A healthy first quarter for Natural Grocers

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A healthy first quarter for Natural Grocers

By Gina Acosta - 02/01/2018

Marketing and operational initiatives are helping Natural Grocers build on the momentum of its aggressive store expansion in 2017. 

The natural foods retailer reported strong results for its first quarter ended Dec. 31. This was the company's third consecutive quarter of comp increases, and this was the best quarter of comps of the three. 

Daily average same store sales increased 4.7% in the first quarter of fiscal 2018 compared to a 0.6% decrease in the first quarter of fiscal 2017. The daily average comparable store sales increase during the first quarter of fiscal 2018 was driven by a 4.8% increase in daily average transaction count. 

"We are pleased with the continued acceleration of sales trends during the first quarter, with daily average comparable store sales increasing 4.7%," said Kemper Isely, Co-President.  "We made additional promotional investments during the quarter and have seen a significant positive response to our direct mail promotions, which, along with continued new {N}Power enrollments and our marketing initiatives, led to 4.8% growth in daily average transaction count. The promotions had a negative effect on product margins, which impacted pre-tax earnings during the quarter. With sales momentum in place, we will look to balance our promotional efforts to drive improved earnings."

Isely elaborated in an earnings call late Thursday that the company has been focused on operational efficiencies and promotional initiatives to reflect the increasingly competitive natural foods market. The company plans to open as many as 11 new stores in 2018.

In the first quarter, net sales at Natural Grocers increased 10.3% to $202.5 million. Net income was $5.2 million with diluted earnings per share of $0.23, and EBITDA was $9.6 million.

The company opened two new stores in the first quarter of fiscal 2018, resulting in a unit growth rate of 8.4% for the 12-month period ended Dec. 31.

Gross profit during the first quarter of fiscal 2018 increased 1.9% over the same period in fiscal 2017 to $53.2 million, primarily driven by an increase in the number of comparable stores. 

Since Jan. 1, 2018, the company has opened one store in Texas and plans to open an additional store in Texas on Feb. 7. The company has nine signed leases for additional stores that are planned to open in fiscal 2018 and beyond in Colorado, Iowa, Oregon, and Texas.  

Natural Grocers by Vitamin Cottage, Inc., founded in 1955, currently has 143 stores in 19 states.

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