Natural Grocers Reports 'Strong Start' to Fiscal 2019

Natural Grocers has had a "strong start" to its fiscal 2019, reporting a strong increase in daily average comparable-store sales for its first quarter of the year.

During the quarter, which ended Dec. 21, 2018, net sales rose 9.4 percent, reaching $221.5 million. This was primarily due to an $11.1 million increase in store comps and an $8.3 million increase in new store sales.

The average store comps rise of 5.5 percent compares with a 4.7 percent increase in Q1 of 2018. The Q1 2019 increase reflects a 2.3 percent rise in daily average transaction count and a 3.2 percent increase in average transaction size.

Net income in Q1 fell 57.6 percent to $2.2 million compared with the prior year. The decrease was driven by the impact of the $4.3 million non-cash remeasurement of the grocer's deferred income-tax assets and liabilities as a result of the enactment of the Tax Cuts and Jobs Act.

"We are pleased to report a strong start to fiscal 2019, delivering continued comparable-store sales growth along with an improved gross margin and operating margin during the first quarter," said Kemper Isely, co-president.  "We remain focused on driving sales growth through a balance of new store growth and comparable-store sales growth, while remaining committed to our cost control initiatives to deliver improved earnings performance. Excluding the non-cash remeasurement of the company's deferred income-tax assets and liabilities as a result of federal tax reform in the prior year, net income and earnings per share would have more than doubled during the first quarter. We remain confident in our ability to achieve our fiscal 2019 outlook."

In Q1 2019, Natural Grocers opened four new stores, relocated one and closed another. This resulted in a 6.3 percent unit growth rate for the 12-month period that ended Dec. 31, 2018. The four store openings are double the openings during the same period a year prior, resulting in 6.3 percent and 8.4 percent unit growth rates for the 12-month periods ended Dec. 31, 2018, and Dec. 31, 2017, respectively.

Since Jan. 1, 2019, Natural Grocers has opened one new store and relocated another. It plans to open seven to nine stores throughout the fiscal year – for which it has signed two leases, one in North Dakota and another in Oregon – and relocate five or six. The company is also projecting 2 percent to 4 percent growth in store comps.

Lakewood, Colo.-based Natural Grocers operates 152 stores in 19 states.