Natural Grocers Delivers Record Sales, Earnings in Q2
Sales growth remained robust in Natural Grocers by Vitamin Cottage, Inc.’s second quarter, ended March 31.
Net sales increased 9% from the prior-year period to $335.8 million. Daily average comparable-store sales rose 8.9%, and on a two-year basis, the increase accelerated to 16.4%. Daily average comparable-transaction count increased 5.9%. Daily average comparable-transaction size increased 2.8% — the fifth consecutive quarter with an increase in items per basket and modest inflation.
For Q2, gross margin increased 100 basis points to 30.3%, driven by higher product margin, which the company primarily attributed to effective promotions.
"Sales growth continued to be broad-based across product categories, geographic regions and store vintages, and was relatively consistent throughout the second quarter," said Kemper Isely, co-president of Natural Grocers. "We believe there is a continuing trend in consumers' prioritization of health and wellness, including a heightened focus on food and nutrition, and that we are well positioned to capitalize on this dynamic. New customers are increasingly drawn to our relevant value offering of high-quality, natural and organic products at Always Affordable prices. Furthermore, we are enhancing customer engagement through our effective marketing initiatives, compelling offers and {N}power rewards program."
Net income for the company increased 64.6% to $13.1 million, with diluted earnings per share of 56 cents. Adjusted EBITDA increased 33.3% to $26.3 million.
In Q2, branded products accounted for 8.6% of total sales, up from 8.5% a year ago, driven in part by new products. During the quarter, the retailer launched 22 new Natural Grocers brand items.
Also during Q2, the grocer opened new stores in Brownsville and Waco, both in Texas. Store unit growth and development continue to be company priorities. During fiscal 2025, the retailer plans to open three to four new stores and relocate or remodel two to four stores. In the future, it plans to open six to eight new stores per year.
Based on the strong Q2 results, Natural Grocers is increasing its fiscal 2025 outlook. Daily average comparable-store sales growth is projected to be 6.5% to 7.5%, while diluted earnings per share is expected to be $1.78 to $1.86.
“In light of the broader macro environment, we are monitoring consumer trends closely,” said Isley. “To date, we have not observed any indicators of softer demand for our products, trade-down or fewer items per basket.”
Family-operated Natural Grocers by Vitamin Cottage Inc. operates 167 stores in 21 states. The Lakewood, Colo.-based natural and organic grocer is No. 95 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. PG also named the company among its 10 Most Sustainable Grocers for 2025.
