13488 |
| Total other assets | 320984 | 329809 |
| Total assets | $658997 | 655476 |
| **Liabilities and Stockholders**' **Equity** |  |  |
| Current liabilities: |  |  |
| Accounts payable | $82455 | 88397 |
| Accrued expenses | 31481 | 35847 |
| Operating lease obligations, current portion | 36428 | 35926 |
| Finance lease obligations, current portion | 4128 | 3960 |
| Total current liabilities | 154492 | 164130 |
| Long-term liabilities: |  |  |
| Operating lease obligations, net of current portion | 250724 | 263404 |
| Finance lease obligations, net of current portion | 43253 | 43217 |
| Deferred income tax liabilities, net | 8027 | 10471 |
| Total long-term liabilities | 302004 | 317092 |
| Total liabilities | 456496 | 481222 |
| Commitments (Notes 7 and 14) |  |  |
| Stockholders' equity: |  |  |
| Common stock, $0.001 par value, 50,000,000 shares authorized, 22,954,109 and 22,888,540 shares issued and outstanding at June 30, 2025 and September 30, 2024, respectively | 23 | 23 |
| Additional paid-in capital | 62185 | 60327 |
| Retained earnings | 140293 | 113904 |
| Total stockholders' equity | 202501 | 174254 |
| Total liabilities and stockholders' equity | $658997 | 655476 |

---

See accompanying notes to unaudited interim consolidated financial statements.

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**NATURAL GROCERS BY VITAMIN COTTAGE, INC.**

**Consolidated Statements of Income**

**(Unaudited)**

***(Dollars in thousands, except per share data)***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended<br> June 30,** | **Three months ended<br> June 30,** | **Nine months ended<br> June 30,** | **Nine months ended<br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net sales | $328705 | 309082 | 994695 | 918924 |
| Cost of goods sold and occupancy costs | 230426 | 218751 | 695844 | 649476 |
| Gross profit | 98279 | 90331 | 298851 | 269448 |
| Store expenses | 71719 | 67575 | 218000 | 204791 |
| Administrative expenses | 10949 | 9545 | 33486 | 28474 |
| Pre-opening expenses | 24 | 364 | 877 | 1272 |
| Operating income | 15587 | 12847 | 46488 | 34911 |
| Interest expense, net | (694) | (1052) | (2367) | (3123) |
| Income before income taxes | 14893 | 11795 | 44121 | 31788 |
| Provision for income taxes | (3288) | (2586) | (9477) | (6863) |
| Net income | $11605 | 9209 | 34644 | 24925 |
| Net income per share of common stock: |  |  |  |  |
| Basic | $0.51 | 0.40 | 1.51 | 1.09 |
| Diluted | $0.50 | 0.40 | 1.49 | 1.08 |
| Weighted average number of shares of common stock outstanding: |  |  |  |  |
| Basic | 22951339 | 22789057 | 22930084 | 22766516 |
| Diluted | 23311935 | 23115356 | 23247316 | 23052044 |

---

See accompanying notes to unaudited interim consolidated financial statements.

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**NATURAL GROCERS BY VITAMIN COTTAGE, INC.**

**Consolidated Statements of Cash Flows** 

**(Unaudited)**

***(Dollars in thousands)***

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| | | |
|:---|:---|:---|
|  | **Nine months ended June 30,**  | **Nine months ended June 30,**  |
|  | **2025** | **2024** |
| Operating activities: |  |  |
| Net income | $34644 | 24925 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Depreciation and amortization | 23791 | 22998 |
| Loss on impairment of long-lived assets and store closing costs | 81 | 390 |
| (Gain) loss on disposal of property and equipment | (30) | 10 |
| Share-based compensation | 3100 | 1900 |
| Deferred income tax benefit | (2444) | (2519) |
| Non-cash interest expense | 3 | 14 |
| Other | 3 | (160) |
| Changes in operating assets and liabilities: |  |  |
| (Increase) decrease in: |  |  |
| Accounts receivable, net | (1055) | 1318 |
| Merchandise inventory | (3954) | 1923 |
| Prepaid expenses and other assets | (5232) | (1009) |
| Income tax receivable |  | 252 |
| Operating lease assets | 25221 | 25005 |
| (Decrease) increase in: |  |  |
| Operating lease liabilities | (25565) | (25386) |
| Accounts payable | (4520) | 2023 |
| Accrued expenses | (4366) | (2404) |
| Net cash provided by operating activities | 39677 | 49280 |
| Investing activities: |  |  |
| Acquisition of property and equipment  | (23124) | (31016) |
| Acquisition of other intangibles | (167) | (839) |
| Proceeds from sale of property and equipment | 44 | 3 |
| Proceeds from property insurance settlements | 305 | 44 |
| Net cash used in investing activities | (22942) | (31808) |
| Financing activities: |  |  |
| Borrowings under revolving loans | 486200 | 455300 |
| Repayments under revolving loans | (486200) | (438700) |
| Repayments under term loan |  | (6000) |
| Finance lease obligation payments | (2931) | (2653) |
| Dividends to shareholders | (8255) | (29585) |
| Payments of deferred financing costs |  | (18) |
| Payments on withholding tax for restricted stock unit vesting | (1242) | (243) |
| Net cash used in financing activities | (12428) | (21899) |
| Net increase (decrease) in cash and cash equivalents | 4307 | (4427) |
| Cash and cash equivalents, beginning of period | 8871 | 18342 |
| Cash and cash equivalents, end of period | $13178 | 13915 |
| Supplemental disclosures of cash flow information: |  |  |
| Cash paid for interest | $959 | 1630 |
| Cash paid for interest on finance lease obligations, net of capitalized interest of $164 and $302, respectively | 1441 | 1422 |
| Income taxes paid | 11644 | 8264 |
| Supplemental disclosures of non-cash investing and financing activities: |  |  |
| Acquisition of property and equipment not yet paid | $2157 | 2578 |
| Acquisition of other intangibles not yet paid |  | 51 |
| Lease assets obtained in exchange for new operating lease obligations | 14022 | 13073 |
| Lease assets obtained in exchange for new finance lease obligations | 3135 | (45) |

---

See accompanying notes to unaudited interim consolidated financial statements.

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**NATURAL GROCERS BY VITAMIN COTTAGE, INC.**

**Consolidated Statements of Changes in Stockholders**' **Equity**

**For the Nine Months Ended June 30, 2025 and 2024**

**(Unaudited)**

***(Dollars in thousands, except per share data)***

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common stock –**  | **Common stock –**  |  |  |  |
|  | **$0.001 par value** | **$0.001 par value** | **Additional** |  | **Total** |
|  | **Shares** <br> **outstanding** | **Amount** | **paid-in** <br> **capital** | **Retained** <br> **earnings** | **stockholders'** <br> **equity** |
| Balances September 30, 2024 | 22888540 | $23 | $60327 | $113904 | $174254 |
| Net income |  |  |  | 9938 | 9938 |
| Share-based compensation |  |  | 433 |  | 433 |
| Issuance of common stock | 42686 |  |  |  |  |
| Cash dividend |  |  |  | (2749) | (2749) |
| Balances December 31, 2024 | 22931226 | 23 | 60760 | 121093 | 181876 |
| Net income |  |  |  | 13101 | 13101 |
| Share-based compensation |  |  | 749 |  | 749 |
| Issuance of common stock | 14900 |  |  |  |  |
| Cash dividend |  |  |  | (2751) | (2751) |
| Balances March 31, 2025 | 22946126 | 23 | 61509 | 131443 | 192975 |
| Net income |  |  |  | 11605 | 11605 |
| Share-based compensation |  |  | 676 |  | 676 |
| Issuance of common stock | 7983 |  |  |  |  |
| Cash dividend |  |  |  | (2755) | (2755) |
| Balances June 30, 2025 | 22954109 | $23 | $62185 | $140293 | $202501 |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common stock –**  | **Common stock –**  |  |  |  |  |
|  | **$0.001 par value** | **$0.001 par value** | **Additional** |  |  | **Total** |
|  | **Shares** <br> **outstanding** | **Amount** | **paid-in** <br> **capital** | **Retained** <br> **earnings** | **Treasury** <br> **stock** | **stockholders'** <br> **equity** |
| Balances September 30, 2023 | 22738915 | $23 | $59013 | $111871 | $(66) | $170841 |
| Net income |  |  |  | 7755 |  | 7755 |
| Share-based compensation |  |  | 262 |  | 66 | 328 |
| Issuance of common stock | 13498 |  |  |  |  |  |
| Adoption of accounting standard |  |  |  | (36) |  | (36) |
| Cash dividend |  |  |  | (25028) |  | (25028) |
| Balances December 31, 2023 | 22752413 | 23 | 59275 | 94562 |  | 153860 |
| Net income |  |  |  | 7961 |  | 7961 |
| Share-based compensation |  |  | 431 |  |  | 431 |
| Issuance of common stock | 19556 |  |  |  |  |  |
| Cash dividend |  |  |  | (2278) |  | (2278) |
| Balances March 31, 2024 | 22771969 | 23 | 59706 | 100245 |  | 159974 |
| Net income |  |  |  | 9209 |  | 9209 |
| Share-based compensation |  |  | 898 |  |  | 898 |
| Issuance of common stock | 21624 |  |  |  |  |  |
| Cash dividend |  |  |  | (2279) |  | (2279) |
| Balances June 30, 2024 | 22793593 | $23 | $60604 | $107175 | $— | $167802 |

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See accompanying notes to unaudited interim consolidated financial statements.

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**NATURAL GROCERS BY VITAMIN COTTAGE, INC.**

**Notes to Unaudited Interim Consolidated Financial Statements**

**June 30, 2025 and 2024**

**1. Organization**

*Nature of Business*

Natural Grocers by Vitamin Cottage, Inc. (Natural Grocers or the holding company) and its consolidated subsidiaries (collectively, the Company) operate retail stores that specialize in natural and organic groceries, dietary supplements and body care products. The Company operated 169 stores as of June 30, 2025 and September 30, 2024, in 21 states. The Company also has a bulk food repackaging facility and distribution center in Golden, Colorado.

**2. Basis of Presentation and Summary of Significant Accounting Policies**

*Consolidated Financial Statements*

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial statements and are in the form prescribed by Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for annual financial statements. The information included in this Form 10-Q should be read in conjunction with Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and notes thereto included in the Form 10-K. The accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company's financial results. Interim results are not necessarily indicative of results for any other interim period or for a full fiscal year. The Company reports its results of operations on a fiscal year ending September 30.

The accompanying unaudited consolidated financial statements include all the accounts of the holding company's wholly owned subsidiaries, Vitamin Cottage Natural Food Markets, Inc. (the operating company) and Vitamin Cottage Two Ltd. Liability Company (VC2). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company has a single reporting segment: natural and organic retail stores.

*Use of Estimates*

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management reviews its estimates on an ongoing basis, including those related to valuation of inventories, useful lives of long-lived assets for depreciation and amortization, impairment of goodwill, indefinite-lived intangible assets and long-lived assets, lease assumptions, allowances for self-insurance reserves, deferred tax assets and liabilities, and litigation based on currently available information. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates.

*Recently Adopted Accounting Pronouncements*

In March 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-01, "Common Control Arrangements," Accounting Standards Codification (ASC) Topic 842, "Leases" (ASU 2023-01). Issue 1, Terms and Conditions to Be Considered, of ASU 2023-01 is not applicable to public entities. Issue 2, Accounting for Leasehold Improvements, of ASU 2023-01 requires leasehold improvements associated with common control leases to be amortized over the useful life of the improvements and certain disclosures when the useful life of leasehold improvements to the common control group exceeds the related lease term. The Company adopted ASU 2023-01 prospectively for all applicable new leasehold improvements on or after October 1, 2024. The adoption of this ASU did not have any impact on the Company's consolidated financial statements.

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In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses," ASC Topic 326, "Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), subsequently amended by various standard updates. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when determining credit loss estimates. ASU 2016-13 also requires financial assets to be measured net of expected credit losses at the time of initial recognition. ASU 2019-10, issued in November 2019, delayed the effective date of ASU 2016-13 for smaller reporting companies such as the Company. The Company adopted ASU 2016-13 effective October 1, 2023 by recognizing the cumulative effect of initially applying the new credit loss standard as an adjustment to the opening balance of retained earnings. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

*Recent Accounting Pronouncements*

In November 2023, the FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures," ASC Topic 280, "Segment Reporting" (ASU 2023-07). The ASU 2023-07 provisions require enhanced disclosures primarily about significant segment expenses. In addition, the provisions enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The provisions of ASU 2023-07 will be effective for the Company's annual reporting period ending September 30, 2025. The Company expects that the adoption of these provisions will have an impact on its single reportable segment disclosures.

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures," ASC Topic 740, "Income Taxes" (ASU 2023-09). The ASU 2023-09 provisions require entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items equal to or greater than 5% of the statutory income tax rate amount. ASU 2023-09 also requires that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid. In addition, ASU 2023-09 eliminates some disclosures relating to estimates of the change in unrecognized tax benefits reasonably possible within 12 months. The provisions of ASU 2023-09 will be effective for the Company's annual reporting period ending September 30, 2026. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of these provisions will have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses," ASC Subtopic 220-40, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures" (ASU 2024-03). The ASU 2024-03 provisions require entities, on both an interim and annual basis, to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption of the entity's income statement, and disclose a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively. In addition, ASU 2024-03 requires the disclosure of the total amount of selling expenses and certain other items. The provisions of ASU 2024-03 will be effective for the Company's annual reporting period ending September 30, 2028. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of these provisions will have on its consolidated financial statements.

No other new accounting pronouncements issued or effective prior to the filing of this Form 10-Q had, or are expected to have, a material impact on the Company's consolidated financial statements.

**3. Revenue Recognition**

The nature of the goods the Company transfers to customers at the point of sale consists of merchandise purchased for resale. In these transactions, the Company acts as a principal and recognizes revenue (net sales) from the sale of goods when control of the promised goods is transferred to the customer. Control refers to the ability of the customer to direct the use of, and obtain substantially all the remaining benefits from, the transferred goods.

The Company's performance obligations are satisfied upon the transfer of goods to the customer (at the point of sale), and payment from the customer is also due at that time. Transaction prices are considered fixed. Discounts provided to customers at the point of sale are recognized as a reduction in revenue as the goods are sold. Revenue excludes sales and usage-based taxes collected.

Proceeds from the sale of the Company's gift cards are recorded as a liability at the time of sale and recognized as revenue when the gift cards are redeemed by the customer and the performance obligation is satisfied by the Company.

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The balance of contract liabilities related to unredeemed gift cards was $1.7 million and $1.5 million as of June 30, 2025 and September 30, 2024, respectively. Revenue for the three months ended June 30, 2025 and 2024 includes $0.1 million and less than $0.1 million, respectively, that was included in the contract liability balance of unredeemed gift cards at September 30, 2024 and 2023, respectively. Revenue for the nine months ended June 30, 2025 and 2024 includes approximately $0.7 million and $0.5 million, respectively, that was included in the contract liability balance of unredeemed gift cards at September 30, 2024 and 2023, respectively.

Rewards program points are accrued as deferred revenue at the retail value per point, net of estimated breakage based on historical redemption rates experienced within the rewards program. Rewards points are forfeited at the end of each calendar year.

The following table disaggregates the Company's revenue by product category for the three and nine months ended June 30, 2025 and 2024, dollars in thousands and as a percentage of net sales:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three months ended**<br> **June 30,** | **Three months ended**<br> **June 30,** | **Three months ended**<br> **June 30,** | **Three months ended**<br> **June 30,** | **Nine months ended**<br> **June 30,** | **Nine months ended**<br> **June 30,** | **Nine months ended**<br> **June 30,** | **Nine months ended**<br> **June 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **2025** | **2025** | **2024** | **2024** |
| Grocery | $235286 | 72% | 219040 | 71 | 710432 | 71 | 648295 | 70 |
| Dietary supplements | 61988 | 19 | 59966 | 19 | 189718 | 19 | 181890 | 20 |
| Body care, pet care and other | 31431 | 9 | 30076 | 10 | 94545 | 10 | 88739 | 10 |
|  | $328705 | 100% | 309082 | 100 | 994695 | 100 | 918924 | 100 |

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**4. Earnings Per Share**

Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed using the treasury stock method and reflects the potential dilution that could occur if the Company's granted but unvested restricted stock units (RSUs) were to vest, resulting in the issuance of common stock that would then share in the earnings of the Company.

The following table presents the Company's basic and diluted EPS for the three and nine months ended June 30, 2025 and 2024, dollars in thousands, except per share data:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended<br> June 30,** | **Three months ended<br> June 30,** | **Nine months ended<br> June 30,** | **Nine months ended<br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income | $11605 | 9209 | 34644 | 24925 |
| Weighted average number of shares of common stock outstanding | 22951339 | 22789057 | 22930084 | 22766516 |
| Effect of dilutive securities | 360596 | 326299 | 317232 | 285528 |
| Weighted average number of shares of common stock outstanding including effect of dilutive securities | 23311935 | 23115356 | 23247316 | 23052044 |
| Basic earnings per share | $0.51 | 0.40 | 1.51 | 1.09 |
| Diluted earnings per share | $0.50 | 0.40 | 1.49 | 1.08 |

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There were no and 13,000 non-vested RSUs for the three months ended June 30, 2025 and 2024, respectively, and 32,096 and 27,944 non-vested RSUs for the nine months ended June 30, 2025 and 2024, respectively, excluded from the calculation of diluted EPS as they were antidilutive.

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**5. Debt**

*Credit Facility*

The Company is party to a credit facility originally entered into on January 28, 2016, as subsequently amended, consisting of a revolving loan facility and, prior to its repayment in September 2024, a $35.0 million term loan (the Term Loan, and, collectively, the Credit Facility). As of September 30, 2024, the Company had fully repaid all remaining amounts outstanding under the Term Loan. The operating company is the borrower under the Credit Facility and its obligations under the Credit Facility are guaranteed by the holding company and VC2. The Credit Facility is secured by a lien on substantially all of the Company's assets. At June 30, 2025, the aggregate revolving commitment amount available under the Credit Facility was $72.5 million, including a $5.0 million sublimit for standby letters of credit. The Company has the right to borrow, prepay and re-borrow revolving amounts under the Credit Facility at any time prior to its maturity date without premium or penalty. The revolving commitments under the Credit Facility mature on November 16, 2028. Base rate loans under the Credit Facility bear interest at a fluctuating base rate, as determined by the lenders' administrative agent based on the most recent compliance certificate of the operating company and stated at the highest of: (i) the federal funds rate plus0.50%; (ii) the prime rate; and (iii) Term SOFR plus 1.00%, subject to the applicable interest rate floor, less the lender spread based upon the Company's consolidated leverage ratio. Term SOFR borrowings under the Credit Facility bear interest based on Term SOFR for the interest period plus the lender spread based upon the Company's consolidated leverage ratio. The unused commitment fee is based upon the Company's consolidated leverage ratio.

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 administrative agent's consent, provided that so long as no default or event of 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 the Company's common stock in an aggregate amount not to exceed $15.0 million during any fiscal year.

On November 16, 2023, the Company amended the Credit Facility to: (i) increase its 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 is automatically and permanently reduced by $2.5 million on each anniversary date until the Credit Facility matures on November 16, 2028, unless the Company has previously exercised its option to reduce the aggregate revolving commitments to a lower amount.

The Company had no revolving loan amounts outstanding under the Credit Facility as of June 30, 2025 and September 30, 2024. The Company had undrawn, issued and outstanding letters of credit of $3.0 million and $2.2 million as of June 30, 2025 and September 30, 2024, respectively, which were reserved against the amount available for borrowing under the terms of the Credit Facility. The Company had $69.5 million and $72.8 million available for borrowing under the Credit Facility as of June 30, 2025 and September 30, 2024, respectively.

As of June 30, 2025 and September 30, 2024, the Company was in compliance with all covenants under the Credit Facility.

*Lease Obligations*

The Company had 25 and 24 leases that were classified as finance leases as of June 30, 2025 and September 30, 2024, respectively. No rent expense is recorded for these finance leases; rather, rental payments under such leases are recognized as a reduction of the lease obligation and as interest expense. The interest rate on finance lease obligations is determined at the commencement of the lease.

*Interest*

The Company incurred gross interest expense of $0.8 million and $1.2 million for the three months ended June 30, 2025 and 2024, respectively, and $2.5 million and $3.4 million for the nine months ended June 30, 2025 and 2024, respectively. Interest expense for the three and nine months ended June 30, 2025 and 2024 relates primarily to interest on finance lease obligations and the Credit Facility. The Company capitalized interest of $0.1 million for each of the three months ended June 30, 2025 and 2024, and $0.2 million and $0.3 million for the nine months ended June 30, 2025 and 2024, respectively.

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**6. Stockholders**' **Equity**

*Share Repurchases*

In May 2016, the 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 the Company's common stock. The Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate on May 31, 2026. Repurchases under the Company's share repurchase program may be made from time to time at management's discretion on the open market or through privately negotiated transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the Exchange Act), subject to market conditions, applicable legal requirements and other relevant factors. Repurchases of common stock may also be made under a Rule 10b5-1 plan, which permits common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The share repurchase program does not obligate the Company to purchase any particular amount of common stock and may be suspended, modified or discontinued by the Company without prior notice. 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.

The Company did not repurchase any shares of common stock during the three and nine months ended June 30, 2025 and 2024. During the nine months ended June 30, 2024, the Company reissued 6,497 treasury shares at a cost of $0.1 million to partially satisfy the issuance of common stock pursuant to the vesting of certain restricted stock unit awards and the award of stock grants. At June 30, 2025 and September 30, 2024, the Company held no shares in treasury.

*Dividends*

The Company paid a quarterly cash dividend of $0.12 per share of common stock in each of the first three quarters of fiscal year 2025 and $0.10 per share of common stock in each of the first three quarters of fiscal year 2024. In addition, the Company paid a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.

*Share-Based Compensation*

During the nine months ended June 30, 2025, the Company accelerated the vesting of certain restricted stock units upon the retirement of the Company's former Chief Financial Officer, making them fully vested, resulting in incremental share-based compensation expense of $0.5 million.

**7. Leases**

The Company leases most of its stores, a bulk food repackaging facility and distribution center, and its administrative offices. The Company determines if an arrangement is a lease or contains a lease at inception. Lease terms generally range from 10 to 25 years, with scheduled increases in minimum rent payments.

Operating and finance lease liabilities represent the present value of lease payments not yet paid. Operating and finance lease assets represent the Company's right to use an underlying asset and are based upon the operating and finance lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives and impairment of operating and finance lease assets.

Most leases include one or more options to renew, with renewal terms normally expressed in periods of five to ten-year increments. The exercise of lease renewal options is at the Company's sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option.

Variable payments related to pass-through costs for maintenance, taxes and insurance or adjustments based on an index such as Consumer Price Index are not included in the measurement of the lease liability or asset and are expensed as incurred.

Because the rate implicit in the Company's lease agreements is typically not readily determinable, the Company uses an estimated incremental borrowing rate, which is derived from third-party lenders, to determine the present value of lease payments. The Company uses other observable market data to evaluate the appropriateness of the rate derived from the lenders. The estimated incremental borrowing rate is based on the borrowing rate for a secured loan with a term similar to the expected term of the lease.

Leases are recorded at the commencement date (the date the underlying asset becomes available for use) for the present value of lease payments, less tenant improvement allowances received or receivable. Leases with a term of 12 months or less (short-term leases) are not presented on the balance sheet. The Company has elected to account for the lease and non-lease components as a single lease component for all current classes of leases.

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The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company subleases certain real estate or portions thereof to third parties. Such subleases have all been classified as operating leases. Remaining sublease terms extend through fiscal year 2030. Although some sublease arrangements provide renewal options, the exercise of sublease renewal options is at the sole discretion of the subtenant. The Company recognizes sublease income on a straight-line basis.

The Company has five operating leases with Chalet Properties, LLC (Chalet), one operating lease with the Isely Family Land Trust LLC (Land Trust) and one operating lease with FTVC, LLC (FTVC), each of which is a related party (see Note 13). The leases began at various times with the earliest commencing in November 1999, continue for various terms through May 2042 and include various options to renew. The terms and rental rates of these leases have been approved by our audit committee in accordance with our related party transaction policy. As of June 30, 2025, these leases accounted for $8.6 million of operating lease assets and $8.8 million of operating lease liabilities, of which $0.8 million was current, and are included in the disclosures below. Lease expense is recognized on a straight-line basis and was $0.3 million for each of the three months ended June 30, 2025 and 2024 and $0.9 million for each of the nine months ended June 30, 2025 and 2024.

The components of total lease cost for the three and nine months ended June 30, 2025 and 2024 were as follows, dollars in thousands:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Three months ended**  | **Three months ended**  | **Nine months ended** | **Nine months ended** |
|  |  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
| **Lease cost** | **Classification** | **2025** | **2024** | **2025** | **2024** |
| Operating lease cost: |  |  |  |  |  |
|  | Cost of goods sold and occupancy costs | $11143 | 10976 | 33201 | 33012 |
|  | Store expenses | 115 | 115 | 346 | 346 |
|  | Administrative expenses | 98 | 98 | 295 | 295 |
|  | Pre-opening expenses | 17 | 54 | 226 | 191 |
| Finance lease cost: |  |  |  |  |  |
| Depreciation of lease assets | Store expenses | 1078 | 1029 | 3234 | 3066 |
|  | Pre-opening expenses | 10 | 50 | 10 | 169 |
| Interest on lease liabilities | Interest expense, net | 533 | 503 | 1605 | 1519 |
|  | Pre-opening expenses |  | 61 |  | 206 |
| Short-term lease cost | Store expenses | 853 | 791 | 2514 | 2450 |
| Variable lease cost | Cost of goods sold and occupancy costs<sup>(1)</sup> | 1887 | 1807 | 5412 | 5065 |
| Sublease income | Store expenses | (80) | (84) | (300) | (190) |
| Total lease cost | Total lease cost | $15654 | 15400 | 46543 | 46129 |

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<sup>(1)</sup> Immaterial balances related to corporate headquarters and distribution center are included in administrative expenses and store expenses, respectively.

Additional information related to the Company's leases for the three and nine months ended June 30, 2025 and 2024 were as follows, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Nine months ended** | **Nine months ended** |
|  | **June 30,** | **June 30,** | **June 30,** | **June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
| Operating cash flows from operating leases | $11529 | 11518 | 34411 | 34225 |
| Operating cash flows from finance leases | 533 | 564 | 1605 | 1724 |
| Financing cash flows from finance leases | 980 | 947 | 2931 | 2653 |
| Lease assets obtained in exchange for new lease liabilities: |  |  |  |  |
| Operating leases | 5740 | 3641 | 14022 | 13073 |
| Finance leases | 3135 |  | 3135 | (45) |

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Additional information related to the Company's leases as of June 30, 2025 and 2024 was as follows:

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| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
| Weighted-average remaining lease term (in years): |  |  |
| Operating leases | 9.4 | 9.8 |
| Finance leases | 14.0 | 13.7 |
| Weighted-average discount rate: |  |  |
| Operating leases | 4.2% | 4.0 |
| Finance leases | 4.9% | 4.8 |

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During the nine months ended June 30, 2025, the Company early terminated a lease due to a store relocation, and, as a result, the Company wrote off operating lease assets and liabilities of less than $0.1 million each and recorded a gain of less than $0.1 million. During the nine months ended June 30, 2024, the Company paid $0.3 million to early terminate the operating lease associated with a closed store, and, as a result, the Company wrote off $0.4 million of operating lease assets and $0.6 million of operating lease liabilities and recorded a loss of $0.2 million. In addition, during the nine months ended June 30, 2025, the Company recorded impairment charges related to operating lease assets of $0.1 million, associated with store closures and an early store relocation, and during the three and nine months ended June 30, 2024, the Company recorded impairment charges related to operating lease assets of $0.4 million, associated with a store closure and an early store relocation, and $0.5 million, associated with store closures and an early store relocation, respectively.

Future lease payments under non-cancellable leases as of June 30, 2025 were as follows, dollars in thousands:

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| | | | |
|:---|:---|:---|:---|
| **Fiscal year**  | **Operating** <br> **leases** | **Finance** <br> **leases** | **Total** |
| Remainder of 2025 | $11930 | 1515 | 13445 |
| 2026 | 47172 | 6289 | 53461 |
| 2027 | 46000 | 6364 | 52364 |
| 2028 | 43322 | 5279 | 48601 |
| 2029 | 39000 | 4131 | 43131 |
| Thereafter | 162650 | 42419 | 205069 |
| Total future undiscounted lease payments | 350074 | 65997 | 416071 |
| Less imputed interest | (62922) | (18616) | (81538) |
| Total reported lease liability | 287152 | 47381 | 334533 |
| Less current portion | (36428) | (4128) | (40556) |
| Noncurrent lease liability | $250724 | 43253 | 293977 |

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The table above excludes $15.4 million of legally binding minimum lease payments for leases that had been executed as of June 30, 2025 but whose terms had not yet commenced.

**8. Property and Equipment**

The Company had the following property and equipment balances as of June 30, 2025 and September 30, 2024, dollars in thousands:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **As of** | **As of** |
|  | **Useful lives** **(in years)** | **Useful lives** **(in years)** | **Useful lives** **(in years)** | **June 30,**<br> **2025** | **September 30,**<br> **2024** |
| Construction in process |  | n/a |  | $1384 | 5758 |
| Land |  | n/a |  | 10242 | 6746 |
| Buildings | 16 |  | 40 | 60578 | 60556 |
| Land improvements | 1 |  | 24 | 2459 | 2324 |
| Leasehold and building improvements | 1 |  | 25 | 193556 | 185045 |
| Fixtures and equipment | 5 |  | 7 | 172137 | 167060 |
| Computer hardware and software | 3 |  | 5 | 32305 | 30622 |
|  |  |  |  | 472661 | 458111 |
| Less accumulated depreciation and amortization |  |  |  | (291624) | (279502) |
| Property and equipment, net |  |  |  | $181037 | 178609 |

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Depreciation and amortization expense for the three and nine months ended June 30, 2025 and 2024 is summarized as follows, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended<br> June 30,** | **Three months ended<br> June 30,** | **Nine months ended<br> June 30,** | **Nine months ended<br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Depreciation and amortization expense included in cost of goods sold and occupancy costs | $207 | 187 | 603 | 544 |
| Depreciation and amortization expense included in store expenses | 6909 | 7189 | 21087 | 21028 |
| Depreciation and amortization expense included in administrative expenses | 827 | 419 | 2091 | 1257 |
| Depreciation and amortization expense included in pre-opening expenses | 10 | 50 | 10 | 169 |
| Total depreciation and amortization expense | $7953 | 7845 | 23791 | 22998 |

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**9. Other Assets**

Other assets as of June 30, 2025 and September 30, 2024, are summarized as follows, dollars in thousands:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **As of** | **As of** |
|  | **Useful lives** | **Useful lives** | **Useful lives** | **June 30,** | **September 30,** |
|  | **(in years)** | **(in years)** | **(in years)** | **2025** | **2024** |
| Amortizable other assets: |  |  |  |  |  |
| Implementation costs for software hosting arrangements | 3 |  | 8 | $3953 | 171 |
| Less accumulated amortization |  |  |  | (3) | (–) |
| Amortizable other assets, net |  |  |  | 3950 | 171 |
| Deposits |  | n/a |  | 184 | 158 |
| Deferred sublease rents |  | n/a |  | 82 | 127 |
| Other |  | n/a |  | 2 | 2 |
| Total other assets |  |  |  | $4218 | 458 |

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**10. Goodwill and Other Intangible Assets**

The Company had the following goodwill and other intangible asset balances as of June 30, 2025 and September 30, 2024, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **As of** | **As of** |
|  | **Useful lives** <br> **(in years)** | **Useful lives** <br> **(in years)** | **June 30,**<br> **2025** | **September 30,**<br> **2024** |
| Amortizable intangible assets: |  |  |  |  |
| Internal-use software <sup>(1)</sup> | 1 | 7 | $14969 | 14774 |
| Other intangibles | 1 | 10 | 92 | 92 |
| Amortizable intangible assets |  |  | 15061 | 14866 |
| Less accumulated amortization |  |  | (8469) | (7034) |
| Amortizable intangible assets, net |  |  | 6592 | 7832 |
| Internal-use software in process <sup>(1)</sup> |  |  |  | 50 |
| Trademarks | Indefinite | Indefinite | 389 | 389 |
| Deferred financing costs, net | 3 | 5 | 16 | 19 |
| Total other intangibles, net |  |  | 6997 | 8290 |
| Goodwill | Indefinite | Indefinite | 5198 | 5198 |
| Total goodwill and other intangibles, net |  |  | $12195 | 13488 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup> Internal-use software at September 30, 2024 has been reclassified from other intangibles to be consistent with the current period presentation.

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**11. Accrued Expenses**

The composition of accrued expenses as of June 30, 2025 and September 30, 2024 is summarized as follows, dollars in thousands:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **June 30,** | **September 30,** |
|  | **2025** | **2024** |
| Payroll and employee-related expenses | $18688 | 21874 |
| Accrued property, sales, and use tax payable | 8029 | 9607 |
| Accrued marketing expenses | 406 | 413 |
| Deferred revenue | 2042 | 1895 |
| Other | 2316 | 2058 |
| Total accrued expenses | $31481 | 35847 |

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**12. Income Taxes**

Income taxes are accounted for in accordance with the provisions of FASB ASC Topic 740 "Income Taxes" (ASC 740). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

On July 4, 2025, the U.S. federal government enacted the One Big Beautiful Bill Act (OBBBA). The OBBBA, among other things, makes changes to certain business-related exclusions, deductions and credits. As the effects of changes in tax law are recognized in the period of change, this legislation is not reflected in the Company's unaudited consolidated financial statements for the periods ended June 30, 2025. The Company is currently evaluating the impact of the OBBBA, but does not expect it to have a material impact on its consolidated financial statements.

**13. Related Party Transactions**

The Company has ongoing relationships with related entities as noted below:

*Chalet Properties, LLC:* The Company has five operating leases (see Note 7) with Chalet. Chalet is owned by the Company's four non-independent Board members: Kemper Isely, Zephyr Isely, Heather Isely and Elizabeth Isely, and other related family members. Rent paid to Chalet was $0.2 million for each of the three months ended June 30, 2025 and 2024, and $0.6 million for each of the nine months ended June 30, 2025 and 2024.

*Isely Family Land Trust LLC:* The Company has one operating lease (see Note 7) with the Land Trust. The Land Trust is owned by the Isely Children's Trust and by the Margaret A. Isely Family Trust. Rent paid to the Land Trust was $0.1 million for each of the three months ended June 30, 2025 and 2024 and was $0.2 million for each of the nine months ended June 30, 2025 and 2024.

*FTVC LLC:* The Company has one operating lease (see Note 7) with FTVC, which is owned by the Company's four non-independent Board members and other related family members. Rent paid to FTVC was less than $0.1 million for each of the three months ended June 30, 2025 and 2024 and was less than $0.1 million for each of the nine months ended June 30, 2025 and 2024.

**14. Commitments and Contingencies**

*Self-Insurance*

The Company is self-insured for certain losses, liabilities and employee benefit costs, subject to a stop loss policy or deductible limits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering an analysis of actual claims, historical claims experience, demographic factors and other actuarial assumptions. While the Company believes that its assumptions are appropriate, the estimated accrual for these liabilities could be significantly affected if future occurrences and claims materially differ from these assumptions and historical trends.

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*Legal Proceedings*

The Company is periodically involved in various legal proceedings that are incidental to the conduct of its business, including but not limited to labor and employment-related claims, customer injury claims, investigations and other proceedings arising in the ordinary course of business. When the potential liability from a matter can be estimated and the loss is considered probable, the Company records the estimated loss. Due to uncertainties related to the resolution of lawsuits, investigations, and claims, the ultimate outcome may differ from the estimates. Although the Company cannot predict with certainty the ultimate resolution of any lawsuits, investigations, and claims asserted against it, management does not believe any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its financial statements.

**15. Subsequent Event**

On August 6, 2025, the Board approved the payment of a quarterly cash dividend of $0.12 per share of common stock to be paid on September 17, 2025 to stockholders of record as of the close of business on September 2, 2025.

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**Item 2. Management**'**s Discussion and Analysis of Financial Condition and Results of Operations**

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with our unaudited consolidated financial statements and notes thereto, which are included elsewhere in this Form 10-Q, and with the audited consolidated financial statements and notes thereto in our Form 10-K. This MD&A contains forward-looking statements. Refer to "*Forward-Looking Statements*" at the beginning of this Form 10-Q for an explanation of these types of statements. Summarized numbers included in this section, and corresponding percentage or basis point changes, may not sum due to the effects of rounding*.*

**Company Overview**

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 June 30, 2025, we operated 169 stores in 21 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.

We offer a variety of natural and organic groceries and dietary supplements that meet our strict quality guidelines. The sizes of our stores range from approximately 7,000 to 17,000 selling square feet.

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, we increased our store count at a compound annual growth rate of 2.0%. In fiscal year 2024, we opened four new stores and relocated/remodeled four existing stores. We plan to open two new stores and relocate/remodel three existing stores in fiscal year 2025. During the nine months ended June 30, 2025, we opened two new stores, relocated/remodeled two existing stores and closed two stores. Between July 1, 2025 and the date of this Form 10-Q, we did not open any new stores and relocated/remodeled one existing store.

**Performance Highlights**

Key highlights of our performance for the three and nine months ended June 30, 2025 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.

● *Net sales.* Net sales were $328.7 million for the three months ended June 30, 2025, an increase of $19.6 million, or 6.3%, compared to net sales of $309.1 million for the three months ended June 30, 2024. Net sales were $994.7 million for the nine months ended June 30, 2025, an increase of $75.8 million, or 8.2%, compared to net sales of $918.9 million for the nine months ended June 30, 2024.

● *Daily average comparable store sales.* Daily average comparable store sales for the three months ended June 30, 2025 increased 7.4% compared to the three months ended June 30, 2024. Daily average comparable store sales for the nine months ended June 30, 2025 increased 8.4% compared to the nine months ended June 30, 2024.

● *Net income.* Net income was $11.6 million for the three months ended June 30, 2025, an increase of $2.4 million, or 26.0%, compared to net income of $9.2 million for the three months ended June 30, 2024. Net income was $34.6 million for the nine months ended June 30, 2025, an increase of $9.7 million, or 39.0%, compared to net income of $24.9 million for the nine months ended June 30, 2024.

● *EBITDA.* Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $23.5 million for the three months ended June 30, 2025, an increase of $2.8 million, or 13.8%, compared to $20.7 million for the three months ended June 30, 2024. EBITDA was $70.3 million for the nine months ended June 30, 2025, an increase of $12.4 million, or 21.4%, compared to $57.9 million for the nine months ended June 30, 2024. EBITDA is not a measure of financial performance under GAAP. Refer to the "Non-GAAP Financial Measures" section in this MD&A for a definition of EBITDA and a reconciliation of net income to EBITDA.

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● *Adjusted EBITDA.* Adjusted EBITDA was $24.4 million for the three months ended June 30, 2025, an increase of $2.2 million, or 10.1%, compared to $22.2 million for the three months ended June 30, 2024. Adjusted EBITDA was $73.5 million for the nine months ended June 30, 2025, an increase of $12.9 million, or 21.2%, compared to $60.6 million for the nine months ended June 30, 2024. Adjusted EBITDA is not a measure of financial performance under GAAP. Refer to the "Non-GAAP Financial Measures" section in this MD&A for a definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.

● *Liquidity.* As of June 30, 2025, cash and cash equivalents was $13.2 million, and there was $69.5 million available for borrowing under our Credit Facility, net of undrawn, issued and outstanding letters of credit of $3.0 million.

**Industry Trends and Economics**

We have identified the following recent trends and factors that have impacted and may continue to impact our results of operations and financial condition:

*●* *Impact of broader economic trends and political environment.* The grocery industry and our sales are affected by general economic conditions, including, but not limited to, consumer spending, levels of disposable consumer income, consumer debt, interest rates, inflation or deflation, periods of recession and growth, the price of commodities, tariffs and trade restrictions, the political environment and consumer confidence. Furthermore, 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 workforce 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. Over the past several years, a number of macroeconomic and global trends have impacted our business. The labor market has impacted our ability to retain and attract store Crew members, and in certain markets we continue to be challenged by labor shortages broadly impacting the retail industry. We have invested in increased wages for our store Crew members and may be required to do so in the future. As a result of global supply chain issues, we have on occasion experienced shortages and delays in the delivery of certain products to our stores. We have taken steps to mitigate these disruptions to our supply chain, although certain products may be in relatively short supply or unavailable from time to time.

In recent years, the costs of certain goods we sell were impacted by levels of inflation higher than we have historically experienced, resulting in part from 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, other disruptions and the uncertain economic environment. While levels of inflation moderated during fiscal year 2024, we are unable to predict the impact of inflationary or disinflationary trends on consumer behavior and our sales and profitability in the future. In addition, the United States recently has imposed, or has proposed, tariffs on a broad range of foreign-sourced products and materials. Although the tariffs imposed have not had a material impact on our business, financial condition and results of operations, there can be no assurance that this will continue to be the case. The imposition of additional tariffs and trade restrictions, or a prolonged trade conflict between the United States and its trade partners, could result in adverse and uncertain economic conditions and adversely impact demand for our products.<br>

*●* *Opportunities in the growing natural and organic grocery and dietary supplements industry.* Our industry, which includes organic and natural foods and dietary supplements, continues to experience growth driven primarily by increased public interest in health and nutrition. Capitalizing on this opportunity, we continue to open new stores and enter new markets. We expect the rate of new store unit growth in the foreseeable future to be dependent upon economic and business conditions and other factors, including construction permitting and the availability of construction materials, equipment and labor.

*●* *Competition.* The grocery and dietary supplement retail business is a large, fragmented and highly competitive industry, with few barriers to entry. Competition in the grocery industry is likely to intensify, and shopping dynamics may shift, as a result of, among other things, industry consolidation, expansion by existing competitors, and the increasing availability of grocery ordering, pick-up, and delivery options. 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. In addition, many of our competitors increasingly offer a broad range of natural and organic foods. We also face internally generated competition when we open new stores in markets we already serve. We believe our commitment to carrying carefully vetted, affordably priced and high-quality natural and organic products and dietary supplements, as well as our focus on providing nutrition education, differentiate us and can provide a competitive advantage.

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● *Consumer preferences.* Our performance is also impacted by trends regarding natural and organic products, dietary supplements and at-home meal preparation. Consumer preferences towards dietary supplements or natural and organic food products might shift as a result of, among other things, economic conditions, food safety perceptions, changing consumer choices and the cost of these products. A change in consumer preferences away from our offerings, including those resulting from higher retail prices for our products due to inflation or tariffs, or reductions or changes in our offerings, could have a material adverse effect on our business.

● *Recent developments*. In June 2025, our primary distributor, United Natural Foods, Inc. (UNFI), experienced a cybersecurity incident that temporarily impacted UNFI's ability to fulfill orders and distribute products to our stores, resulting in product shortages in June and July 2025. In the weeks following the incident, we collaborated with UNFI to minimize disruptions and restore normalized levels of product distribution to our stores. Management estimates that for the three months ended June 30, 2025, the disruption to our operations adversely impacted daily average comparable store sales by 1.0 to 1.5 percentage points and diluted earnings per share by $0.04 to $0.05. As of the date of this report, our operations have substantially normalized, and we do not expect the disruption to materially impact our operations or financial performance in the future.

**Outlook**

We believe there are several key factors that have contributed to our success and will enable us to increase our comparable store sales and continue to profitably expand. These factors include a loyal customer base, increasing transaction size, growing consumer interest in nutrition and wellness, a differentiated shopping experience that focuses on customer service, nutrition education, a convenient, clean and shopper-friendly retail environment, and our focus on high quality, affordable natural and organic groceries, dietary supplements and body care products.

We expect the rate of new store unit growth in the foreseeable future to be dependent upon economic and business conditions and other factors, including construction permitting and the availability of construction materials, equipment and labor. We believe there are opportunities for us to continue to expand our store base, expand profitability and increase comparable store sales. However, future sales growth, including comparable store sales, and our profitability could vary due to increasing competitive conditions in the natural and organic grocery and dietary supplement industries and regional and general economic conditions, including inflationary or recessionary trends. We believe there are opportunities for increased leverage of costs and increased economies of scale in sourcing products. However, due to the fixed nature of certain of our costs (in particular, our rent obligations and related occupancy costs), our ability to leverage costs may be limited.

Our operating results may be affected by the above-described factors as well as a variety of other internal and external factors and trends described more fully in Item 1A – "Risk Factors" in our Form 10-K and Part II, Item 1A – "Risk Factors" in this Form 10-Q.

**Key Financial Metrics in Our Business**

In assessing our performance, we consider a variety of performance and financial measures. The key measures are as follows:

*Net sales*

Our net sales are comprised of gross sales net of discounts, in-house coupons, returns, and allowances. In comparing net sales between periods, we monitor the following:

*●* *Change in daily average comparable store sales.* We begin to include sales from a store in comparable store sales on the first day of the thirteenth full month following the store's opening. We monitor the percentage change in comparable store sales by comparing sales from all stores in our comparable store base for a reporting period against sales from the same stores for the same number of operating months in the comparable reporting period of the prior fiscal year. When a store that is included in comparable store sales is remodeled or relocated, we continue to consider sales from that store to be comparable store sales. Our comparable store sales data may not be presented on the same basis as our competitors. We use the term "new stores" to refer to stores that have been open for less than thirteen months. Daily average comparable store sales are comparable store sales divided by the number of selling days in each period. We use this metric to remove the effect of differences in the number of selling days we are open during the comparable periods (for example, as a result of leap years or the Easter holiday shift between quarters).

*●* *Transaction count.* Transaction count represents the number of transactions reported at our stores during the period and includes transactions that are voided, returned, and exchanged.

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*●* *Average transaction size.* Average transaction size is calculated by dividing net sales by transaction count for a given time period. We use this metric to track the trends in average dollars spent in our stores per customer transaction.

*Cost of goods sold and occupancy costs*

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 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-Q 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.

*Gross profit and gross margin*

Gross profit is equal to our net sales less our cost of goods sold and occupancy costs. Gross margin is gross profit as a percentage of net sales. Gross margin is impacted by changes in retail prices, product costs, occupancy costs and the mix of products sold, as well as the rate at which we open new stores.

*Store expenses*

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 consist 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*

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*

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 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.

*Interest expense, net*

Interest expense consists of the interest associated with finance lease obligations and our Credit Facility, net of capitalized interest.

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*Income tax expense*

Income taxes are accounted for in accordance with the provisions of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Income tax expense also includes excess tax benefits and deficiencies related to the vesting of RSUs.

**Results of Operations**

The following table presents key components of our results of operations expressed as a percentage of net sales for the periods presented:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended<br> June 30,** | **Three months ended<br> June 30,** | **Nine months ended<br> June 30,** | **Nine months ended<br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Statements of Income Data: \*** |  |  |  |  |
| Net sales | 100.0 | 100.0 | 100.0 | 100.0 |
| Cost of goods sold and occupancy costs | 70.1 | 70.8 | 70.0 | 70.7 |
| Gross profit | 29.9 | 29.2 | 30.0 | 29.3 |
| Store expenses | 21.8 | 21.9 | 21.9 | 22.3 |
| Administrative expenses | 3.3 | 3.1 | 3.4 | 3.1 |
| Pre-opening expenses |  | 0.1 | 0.1 | 0.1 |
| Operating income | 4.7 | 4.2 | 4.7 | 3.8 |
| Interest expense, net | (0.2) | (0.3) | (0.2) | (0.3) |
| Income before income taxes | 4.5 | 3.8 | 4.4 | 3.5 |
| Provision for income taxes | (1.0) | (0.8) | (1.0) | (0.7) |
| Net income | 3.5 | 3.0 | 3.5 | 2.7 |
| **__________________________** |  |  |  |  |
| *\*Figures may not sum due to rounding.* | | | | |
| **Other Operating Data:** |  |  |  |  |
| Number of stores at end of period | 169 | 168 | 169 | 168 |
| Number of new stores opened during the period |  |  | 2 | 3 |
| Number of stores relocated/remodeled during the period |  | 3 | 2 | 4 |
| Number of stores closed during the period |  |  | 2 |  |
| Twelve-month store unit growth rate | 0.6 | 2.4 | 0.6 | 2.4 |
| Change in daily average comparable store sales | 7.4 | 7.2 | 8.4 | 7.0 |

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***Three months ended June 30, 2025 compared to the three months ended June 30, 2024***

The following table summarizes our results of operations and other operating data for the periods presented, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended**<br> **June 30,** | **Three months ended**<br> **June 30,** | **Change in** | **Change in** |
|  | **2025** | **2024** | **Dollars** | **Percent** |
| **Statements of Income Data:** |  |  |  |  |
| Net sales | $328705 | 309082 | 19623 | 6.3% |
| Cost of goods sold and occupancy costs | 230426 | 218751 | 11675 | 5.3 |
| Gross profit | 98279 | 90331 | 7948 | 8.8 |
| Store expenses | 71719 | 67575 | 4144 | 6.1 |
| Administrative expenses | 10949 | 9545 | 1404 | 14.7 |
| Pre-opening expenses | 24 | 364 | (340) | (93.4) |
| Operating income | 15587 | 12847 | 2740 | 21.3 |
| Interest expense, net | (694) | (1052) | 358 | (34.0) |
| Income before income taxes | 14893 | 11795 | 3098 | 26.3 |
| Provision for income taxes | (3288) | (2586) | (702) | 27.1 |
| Net income | $11605 | 9209 | 2396 | 26.0% |

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*Net sales*

Net sales increased $19.6 million, or 6.3%, to $328.7 million for the three months ended June 30, 2025 compared to $309.1 million for the three months ended June 30, 2024, due to a $19.0 million increase in comparable store sales and a $3.4 million increase in new store sales, partially offset by a $2.8 million decrease in net sales related to closed stores. We estimate that net sales for the three months ended June 30, 2025 were adversely impacted by the disruption to our operations resulting from the UNFI cybersecurity incident, as discussed above in "Industry Trends and Economics," by approximately $3.5 million to $4.0 million. Daily average comparable store sales increased 7.4% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The daily average comparable store sales increase resulted from a 4.8% increase in daily average transaction count and a 2.4% increase in daily average transaction size. Comparable store average transaction size was $48.02 for the three months ended June 30, 2025.

*Gross profit*

Gross profit increased $7.9 million, or 8.8%, to $98.3 million for the three months ended June 30, 2025 compared to $90.3 million for the three months ended June 30, 2024. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 29.9% for the three months ended June 30, 2025 compared to 29.2% for the three months ended June 30, 2024. The increase in gross margin during the three months ended June 30, 2025 was driven by higher product margin primarily attributed to effective promotions.

*Store expenses*

Store expenses increased $4.1 million, or 6.1%, to $71.7 million for the three months ended June 30, 2025 compared to $67.6 million for the three months ended June 30, 2024. The increase in store expenses was primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 21.8% and 21.9% for the three months ended June 30, 2025 and 2024, respectively. The decrease in store expenses as a percentage of net sales reflects expense leverage.

*Administrative expenses*

Administrative expenses increased $1.4 million, or 14.7%, to $10.9 million for the three months ended June 30, 2025 compared to $9.5 million for the three months ended June 30, 2024. The increase in administrative expenses was driven by higher technology expenses and compensation expenses. Administrative expenses as a percentage of net sales were 3.3% and 3.1% for the three months ended June 30, 2025 and 2024, respectively.

*Pre-opening expenses*

Pre-opening expenses were less than $0.1 million for the three months ended June 30, 2025 compared to $0.4 million for the three months ended June 30, 2024.

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*Interest expense, net*

Interest expense, net of capitalized interest, was $0.7 million for the three months ended June 30, 2025 compared to $1.1 million for the three months ended June 30, 2024.

*Income taxes*

Income tax expense increased $0.7 million for the three months ended June 30, 2025 to $3.3 million compared to $2.6 million for the three months ended June 30, 2024. The Company's effective income tax rate was 22.1% and 21.9% for the three months ended June 30, 2025 and 2024, respectively.

*Net income*

Net income was $11.6 million, or $0.50 diluted earnings per share, for the three months ended June 30, 2025 compared to $9.2 million, or $0.40 diluted earnings per share, for the three months ended June 30, 2024.

***Nine months ended June 30, 2025 compared to the nine months ended June 30, 2024***

The following table summarizes our results of operations and other operating data for the periods presented, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine months ended**<br> **June 30,** | **Nine months ended**<br> **June 30,** | **Change in** | **Change in** |
|  | **2025** | **2024** | **Dollars** | **Percent** |
| **Statements of Income Data:** |  |  |  |  |
| Net sales | $994695 | 918924 | 75771 | 8.2% |
| Cost of goods sold and occupancy costs | 695844 | 649476 | 46368 | 7.1 |
| Gross profit | 298851 | 269448 | 29403 | 10.9 |
| Store expenses | 218000 | 204791 | 13209 | 6.4 |
| Administrative expenses | 33486 | 28474 | 5012 | 17.6 |
| Pre-opening expenses | 877 | 1272 | (395) | (31.1) |
| Operating income | 46488 | 34911 | 11577 | 33.2 |
| Interest expense, net | (2367) | (3123) | 756 | (24.2) |
| Income before income taxes | 44121 | 31788 | 12333 | 38.8 |
| Provision for income taxes | (9477) | (6863) | (2614) | 38.1 |
| Net income | $34644 | 24925 | 9719 | 39.0% |

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*Net sales*

Net sales increased $75.8 million, or 8.2%, to $994.7 million for the nine months ended June 30, 2025 compared to $918.9 million for the nine months ended June 30, 2024, due to a $72.8 million increase in comparable store sales and a $9.8 million increase in new store sales, partially offset by a $6.8 million decrease in net sales related to closed stores. Daily average comparable store sales increased 8.4% for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. The daily average comparable store sales increase for the nine months ended June 30, 2025 resulted from a 5.4% increase in daily average transaction count and a 2.9% increase in daily average transaction size. Comparable store average transaction size was $48.63 for the nine months ended June 30, 2025.

*Gross profit*

Gross profit increased $29.4 million, or 10.9%, to $298.9 million for the nine months ended June 30, 2025 compared to $269.4 million for the nine months ended June 30, 2024. Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 30.0% for the nine months ended June 30, 2025 compared to 29.3% for the nine months ended June 30, 2024. The increase in gross margin during the nine months ended June 30, 2025 was driven by higher product margin primarily attributed to effective promotions, and store occupancy cost leverage.

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*Store expenses*

Store expenses increased $13.2 million, or 6.4%, to $218.0 million for the nine months ended June 30, 2025 compared to $204.8 million for the nine months ended June 30, 2024. The increase in store expenses was primarily driven by higher compensation expenses. Store expenses as a percentage of net sales were 21.9% and 22.3% for the nine months ended June 30, 2025 and 2024, respectively. The decrease in store expenses as a percentage of net sales reflects expense leverage.

*Administrative expenses*

Administrative expenses increased $5.0 million, or 17.6%, to $33.5 million for the nine months ended June 30, 2025 compared to $28.5 million for the nine months ended June 30, 2024. The increase in administrative expenses was driven by higher compensation expenses, including costs related to our Chief Financial Officer transition, and technology expenses. Administrative expenses as a percentage of net sales were 3.4% and 3.1% for the nine months ended June 30, 2025 and 2024, respectively.

*Pre-opening expenses*

Pre-opening expenses were $0.9 million for the nine months ended June 30, 2025 compared to $1.3 million for the nine months ended June 30, 2024.

*Interest expense, net*

Interest expense, net of capitalized interest, was $2.4 million for the nine months ended June 30, 2025 compared to $3.1 million for the nine months ended June 30, 2024.

*Income taxes*

Income tax expense increased $2.6 million for the nine months ended June 30, 2025 to $9.5 million compared to $6.9 million for the nine months ended June 30, 2024. The Company's effective income tax rate was 21.5% and 21.6% for the nine months ended June 30, 2025 and 2024, respectively.

*Net income*

Net income was $34.6 million, or $1.49 diluted earnings per share, for the nine months ended June 30, 2025 compared to $24.9 million, or $1.08 diluted earnings per share, for the nine months ended June 30, 2024.

***Non-GAAP financial measures***

*EBITDA and Adjusted EBITDA*

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 software hosting arrangement (SaaS) implementation costs and non-recurring items.

The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended<br> June 30,** | **Three months ended<br> June 30,** | **Nine months ended<br> June 30,** | **Nine months ended<br> June 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income | $11605 | 9209 | 34644 | 24925 |
| Interest expense, net | 694 | 1052 | 2367 | 3123 |
| Provision for income taxes | 3288 | 2586 | 9477 | 6863 |
| Depreciation and amortization | 7953 | 7845 | 23791 | 22998 |
| EBITDA | 23540 | 20692 | 70279 | 57909 |
| Impairment of long-lived assets and store closing costs |  | 402 | 118 | 826 |
| Share-based compensation | 843 | 1062 | 3100 | 1900 |
| Amortization of SaaS implementation costs | 2 |  | 3 |  |
| Adjusted EBITDA | $24385 | 22156 | 73500 | 60635 |

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EBITDA increased 13.8% to $23.5 million for the three months ended June 30, 2025 compared to $20.7 million for the three months ended June 30, 2024. EBITDA increased 21.4% to $70.3 million for the nine months ended June 30, 2025 compared to $57.9 million for the nine months ended June 30, 2024. EBITDA as a percentage of net sales was 7.2% and 6.7% for the three months ended June 30, 2025 and 2024, respectively. EBITDA as a percentage of net sales was 7.1% and 6.3% for the nine months ended June 30, 2025 and 2024, respectively.

Adjusted EBITDA increased 10.1% to $24.4 million for the three months ended June 30, 2025 compared to $22.2 million for the three months ended June 30, 2024. Adjusted EBITDA increased 21.2% to $73.5 million for the nine months ended June 30, 2025 compared to $60.6 million for the nine months ended June 30, 2024. Adjusted EBITDA as a percentage of net sales was 7.4% and 7.2% for the three months ended June 30, 2025 and 2024, respectively. Adjusted EBITDA as a percentage of net sales was 7.4% and 6.6% for the nine months ended June 30, 2025 and 2024, respectively.

Management believes some investors' understanding of our performance is enhanced by including EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe EBITDA and Adjusted EBITDA provide additional information about: (i) our operating performance, because they assist us in comparing the operating performance of our stores on a consistent basis, as they remove the impact of non-cash depreciation and amortization expense as well as items not directly resulting from our core operations, such as interest expense and income taxes and (ii) our performance and the effectiveness of our operational strategies. Additionally, EBITDA is a component of a measure in our financial covenants under our Credit Facility.

Furthermore, management believes some investors use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry. Management believes that some investors' understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. By providing these non-GAAP financial measures, together with a reconciliation from net income, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.

Our competitors may define EBITDA and Adjusted EBITDA differently, and as a result, our measures of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA of other companies. Items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered in isolation or as an alternative to, or substitute for, net income or other financial statement data presented in the consolidated financial statements as indicators of financial performance. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:

● EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

● EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

● EBITDA and Adjusted EBITDA do not reflect any depreciation or interest expense for leases classified as finance leases;

● EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

● Adjusted EBITDA does not reflect share-based compensation, impairment of long-lived assets, store closing costs and amortization of SaaS implementation costs;

● EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and

● although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

Due to these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA as supplemental information.

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**Liquidity and Capital Resources**

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 inventory, operating expenses, capital expenditures predominantly in connection with opening, relocating and remodeling stores, debt service, cash dividends, share repurchases and corporate taxes. As of June 30, 2025, we had $13.2 million in cash and cash equivalents and $69.5 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 2024 – and the current program will terminate on May 31, 2026. We did not repurchase any shares of our common stock during the three months ended June 30, 2025. 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 $0.12 per share of common stock in each of the first three quarters of fiscal year 2025. On August 6, 2025, our Board approved the payment of a quarterly cash dividend of $0.12 per share of common stock to be paid on September 17, 2025 to stockholders of record as of the close of business on September 2, 2025.

We plan to continue to open new stores and relocate/remodel existing stores in the future, which may require us to borrow additional amounts under the Credit Facility from time to time. We believe that cash and cash equivalents, together with the cash generated from operations and the borrowing availability under our Credit Facility, will be sufficient to meet our working capital needs and planned capital expenditures, including capital expenditures related to new store needs, repayment of debt, stock repurchases and dividends for the next 12 months and the foreseeable future. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within days from the related sale.

The following is a summary of our operating, investing and financing activities for the periods presented, dollars in thousands:

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| | | |
|:---|:---|:---|
|  | **Nine months ended** <br> **June 30,** | **Nine months ended** <br> **June 30,** |
|  | **2025** | **2024** |
| Net cash provided by operating activities | $39677 | 49280 |
| Net cash used in investing activities | (22942) | (31808) |
| Net cash used in financing activities | (12428) | (21899) |
| Net increase (decrease) in cash and cash equivalents | 4307 | (4427) |
| Cash and cash equivalents, beginning of period | 8871 | 18342 |
| Cash and cash equivalents, end of period | $13178 | 13915 |

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*Operating Activities*

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 decreased $9.6 million, or 19.5%, to $39.7 million for the nine months ended June 30, 2025 compared to $49.3 million for the nine months ended June 30, 2024. The decrease in cash provided by operating activities was the result of a decrease in cash provided by operating assets and liabilities, partially offset by an increase in cash provided by net income as adjusted for non-cash items.

*Investing Activities*

Net cash used in investing activities decreased $8.9 million, or 27.9%, to $22.9 million for the nine months ended June 30, 2025 compared to $31.8 million for the nine months ended June 30, 2024. This decrease was primarily the result of decreases in acquisitions of property and equipment of $7.9 million and other intangibles of $0.7 million during the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024, and was attributed to the timing of new store openings, relocations/remodels, and software projects under development.

We plan to spend approximately $7.1 million to $10.1 million on capital expenditures during the remainder of fiscal year 2025 primarily in connection with expected new store openings and store relocations/remodels.

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Acquisition of property and equipment not yet paid decreased $0.4 million to $2.2 million for the nine months ended June 30, 2025 compared to $2.6 million for the nine months ended June 30, 2024 due to the timing of payments related to new store openings and relocations/remodels.

*Financing Activities*

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 $12.4 million for the nine months ended June 30, 2025 compared to $21.9 million for the nine months ended June 30, 2024. During the nine months ended June 30, 2024, we paid a special cash dividend to stockholders of $22.7 million.

**Credit Facility**

The aggregate revolving commitment amount available under the Credit Facility is $72.5 million, including a $5.0 million sub-limit for standby letters of credit. The operating company is the borrower under the Credit Facility, and its obligations under the Credit Facility are guaranteed by the holding company and VC2. 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 is 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.

Base rate loans under the Credit Facility bear interest at a fluctuating base rate as determined by the lenders' administrative agent based on the most recent compliance certificate of the operating company and stated at the highest of: (i) the federal funds rate plus 0.50%; (ii) the prime rate; and (iii) Term SOFR plus 1.00%, subject to the applicable interest rate floor, less the lender spread based upon the Company's consolidated leverage ratio. Term SOFR loans under the Credit Facility bear interest based on Term SOFR for the interest period plus the lender spread based upon the Company's consolidated leverage ratio. The unused commitment fee is also based upon the Company's consolidated leverage ratio.

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 required lenders' 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 June 30, 2025 and September 30, 2024. As of June 30, 2025 and September 30, 2024, we had undrawn, issued and outstanding letters of credit of $3.0 million and $2.2 million, respectively, which were reserved against the amount available for borrowing under the Credit Facility. We had $69.5 million and $72.8 million available for borrowing under the Credit Facility as of June 30, 2025 and September 30, 2024, respectively.

As of June 30, 2025 and September 30, 2024, the Company was in compliance with all covenants under the Credit Facility.

**Share Repurchases**

Certain information about the Company's share repurchases is set forth under the heading "Share Repurchases" in Note 6 of Notes to Unaudited Interim Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

**Recent Accounting Pronouncements**

See Note 2 to the consolidated financial statements included in this Form 10-Q.

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**Critical Accounting Policies**

The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. Actual amounts may differ from these estimates. We base our estimates on historical experience and on various other assumptions and factors that we believe to be reasonable under the circumstances. We evaluate our accounting policies and resulting estimates on an ongoing basis to make adjustments we consider appropriate under the facts and circumstances.

Critical accounting policies that affect our more significant judgments and estimates used in the preparation of our financial statements include accounting for income taxes, accounting for impairment of long-lived assets and accounting for leases, which are discussed in more detail under the caption "Critical Accounting Policies" under Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Form 10-K.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

There have been no material changes regarding our market risk position from the information provided under Item 7A – "Quantitative and Qualitative Disclosures about Market Risk" in our Form 10-K.

**Item 4. Controls and Procedures**

*Evaluation of Disclosure Controls and Procedures* 

Our management, with the participation of our principal executive officers and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our principal executive officers and principal financial and accounting officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025.

*Changes in Internal Control over Financial Reporting*

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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**PART II. Other Information**

**Item 1. Legal Proceedings**

We periodically are involved in legal proceedings, including labor and employment-related claims, customer personal injury claims, investigations and other proceedings arising in the ordinary course of business. When the potential liability from a matter can be estimated and the loss is considered probable, we record the estimated loss. Due to uncertainties related to the resolution of lawsuits, investigations and claims, the ultimate outcome may differ from our estimates. Although we cannot predict with certainty the ultimate resolution of any lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations.

**Item 1A. Risk Factors**

The risk factor below updates those disclosed in Part I, "Item 1A-Risk Factors," of our Form 10-K.

***New or increased tariffs on the foreign-sourced goods that we sell or the foreign-sourced materials incorporated into such goods could have a material adverse effect on our business, financial condition and results of operations.***

We rely on foreign suppliers to source certain of the products that we sell. The United States recently has imposed, or has proposed, tariffs on a broad range of foreign-sourced products and materials including tariffs on products imported from China, Mexico and Canada. In response, certain trading partners of the United States, including China, have imposed, or proposed, retaliatory tariffs and other measures on goods manufactured in the United States. Although the tariffs imposed have not had a material impact on our business, financial condition and results of operations, there can be no assurance that this will continue to be the case. The imposition, or proposed imposition, of additional tariffs and trade restrictions on the foreign-sourced goods that we sell, or the foreign-sourced materials that are incorporated into such goods, may cause us to incur higher costs to procure certain products we offer, which may require us to raise prices on such products. If our competitors do not keep pace with any such price increases or are able to offset the impact of tariffs through other actions, our competitive position may be adversely affected. In addition, a prolonged trade conflict between the United States and its trade partners could result in adverse and uncertain economic conditions and adversely impact demand for our products. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.

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**Item 6. Exhibits**

**EXHIBIT INDEX**

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| | |
|:---|:---|
| **Exhibit** <br> **Number** | **Description** |
| 3.1 | [Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 5, 2012, File No. 333-182186)](http://www.sec.gov/Archives/edgar/data/1547459/000104746912007048/a2210104zex-3_1.htm) |
| 3.2 | [Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 11, 2025)](http://www.sec.gov/Archives/edgar/data/1547459/000143774925007040/ex_788089.htm) |
| 3.3 | [Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on July 5, 2012, File No. 333-182186)](http://www.sec.gov/Archives/edgar/data/1547459/000104746912007048/a2210104zex-3_2.htm) |
| 31.1 | [Certification of Kemper Isely, a Principal Executive Officer Required Under Section 302(a) of the Sarbanes-Oxley Act of 2002](ex_846546.htm) |
| 31.2 | [Certification of Zephyr Isely, a Principal Executive Officer Required Under Section 302(a) of the Sarbanes-Oxley Act of 2002](ex_846547.htm) |
| 31.3 | [Certification of Richard Hallé, Principal Financial Officer Required Under Section 302(a) of the Sarbanes-Oxley Act of 2002](ex_846549.htm) |
| 32.1† | [Certification of Principal Executive Officers and Principal Financial Officer Required Under 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex_846548.htm) |
| 101 | The following materials from Natural Grocers by Vitamin Cottage, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2025 and September 30, 2024 (unaudited); (ii) Consolidated Statements of Income for the three and nine months ended June 30, 2025 and 2024 (unaudited); (iii) Consolidated Statements of Cash Flows for the nine months ended June 30, 2025 and 2024 (unaudited); (iv) Consolidated Statements of Changes in Stockholders' Equity for the nine months ended June 30, 2025 and 2024 (unaudited); and (v) Notes to Unaudited Interim Consolidated Financial Statements. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

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† The certifications attached as Exhibit 32.1 that accompany this Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Natural Grocers by Vitamin Cottage, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on August 7, 2025.

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| | |
|:---|:---|
| Natural Grocers by Vitamin Cottage, Inc. | Natural Grocers by Vitamin Cottage, Inc. |
| By: | /s/ KEMPER ISELY |
|  | Kemper Isely, Co-President |
|  | *(Principal Executive Officer)* |
| By: | /s/ RICHARD HALLÉ |
|  | Richard Hallé, Chief Financial Officer |
|  | *(Principal Financial and Accounting Officer)* |

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Kemper Isely, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q of Natural Grocers by Vitamin Cottage, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2025

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| |
|:---|
| /s/ Kemper Isely |
| Kemper Isely |
| Co-President and a Principal Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Zephyr Isely, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q of Natural Grocers by Vitamin Cottage, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2025

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| |
|:---|
| /s/ Zephyr Isely |
| Zephyr Isely |
| Co-President and a Principal Executive Officer |

---

## Exhibit 31.3

**Exhibit 31.3**

**CERTIFICATION**

I, Richard Hallé, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q of Natural Grocers by Vitamin Cottage, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 7, 2025

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| |
|:---|
| /s/ Richard Hallé |
| Richard Hallé |
| Chief Financial Officer and Principal Financial Officer |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002** 

In connection with the Quarterly Report on Form 10-Q of Natural Grocers by Vitamin Cottage, Inc. (the "Company") for the fiscal quarter ended June 30, 2025, Kemper Isely, Co-President and a Principal Executive Officer of the Company, Zephyr Isely, Co-President and a Principal Executive Officer of the Company, and Richard Hallé, Chief Financial Officer and Principal Financial Officer of the Company, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;● The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;● The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2025

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| |
|:---|
| /s/ Kemper Isely |
| Kemper Isely |
| Co-President and a Principal Executive Officer |

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| |
|:---|
| /s/ Zephyr Isely |
| Zephyr Isely |
| Co-President and a Principal Executive Officer |

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| |
|:---|
| /s/ Richard Hallé |
| Richard Hallé |
| Chief Financial Officer and Principal Financial Officer |

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