UNITED NATURAL FOODS INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, that involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and “would,” or similar words. Statements that contain these words and other statements that are forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial positions or state other “forward-looking” information. Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect. These statements are based on our management’s beliefs and assumptions, which are based on currently available information. These assumptions could prove inaccurate. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to: • our dependence on principal customers; • the relatively low margins of our business, which are sensitive to inflationary and deflationary pressures and intense competition, including as a result of the continuing consolidation of retailers and the growth of consumer choices for grocery and consumable purchases; • our ability to realize the anticipated benefits of our strategic initiatives; • changes in relationships with our suppliers; • our ability to develop, implement, operate and maintain, and rely on third parties to operate and maintain, reliable and secure technology systems, and the effectiveness of our business continuity plans in response to an incident impacting our technology systems, such as the unauthorized incident on our technology systems; • labor and other workforce shortages and challenges; • the addition or loss of significant customers or material changes to our relationships with these customers; • our ability to realize anticipated benefits of strategic transactions; • our ability to continue to grow sales, including of our higher margin natural and organic foods and non-food products; • our ability to maintain sufficient volume in our Natural and Conventional businesses to support our operating infrastructure; • our ability to access additional capital; • increases in healthcare, pension and other costs under our single employer benefit plan and multiemployer benefit plans; • the potential for additional asset impairment charges; • our sensitivity to general economic conditions including inflation, tariff policy and changes in disposable income levels and consumer purchasing habits; • our ability to timely and successfully deploy our warehouse management system throughout our distribution centers and our transportation management system across the Company and to achieve efficiencies and cost savings from these efforts; • the potential for disruptions in our supply chain or our distribution capabilities from circumstances beyond our control, including due to lack of long-term contracts, severe weather, labor shortages or work stoppages or otherwise; • the effect of adverse decisions in, or settlement of, litigation or other proceedings to which we are subject; • moderated supplier promotional activity, including decreased forward buying opportunities; • union-organizing activities that could cause labor relations difficulties and increased costs; • changes in tax laws and regulations, and actions by federal, state and local taxing authorities related to the interpretation and application of such tax laws and regulations; • our ability to maintain food quality and safety; and • volatility in fuel costs. You should carefully review the risks described under “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended August 2, 2025 (the “Annual Report”), as well as any other cautionary language in this Quarterly Report, as the occurrence of any of these events could have an adverse effect, which may be material, on our business, results of operations, financial condition or cash flows. 24 Table of Contents EXECUTIVE OVERVIEW This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto contained in this Quarterly Report on Form 10-Q, the information contained under the caption “Cautionary Note Regarding Forward-Looking Statements,” and the information in the Annual Report. Business Overview UNFI is a leading distributor of grocery and non-food products, and support services provider to retailers in the United States and Canada. We believe we are uniquely positioned to provide the broadest array of products, programs and services to customers throughout North America. Our diversified customer base includes over 30,000 customer locations ranging from some of the largest grocers in the country to smaller retailers. We offer approximately 230,000 products consisting of national, regional and private label brands grouped into the following main product categories: grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products. We believe we are North America’s premier grocery wholesaler with 49 distribution centers and warehouses representing approximately 28 million square feet of warehouse space. We are a coast-to-coast distributor with customers in all 50 states as well as all ten provinces in Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product assortment and service offerings are unmatched by our wholesale competitors. We plan to continue to pursue new business opportunities with independent retailers that operate diverse formats, regional and national chains, as well as international customers with wide-ranging needs. Our business is classified into three reportable segments: Natural, Conventional and Retail. We are executing against the strategy we introduced in October 2024 and three-year financial objectives that seek to add value to our customers and suppliers through our portfolio of products, programs, insights and services while improving our effectiveness, efficiency and cash flow. To accomplish the latter, we are focused on controllable variables in four key areas: intensifying and expanding our network optimization; managing annual capital spending; optimizing our cost structure; and reducing our net working capital position. We expect to continue to use available capital to re-invest in our business and are committed to improving our free cash flow and financial leverage while reducing outstanding debt. We believe we can optimize our performance and profitability through our improvement efforts, which we expect will improve our cost structure, increase sales of products and services, and position us to provide tailored, data-driven solutions to help our customers run their businesses more efficiently and expand our customer base. Trends and Other Factors Affecting Our Business Our results are impacted by macroeconomic and demographic trends, changes in the food distribution market structure and changes in consumer behavior, which may result from factors beyond our control, including geopolitical events and other events that may trigger economic volatility and negatively impact discretionary income levels and consumer confidence, social trends, changes in the levels of disposable income and the health of the economy in which our customers and stores operate. The U.S. economy continues to experience economic volatility, which has had, and we expect may continue to have, an impact on consumer confidence and behavior. Consumer spending may continue to be impacted by levels of discretionary income with consumers trading down to a less expensive mix of products for grocery items or buying fewer items. In addition, inflation continues to affect our business, and fluctuating commodity and labor input costs may continue to impact the prices of products we procure from manufacturers. We believe our product mix, which ranges from high-quality natural and organic products to national and local conventional brands, including cost conscious private label brands, positions us to serve a broad cross section of North American retailers and end customers, and may lessen the impact of any further shifts in consumer and industry trends in grocery product mix. We are actively monitoring the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies, on all aspects of our business. We are also impacted by changes in food distribution trends affecting our wholesale customers, such as direct store deliveries and other methods of distribution. Our wholesale customers manage their businesses independently and operate in a competitive environment. 25 Table of Contents Wholesale Distribution Network Optimization In connection with the termination of our supply agreement with a customer in the East region in fiscal 2025, we ceased operations at our Allentown, Pennsylvania distribution center in the first quarter of fiscal 2026 with the remaining volume consolidated into other facilities in the Northeast. Business with this customer in the Northeast accounted for approximately $1 billion in annual sales. The termination enables us to accelerate progress toward our longer-term strategic and three-year financial objectives. We continue to evaluate our distribution center network to better and more efficiently service customers and suppliers and further optimize performance. We could incur incremental expenses related to any future network realignment, expansion or improvements, including network optimization and automation initiatives. We are working to both minimize future costs and obtain new business to further improve the efficiency of our distribution network. Retail Operations We operated 70 grocery stores, including 53 Cub Foods stores and 17 Shoppers stores, as of November 1, 2025. In addition, we supplied another 24 Cub Foods stores operated by our wholesale customers through franchise and minority equity ownership arrangements. We operated 77 pharmacies primarily within the stores we operate and the stores of our franchisees. In addition, we operated 23 “Cub Wine and Spirit” and “Cub Liquor” stores. Subsequent to the end of the first quarter of fiscal 2026, we closed four Shoppers stores which were previously announced for closure during the first quarter of fiscal 2026. We plan to continue to invest in and optimize our Retail segment in areas such as customer-facing merchandising initiatives, physical facilities, technology and operational tools. Impact of Product Cost Changes We experienced a mix of inflation and deflation across product categories during the first quarter of fiscal 2026. In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately three percent in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025. Cost inflation and deflation estimates are based on individual like items sold during the periods being compared. Our pricing to our customers is determined at the time of sale, primarily based on the then prevailing vendor listed base cost, and includes discounts we offer to our customers. Changes in merchandising, customer buying habits and competitive pressures create inherent difficulties in measuring the impact of inflation and deflation on Net sales and Gross profit. Generally, in an inflationary environment as a wholesaler, rising vendor costs result in higher Net sales driven by higher vendor prices when other variables such as quantities sold, mix of units sold and vendor promotions are constant. Under the last-in, first out (“LIFO”) method of inventory accounting, product cost increases are recognized within Cost of sales based on expected year-end inventory quantities and costs, which generally has the effect of decreasing Gross profit and the carrying value of inventory during periods of inflation. Composition of Condensed Consolidated Statements of Operations and Business Performance Assessment Net Sales Our Net sales consist primarily of product sales of natural, organic, specialty, produce, and conventional grocery and non-food products, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue. Net sales also include amounts charged by us to customers for shipping and handling and fuel surcharges. Cost of Sales and Gross Profit The principal components of our Cost of sales include the amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, our distribution centers and retail stores, partially offset by consideration received from suppliers in connection with the purchase, transportation or promotion of the suppliers’ products. Operating Expenses Operating expenses include distribution expenses of warehousing, delivery, purchasing, receiving, selecting, and outbound transportation expenses, and selling and administrative expenses. These expenses include salaries and wages, employee benefits, occupancy, insurance, depreciation and amortization expense and share-based compensation expense. 26 Table of Contents Restructuring, Acquisition and Integration Related Expenses Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, facility closure costs, contract exit-related costs, share-based compensation acceleration charges and acquisition and integration related expenses. Integration related expenses include certain professional consulting expenses and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions. Loss on Sale of Assets and Other Asset Charges Loss on sale of assets and other asset charges primarily includes losses (gains) on sales of assets, losses on sales of financial assets, and asset impairments. Net Periodic Benefit Income, Excluding Service Cost Net periodic benefit income, excluding service cost reflects the recognition of expected returns on benefit plan assets and interest costs on plan liabilities. Interest Expense, Net Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest income. Adjusted EBITDA Our Condensed Consolidated Financial Statements are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition to the GAAP results, we consider certain non-GAAP financial measures to assess the performance of our business and understand underlying operating performance and core business trends, which we use to facilitate operating performance comparisons of our business on a consistent basis over time. Adjusted EBITDA is provided as a supplement to our results of operations and related analysis, and should not be considered superior to, a substitute for or an alternative to, any financial measure of performance prepared and presented in accordance with GAAP. Adjusted EBITDA excludes certain items because they are non-cash items or items that do not reflect management’s assessment of ongoing business performance. We believe Adjusted EBITDA is useful because it provides additional information regarding factors and trends affecting our business, which are used in the business planning process to understand expected operating performance, to evaluate results against those expectations, and because of its importance as a measure of underlying operating performance, as the primary compensation performance measure under certain compensation programs and plans. We believe Adjusted EBITDA is reflective of factors that affect our underlying operating performance and facilitate operating performance comparisons of our business on a consistent basis over time. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures reflected below exclude items that may be considered recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements and items may be different from non-GAAP financial measures used by other companies. Adjusted EBITDA should be reviewed in conjunction with our results reported in accordance with GAAP in this Quarterly Report on Form 10-Q. There are significant limitations to using Adjusted EBITDA as a financial measure including, but not limited to, it not reflecting the cost of cash expenditures for capital assets or certain other contractual commitments, finance lease obligation and debt service expenses, income taxes and any impacts from changes in working capital. We define Adjusted EBITDA as a consolidated measure which we reconcile by adding Net (loss) income including noncontrolling interests, less Net income attributable to noncontrolling interests, plus Non-operating income and expenses, including Net periodic benefit income, excluding service cost, Interest expense, net and Other (income) expense, net, plus (Benefit) provision for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus adjustments for Share-based compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and integration related expenses, Goodwill impairment charges, Loss (gain) on sale of assets and other asset charges, certain legal charges and gains, and certain other non-cash charges or other items, as determined by management. 27 Table of Contents Assessment of Our Business Results The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated. 13-Week Period Ended (in millions) November 1, 2025 November 2, 2024 Change Net sales $ 7,840 $ 7,871 $ (31) Cost of sales 6,789 6,833 (44) Gross profit 1,051 1,038 13 Operating expenses 996 1,015 (19) Restructuring, acquisition and integration related expenses 22 12 10 Loss on sale of assets and other asset charges 14 6 8 Operating income 19 5 14 Net periodic benefit income, excluding service cost (6) (5) (1) Interest expense, net 34 36 (2) Other income, net — (2) 2 Loss before income taxes (9) (24) 15 Benefit for income taxes (5) (4) (1) Net loss including noncontrolling interests (4) (20) 16 Less net income attributable to noncontrolling interests — (1) 1 Net loss attributable to United Natural Foods, Inc. $ (4) $ (21) $ 17 Adjusted EBITDA $ 167 $ 134 $ 33 28 Table of Contents The following table reconciles Net loss including noncontrolling interests to Adjusted EBITDA: 13-Week Period Ended (in millions) November 1, 2025 November 2, 2024 Net loss including noncontrolling interests $ (4) $ (20) Adjustments to net loss including noncontrolling interests: Less net income attributable to noncontrolling interests — (1) Net periodic benefit income, excluding service cost (6) (5) Interest expense, net 34 36 Other income, net — (2) Benefit for income taxes (5) (4) Depreciation and amortization 77 80 Share-based compensation 11 7 LIFO charge 5 7 Restructuring, acquisition and integration related expenses (1) 22 12 Loss on sale of assets and other asset charges (2) 14 6 Business transformation costs (3) 4 18 Cybersecurity incident (4) 4 — Other adjustments (5) 11 — Adjusted EBITDA $ 167 $ 134 (1) Fiscal 2026 primarily reflects adjustments to previously recorded multiemployer pension plan withdrawal liabilities, distribution center and store closure charges and costs and costs associated with certain employee severance and other employee separation costs. Fiscal 2025 primarily reflects costs associated with certain employee severance and other employee separation costs. (2) Fiscal 2026 primarily includes a $10 million non-cash asset impairment charge related to the decision to close certain retail store locations. (3) Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations. (4) Fiscal 2026 includes costs and charges related to the Cybersecurity Incident, of which $13 million are included within Gross profit and $1 million are included within Operating expenses in the Condensed Consolidated Statements of Operations. These were partially offset by $10 million of insurance recoveries which are included within Operating expenses in the Condensed Consolidated Statements of Operations. (5) Fiscal 2026 reflects accrued costs related to an agreement to settle certain legal proceedings, which are included within Operating expenses in the Condensed Consolidated Statements of Operations. RESULTS OF OPERATIONS Net Sales The following table sets forth Net sales by segment. Prior periods have been recast to conform to our current period presentation. Refer to Note 14—Business Segments in Part 1, Item 1 of this Quarterly Report on Form 10-Q for our category definitions and additional information. 13-Week Period Ended Increase (Decrease) (in millions, except percentages) November 1, 2025 November 2, 2024 $ % Natural $ 4,240 $ 3,838 $ 402 10.5 % Conventional 3,325 3,764 (439) (11.7) % Retail 554 586 (32) (5.5) % Eliminations (279) (317) 38 (12.0) % Total net sales $ 7,840 $ 7,871 $ (31) (0.4) % Our Net sales for the first quarter of fiscal 2026 decreased approximately 0.4% from the first quarter of fiscal 2025. The decrease in Net sales was primarily driven by a decrease in unit volumes, partially offset by inflation. 29 Table of Contents Natural Net sales for the first quarter of fiscal 2026 increased approximately 10.5% from the first quarter of fiscal 2025. The increase was primarily driven by an increase in unit volumes, including new business with existing and new customers, as well as inflation. Conventional Net sales for the first quarter of fiscal 2026 decreased approximately 11.7% from the first quarter of fiscal 2025. The decrease was driven by a decline in unit volumes primarily due to the transition out of our Allentown, Pennsylvania distribution center, partially offset by increases from inflation. Retail Net sales for the first quarter of fiscal 2026 decreased approximately 5.5% from the first quarter of fiscal 2025. The decrease was primarily driven by a 3.1% decrease in identical store sales from lower volume, and store closures. Lower eliminations of Net sales for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation. Cost of Sales and Gross Profit Our Gross profit increased $13 million, or 1.3%, to $1,051 million for the first quarter of fiscal 2026, from $1,038 million for the first quarter of fiscal 2025. Our Gross profit as a percentage of Net sales increased to 13.4% for the first quarter of fiscal 2026 compared to 13.2% for the first quarter of fiscal 2025. The increase in gross profit rate of 22 basis points was primarily driven by the positive impact of network optimization and customer mix, the favorable impact of supplier programs and higher levels of procurement gains, which were partially offset by lower product margin rates and $13 million of charges associated with the previously disclosed Cybersecurity Incident. Operating Expenses Operating expenses decreased $19 million, or 1.9%, to $996 million, or 12.7% of Net sales, for the first quarter of fiscal 2026 compared to $1,015 million, or 12.9% of Net sales, for the first quarter of fiscal 2025. The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiatives and a $10 million cybersecurity insurance recovery. Restructuring, Acquisition and Integration Related Expenses Restructuring, acquisition and integration related expenses increased $10 million to $22 million for the first quarter of fiscal 2026, compared to $12 million for the first quarter of fiscal 2025. The increase was primarily driven by an adjustment to previously recorded multiemployer pension plan withdrawal liabilities in the first quarter of fiscal 2026. Loss on Sale of Assets and Other Asset Charges Loss on sale of assets and other asset charges increased $8 million to $14 million for the first quarter of fiscal 2026, from $6 million for the first quarter of fiscal 2025. The first quarter of fiscal 2026 primarily included a $10 million non-cash asset impairment charge related to the decision to close certain retail store locations, while there were no asset impairment charges in the first quarter of fiscal 2025. The first quarters of fiscal 2026 and 2025 included losses on the sales of receivables under the accounts receivable monetization program. Operating Income Reflecting the factors described above, Operating income increased $14 million to $19 million for the first quarter of fiscal 2026, compared to Operating income of $5 million for the first quarter of fiscal 2025. The increase in Operating income was primarily driven by a decrease in Operating expenses and an increase in Gross profit, partially offset by an increase in Restructuring, acquisition and integration related expenses and Loss on sale of asset and other asset charges and in the first quarter of fiscal 2026, each as described above. 30 Table of Contents Interest Expense, Net 13-Week Period Ended (in millions) November 1, 2025 November 2, 2024 Interest expense on long-term debt, net of capitalized interest $ 32 $ 35 Amortization of financing costs and discounts 2 2 Interest income — (1) Interest expense, net $ 34 $ 36 The decrease in interest expense, net, in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily driven by lower outstanding long-term debt balances. Benefit for Income Taxes The effective tax rate for the first quarter of fiscal 2026 was a benefit rate of 55.6% on pre-tax loss compared to a benefit rate of 16.7% on pre-tax loss for the first quarter of fiscal 2025. The change from the first quarter of fiscal 2025 is primarily driven by discrete tax benefits from favorable tax audit settlements and employee stock awards in the first quarter of fiscal 2026, as well as the tax credit benefit of a solar array that was placed in service during the first quarter of fiscal 2026. Net Loss Attributable to United Natural Foods, Inc. Reflecting the factors described in more detail above, Net loss attributable to United Natural Foods, Inc. was $4 million, or $0.06 per diluted common share, for the first quarter of fiscal 2026, compared to Net loss attributable to United Natural Foods, Inc. of $21 million, or $0.35 per diluted common share, for the first quarter of fiscal 2025. 31 Table of Contents Adjusted EBITDA The following table sets forth Adjusted EBITDA by segment for the periods indicated. Prior periods have been recast to conform to our current period presentation. Refer to Note 14—Business Segments within Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. 13-Week Period Ended (in millions) November 1, 2025 November 2, 2024 Increase (Decrease) Natural $ 127 $ 102 $ 25 Conventional 70 45 25 Retail (9) 1 (10) Corporate and Other (21) (14) (7) Total Adjusted EBITDA $ 167 $ 134 $ 33 Natural Adjusted EBITDA increased $25 million, or 24.5%, for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025. The increase was driven by an increase in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments, partially offset by an increase in operating expenses. • Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $48 million. Natural gross profit rate decreased approximately 17 basis points driven primarily by lower product margin rates and customer and product mix, which were partially offset through supplier programs and higher levels of procurement gains. • Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, increased $23 million. Natural operating expense rate decreased approximately 50 basis points primarily due to the leveraging impact of higher sales and the benefits from cost saving initiatives, partially offset by increases in bad debt expense and costs associated with union and other employee benefits. Conventional Adjusted EBITDA increased $25 million, or 55.6%, for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025. The increase was driven by a decrease in operating expenses, partially offset by a decrease in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments. • Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $10 million. Conventional gross profit rate increased approximately 105 basis points driven primarily by customer mix, higher levels of procurement gains and recoveries related to settlements with customers and suppliers in the first quarter of fiscal 2026. • Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $35 million. Conventional operating expense rate increased approximately 14 basis points primarily due to the deleveraging impact of lower sales on fixed costs, partially offset by benefits from cost saving initiatives. Retail Adjusted EBITDA decreased $10 million for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025. The decrease was driven by a decrease in gross profit excluding the LIFO charge, partially offset by a decrease in operating expenses. • Retail Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $14 million. Retail gross profit rate decreased approximately 107 basis points driven primarily by lower sales volume and changes in category mix. • Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $4 million. Retail operating expense rate increased approximately 73 basis points primarily due to the deleveraging impact of lower sales, partially offset by lower labor costs from operating efficiencies. 32 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Highlights • Total liquidity as of November 1, 2025 was $1,327 million and consisted of the following: ◦ $1,289 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which decreased $164 million from $1,453 million as of August 2, 2025, primarily due to increased cash utilized to fund seasonal working capital increases and a reduction in the borrowing base; and ◦ $38 million of cash and cash equivalents, which decreased $6 million from $44 million as of August 2, 2025. • Total debt increased $58 million to $1,920 million as of November 1, 2025 from $1,862 million as of August 2, 2025, primarily related to an increase in net borrowings under the ABL Credit Facility due to net cash used in operating activities and payments for capital expenditures. • Working capital increased $148 million to $969 million as of November 1, 2025 from $821 million as of August 2, 2025, primarily due to a seasonal increase in inventory levels combined with a decrease in accrued compensation and benefits, partially offset by a decrease in accounts receivable and an increase in accounts payable to support higher inventory levels. • In connection with the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses, we paid the remaining installments totaling $35 million in the first quarter of fiscal 2026. Sources and Uses of Cash We expect to continue to replenish operating assets and pay down debt obligations with internally generated funds. A significant reduction in operating earnings or the incurrence of operating losses could have a negative impact on our operating cash flow, which may limit our ability to pay down our outstanding indebtedness as planned. Our credit facilities are secured by a substantial portion of our total assets. We expect to be able to fund debt maturities and finance lease liabilities through fiscal 2026 with internally generated funds and borrowings under the ABL Credit Facility. Our primary sources of liquidity are from internally generated funds and from borrowing capacity under the ABL Credit Facility. We believe our short-term and long-term financing abilities are adequate as a supplement to internally generated cash flows to satisfy debt obligations and fund capital expenditures as opportunities arise. Our continued access to short-term and long-term financing through credit markets depends on numerous factors, including the condition of the credit markets and our results of operations, cash flows, financial position and credit ratings. Primary uses of cash include debt service, capital expenditures, working capital maintenance depending on seasonality and other fluctuations, investments in cloud technologies and income tax payments. We typically finance working capital needs with cash provided from operating activities and short-term borrowings. Inventories are managed primarily through demand forecasting and replenishing depleted inventories. We currently do not pay a dividend on our common stock. In addition, we are limited in the aggregate amount of dividends that we may pay under the terms of our Term Loan Facility, ABL Credit Facility and our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”). Subject to certain limitations contained in our debt agreements and as market conditions warrant, we may from time to time refinance indebtedness that we have incurred, including through the incurrence or repayment of loans under existing or new credit facilities or the issuance or repayment of debt securities. Proceeds from the sale of any properties mortgaged and encumbered under our Term Loan Facility are required to be used to make additional Term Loan Facility payments or to be reinvested in the business. Long-Term Debt During the first quarter of fiscal 2026, we borrowed a net $58 million under the ABL Credit Facility. Refer to Note 9—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for a detailed discussion of the provisions of our credit facilities and certain long-term debt agreements and additional information. 33 Table of Contents Our Term Loan Agreement and Senior Notes do not include any financial maintenance covenants. Our ABL Loan Agreement subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210 million if no ABL FILO Loans are then outstanding at such time and (ii) 10% of the aggregate borrowing base. We have not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report on Form 10-Q. The Term Loan Agreement, Senior Notes and ABL Loan Agreement contain certain operational and informational covenants customary for debt securities of these types that limit our and our restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to our stockholders, transfer or sell assets, create liens on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of our and our subsidiaries’ assets on a consolidated basis. We were in compliance with all such covenants for all periods presented. If we fail to comply with any of these covenants, we may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable. The potential amount of prepayment under the Term Loan Facility from Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2026 that may be required in fiscal 2027 is not reasonably estimable as of November 1, 2025. Derivatives and Hedging Activity We enter into interest rate swap contracts from time to time to mitigate our exposure to changes in market interest rates as part of our strategy to manage our debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. As of November 1, 2025, we had an aggregate of $550 million of floating rate notional debt subject to active interest rate swap contracts, which effectively fix the Secured Overnight Financing Rate (“SOFR”) component of our floating interest payments through pay fixed and receive floating interest rate swap agreements. These fixed rates range from 3.597% to 4.130%, with maturities between October 2026 and June 2028. The fair values of these interest rate derivatives represent a total net liability of $3 million as of November 1, 2025, and are subject to volatility based on changes in market interest rates. From time to time, we enter into fixed price fuel supply agreements and foreign currency hedges. As of November 1, 2025, we had fixed price fuel contracts and foreign currency forward agreements outstanding. Gains and losses and the outstanding assets and liabilities from these arrangements are insignificant. Payments for Capital Expenditures and Cloud Technology Implementation Expenditures Our capital expenditures for the first quarter of fiscal 2026 were $16 million compared to $49 million for the first quarter of fiscal 2025, a decrease of $33 million. Our capital spending for the first quarter of fiscal 2026 and 2025 principally included supply chain and information technology expenditures, including maintenance expenditures and investments in growth initiatives. Cloud technology implementation expenditures, which are included in operating activities in the Condensed Consolidated Statements of Cash Flows, were $1 million for the first quarter of fiscal 2026 compared to $4 million for the first quarter of fiscal 2025. Fiscal 2026 capital and cloud implementation spending is expected to be approximately $250 million and include technology platform investments and projects that automate and optimize our distribution network. The components of capital and cloud implementation expenditures for fiscal 2026 will be primarily dependent on the nature of certain contracts to be executed. The timing of capital and cloud implementation spending is expected to vary based on a number of factors such as project execution milestones, which can result in fluctuations in cash outflows that are not necessarily indicative of future trends. We expect to finance fiscal 2026 capital and cloud implementation expenditures requirements with cash generated from operations and borrowings under our ABL Credit Facility. Future investments may be financed through long-term debt or borrowings under our ABL Credit Facility and cash from operations. 34 Table of Contents Cash Flow Information The following summarizes our Condensed Consolidated Statements of Cash Flows: 13-Week Period Ended (in millions) November 1, 2025 November 2, 2024 Change Net cash used in operating activities $ (38) $ (110) $ 72 Net cash used in investing activities (16) (47) 31 Net cash provided by financing activities 48 154 (106) Net decrease in cash and cash equivalents (6) (3) (3) Cash and cash equivalents, at beginning of period 44 40 4 Cash and cash equivalents, at end of period $ 38 $ 37 $ 1 The decrease in net cash used in operating activities for the first quarter of 2026 compared to the first quarter of fiscal 2025 was primarily due to lower levels of cash utilized in net working capital, including lower inventory and receivable levels compared to the first quarter of fiscal 2025. These decreases were partially offset by lower levels of cash generated by an increase in Accounts payable due to the lower inventory levels in the first quarter of fiscal 2026 and payments related to the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses in the first quarter of fiscal 2026. The decrease in net cash used in investing activities was primarily due to lower payments for capital expenditures in the first quarter of fiscal 2026. The decrease in net cash provided by financing activities for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to a decrease in net borrowings under the ABL Credit Facility resulting from the decreases in net cash used in operating activities and investing activities, as described above. Other Obligations and Commitments Our principal contractual obligations and commitments consist of obligations under our long-term debt, interest on long-term debt, operating and finance leases, purchase obligations, self-insurance liabilities and multiemployer plan withdrawal liabilities. Except as otherwise disclosed in Note 15—Commitments, Contingencies and Off-Balance Sheet Arrangements and Note 9—Long-Term Debt, there have been no material changes in our contractual obligations since the end of fiscal 2025. Refer to Item 7 of the Annual Report for additional information regarding our contractual obligations. Pension and Other Postretirement Benefit Obligations In fiscal 2026, no minimum pension contributions are required to be made to the SUPERVALU INC. Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). An insignificant amount of contributions is expected to be made to other defined benefit pension plans and postretirement benefit plans in fiscal 2026. We fund our tax-qualified defined benefit pension plan based on the minimum contribution required under ERISA, the Pension Protection Act of 2006 and other applicable laws and additional contributions made at our discretion. We may accelerate contributions or undertake contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing needs or other factors as may be applicable. We assess the relative attractiveness of the use of cash to accelerate contributions considering such factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required Pension Benefit Guaranty Corporation variable rate premiums or the ability to achieve exemption from participant notices of underfunding. 35 Table of Contents Off-Balance Sheet Multiemployer Pension Arrangements We contribute to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees are typically responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration. Trustees are appointed in equal number by employers and the unions that are parties to the relevant collective bargaining agreements. Based on the assessment of the most recent information available from the multiemployer plans, we believe that most of the plans to which we contribute are underfunded. We are only one of a number of employers contributing to these plans and the underfunding is not a direct obligation or liability to us. Our contributions can fluctuate from year to year due to store closures, employer participation within the respective plans and reductions in headcount. Our contributions to these plans could increase in the near term. However, the amount of any increase or decrease in contributions will depend on a variety of factors, including the results of our collective bargaining efforts, investment returns on the assets held in the plans, actions taken by the trustees who manage the plans and requirements under the Pension Protection Act of 2006, the Multiemployer Pension Reform Act and Section 412 of the Internal Revenue Code. Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP. We made contributions to these plans and recognized expense of $48 million in fiscal 2025. In fiscal 2026, we expect to contribute approximately $50 million to multiemployer plans, subject to the outcome of collective bargaining and capital market conditions. If we were to significantly reduce contributions, exit certain markets or otherwise cease making contributions to these plans, we could trigger a partial or complete withdrawal that could require us to record a withdrawal liability obligation and make withdrawal liability payments to the fund. We expect required cash payments to fund multiemployer pension plans from which we have withdrawn to be insignificant in any one fiscal year, which would exclude any payments that may be agreed to on a lump sum basis to satisfy existing withdrawal liabilities. Any future withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Any triggered withdrawal obligation could result in a material charge and payment obligations that would be required to be made over an extended period of time. We also make contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining agreements. A small minority of collective bargaining agreements contain reserve requirements that may trigger unanticipated contributions resulting in increased healthcare expenses. If these healthcare provisions cannot be renegotiated in a manner that reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future. Refer to Note 13—Benefit Plans in Part II, Item 8 of the Annual Report for additional information regarding the plans in which we participate. Share Repurchases In September 2022, our Board of Directors authorized a repurchase program for up to $200 million of our common stock over a term of four years (the “2022 Repurchase Program”). As of November 1, 2025, we had $138 million remaining authorized under the 2022 Repurchase Program. We did not repurchase any shares of our common stock in the first quarter of fiscal 2026. We will manage the timing of any repurchases of our common stock in response to market conditions and other relevant factors, including any limitations on our ability to make repurchases under the terms of our ABL Credit Facility, Term Loan Facility and Senior Notes. We may implement the 2022 Repurchase Program pursuant to a plan or plans meeting the conditions of Rule 10b5-1 under the Exchange Act. Critical Accounting Estimates There were no material changes to our critical accounting estimates during the period covered by this Quarterly Report on Form 10-Q. Refer to the description of critical accounting estimates included in Item 7 of our Annual Report. 36 Table of Contents Seasonality Overall product sales are fairly balanced throughout the year, although demand for certain products of a seasonal nature may be influenced by holidays, changes in seasons or other annual events. Our working capital needs are generally greater during the months of and leading up to high sales periods, such as the buildup in inventory leading to the calendar year-end holidays. Our inventory, accounts payable and accounts receivable levels may be impacted by macroeconomic impacts and changes in food-at-home purchasing rates. These effects can result in normal operating fluctuations in working capital balances, which in turn can result in changes to cash flow from operations that are not necessarily indicative of long-term operating trends.