Natural Grocers Raises Comps Growth Expectations for FY18

Natural Grocers has raised its outlook for comparable-store sales growth for fiscal 2018, following a favorable earnings report detailing the second quarter of fiscal 2018.

While it originally predicted 1 percent to 1.3 percent daily average comps growth when reporting its fiscal 2018 outlook during its Q1 results report, the Lakewood, Colo.-based retailer has now raised anticipated growth to 3.5 percent to 4.5 percent. Comps grew 4.7 percent during Q1, and 5.9 percent during the first half.

In terms of other performance, net sales rose 10.3 percent to $202.5 million compared with Q2 2017, primarily driven by a $10.3 million increase in new-store sales and the strong comps growth, which saw a 0.6 percent decrease during the same period a year prior.

Behind the 4.7 percent rise in comps was a 4.8 percent rise in daily average transaction count that was partly offset by a 0.1 percent decrease in average transaction size. Daily average mature-store sales edged up 1.6 percent in Q1, versus a 2.3 drop during the same quarter a year prior.

"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 [rewards program] enrollments and our marketing initiatives, led to 4.8 percent growth in daily average transaction count,” said Natural Grocers Co-President Kemper Isely. “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."

During Q2, Natural Grocers opened three new stores, bringing its total store count to 145 stores in 19 states as of March 31. It opened a total of five stores in the first half and still plans to have eight to 10 new stores total by the year’s end.