Natural Grocers Keeps Pace in Q1

Retailer reports steady profits, slight sales increases and unchanged guidance for fiscal year
Lynn Petrak, Progressive Grocer
a store in a brick building
Natural Grocers maintained its guidance for the full fiscal year in its Q1 financial report.

In an uneven marketplace, Natural Grocers by Vitamin Cottage is keeping steady. The company shared results of its first fiscal quarter of 2023, showing lifts in net and comp sales and the same gross profit on a year-over-year (YoY) basis.

According to the grocer’s latest financial information, net sales rose 1.1% during the first quarter ending Dec. 31, 2022 to reach $280.5 million. Company officials attributed the increase to inflation, new store sales and marketing initiatives. Daily average comparable store sales rose 0.5% in Q1.

[Read more: "Natural Grocers Reveals Shopper Picks for Best Store-Brand Products"]

Gross profits for the opening quarter of FY2023 held at $78.7 million, the same figure as the first quarter of fiscal 2022. Gross margin dipped a bit, down to 28.1% versus 28.4% for the first quarter last year, while adjusted EBITDA slid from $19.5 million to $13.8 million on a YoY basis.

On the other side of the ledger, a 7.2% leap in store expenses stemmed in part from wage rates. Administrative expenses also went up in the first quarter, again fueled by higher salaries and benefits along with investments in technology.

Natural Grocers also opened a new store in the first quarter. The location in Denver – the retailer’s 44th location in Colorado – propelled a 2.5% new store growth rate on a 12-month basis. Already in the second quarter, the grocer unveiled a store in McCall, Idaho on Jan. 18.

"We delivered first quarter results consistent with our expectations and are reaffirming our full-year guidance," said Co-President Kemper Isely. "Product cost inflation remained elevated during the quarter, though our specialized supply chain has historically provided more cost stability compared to conventional grocery peers. We estimate annualized product cost inflation was approximately 8% in the first quarter, which we continued to offset with increased pricing."

To Isley’s point, Natural Grocers is sticking to its guidance for fiscal 2023. The retailer expects to add between four and six new stores, complete one or two relocations or remodels and keep comp sales growth between -2.0% and 1.0%.

Founded in 1955, family-operated Natural Grocers operates over 160 stores in 21 statesThe Lakewood, Colo.-based natural and organic grocer is No. 95 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.

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