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Natural Grocers’ Q1 Gets Fiscal Year Off to ‘Strong Start’

Based on results, retailer raises 2025 outlook
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Natural Grocers' Q1 results saw accelerating growth and a continuation of the positive trends it experienced over the past two years, including broad-based growth across categories and geographic regions.

In its first quarter of fiscal 2025 ended Dec.31, 2024, Natural Grocers by Vitamin Cottage Inc. reported a net sales increase of 9.4% to $330.2 million from the year-ago period, along with a daily average comparable-store sales lift 8.9% (a 15.1% increase on a two-year basis); a net income increase of  28.1% to $9.9 million, with diluted earnings per share of 43 cents; adjusted EBITDA of $22.8 million; and the relocation of two stores.

“We are very pleased with the strong start to our fiscal year 2025,” noted Co-President Kemper Isely. “Our first-quarter results saw accelerating growth and a continuation of the positive trends we experienced over the past two years, including broad-based growth across categories and geographic regions. Natural Grocers’ differentiated offering of carefully vetted natural and organic products and compelling value proposition continue to resonate with consumers’ increasing prioritization of products that support health and sustainability. Our daily average comparable-store sales increase accelerated to 8.9% for the first quarter, and 15.1% on a two-year basis. Moreover, comparable-store sales growth remained balanced with transaction counts, transaction size and items per basket all higher year over year. Daily average transaction count was up 5.3%, representing our eighth consecutive quarter of increases, and daily average transaction size increased 3.4%. For the fourth consecutive quarter, items per basket increased and we continued to experience modest inflation.”

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Continued Isely: “Robust and balanced sales growth, combined with effective expense management, drove significant operating leverage and generated a 26.5% year-over-year increase in diluted earnings per share. Based on the strong start to fiscal 2025, coupled with confidence in our business trends and execution, we are increasing our fiscal 2025 outlook for daily average comparable-store sales growth and diluted earnings per share. We believe Natural Grocers is well aligned with consumer and product category tailwinds, helping to fuel our momentum and putting us in a strong position for the remainder of the fiscal year.”

Natural Grocers attributed the Q1 net sales increase to a $26.7 million increase in comps and a $2.9 million increase in new store sales, partly offset by a $1.1 million decline in net sales related to closed stores. Daily average comps growth comprised a 5.3% increase in daily average transaction count and a 3.4% increase in daily average transaction size. Sales growth was driven by improved customer engagement through the {N}power rewards program, compelling offers, marketing initiatives and higher sales of Natural Grocers brand products.

Gross profit during Q1 of fiscal 2025 rose $10.1 million, or 11.3%, to $98.8 million, versus $88.8 million in the year-ago period. Gross profit reflects earnings after product and store occupancy costs. Gross margin grew 50 basis points to 29.9% during Q1 of fiscal 2025, compared with 29.4% in Q1 of fiscal 2024, driven by store occupancy cost leverage and higher product margin.

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Administrative expenses during Q1 of fiscal 2025 increased 22.4% to $11.5 million, due to higher compensation expenses, including costs related to Natural Grocers’ CFO transition, as well as technology expenses. Administrative expenses as a percentage of net sales were 3.5% in Q1 of fiscal 2025, from 3.1% in the first quarter of fiscal 2024. 

Operating income for Q1 of fiscal 2025 increased 23.6% to $13.3 million, while operating margin during Q1 of fiscal 2025 was 4.0%, up from 3.6% in the year-ago period.

Net income for Q1 of fiscal 2025 came to $9.9 million, or 43 cents diluted earnings per share, compared with net income of $7.8 million, or 34 cents diluted earnings per share, for Q1 of fiscal 2024.

Natural Grocers also declared a quarterly cash dividend of 12 cents per common share, to be paid on March 19 to stockholders of record at the close of business on March 3.

As part of its updated 2025 outlook, the company now expects daily average comps sales growth of 5% to 7%, from 4% to 6%, and diluted earnings per share of $1.57 to $1.65, from $1.52 to $1.60.

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.

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