Natural Grocers leverages education into growth
Natural Grocers is leveraging dietary education and store experience into sustained sales and earnings growth on its way to 1,100 stores.
Natural Grocers by Vitamin Cottage Inc. reported an impressive third quarter, with a 9.5 percent net sales increase to $213.1 million, a 5.2 boost in same store sales, and a 233 percent net income surge to $2 million with diluted earnings per share of 9 cents.
During an earnings call presentation, Natural Grocers says it is working toward a footprint of 1,100 stores across the United States. It currently has 147 stores in 19 states.
“We are pleased with our third-quarter results, including continued strong sales momentum and improved operating margins that contributed to a tripling of earnings per share,” said Kemper Isely, co-president of the Lakewood, Colo.-based natural food retailer. “We continue to invest in our sales initiatives, including price and promotional investments, while seeing a moderating impact to gross margin, resulting in improved expense leverage. We remain confident with our growth and operating strategies and will continue to focus on driving sales and delivering improved profit performance.”
Natural Grocers is known for its small stores with education-focused employees to talk to shoppers about eating lifestyles and organic foods. The retailer also does a lot of in-store promotions focused on education and getting shoppers through the door.
Gross profit at Natural Grocers during the third quarter ended June 30 rose 7.7 percent over last year to $56.8 million, accounting for 26.7 percent of sales, compared with 27.1 percent for the third quarter of fiscal 2017.
During the first nine months of fiscal 2018, Natural Grocers’ net sales grew $61.0 million, or 10.7 percent, over last year to $631.5 million, which the company attributed to a $32.1 million rise in comparable store sales and a $28.9 million increase in new-store sales. Daily average comps rose 5.7 percent during the first nine months of fiscal 2018, versus a 0.7 percent decline in the year-ago period. Natural Grocers said the Q3 increase was driven by a 4.6 percent rise in daily average transaction count and a 1.0 percent uptick in average transaction size. Daily average mature-store sales rose 2.7 percent in the first nine months of fiscal 2018, compared with a 2.1 percent decrease last year.
During the third quarter of fiscal 2018, Natural Grocers opened two new stores and relocated one. The company opened seven new stores and relocated two stores in the first nine months of fiscal 2018, versus opening 14 new stores and relocating one store in the year-ago period. Since July 1, Natural Grocers has relocated one store in Colorado and signed seven leases for stores in Colorado, Iowa, Oregon and Texas slated to open during fiscal 2018 and beyond.
Thanks to its continued solid results, the company is raising its fiscal 2018 outlook for daily average comps to 4.5 percent to 5.5 percent, and raising the low end of its fiscal 2018 diluted earnings-per-share outlook to 48 cents to 50 cents, among other changes to its guidance.