Natural Grocers Reports Record Sales for Fiscal 2020

While grocery retailers posting record sales in 2020 may be par for the course in a pandemic, it was cause for celebration at Natural Grocers by Vitamin Cottage Inc., which surpassed the $1 billion annual sales mark for the first time and delivered a promising outlook for fiscal 2021 with regard to expansion.

A robust fourth quarter helped with the Lakewood, Colo.-based grocer’s strong finish. Some highlights of the period included: Net sales increasing by 16.3% to $264.2 million; daily average comparable store sales increasing by 13.2%; operating income jumping by 78.7% to $5 million; and net income improving 174.2% to $3.7 million, with diluted earnings per share of 16 cents. Adjusted EBITDA increased 28.1% to $13.3 million.

Sales for the fiscal year increased $133.3 million, or 14.7%, to $1 billion, primarily driven by a $111 million increase in comparable store sales and a $22.5 million from new stores. That was partially offset by a store closure during the first quarter. 

Natural Grocers' board of directors has further declared a special cash dividend of $2 per common share and a quarterly cash dividend of 7 cents per common share. The special and quarterly dividends will be paid on Dec. 16 to all stockholders of record at the close of business on Nov. 30. The special dividend will be funded through available cash and borrowings under its new $35 million term loan facility.

“Fourth-quarter results continue to reflect strong sales and profitability trends, with daily average comparable store sales increasing 13.2%, net sales increasing 16.3% and net income increasing 174.2%, compared to the same period in fiscal 2019,” said Kemper Isely, co-president, in a statement. “Our proactive and effective response to serving our valued customers amidst the COVID-19 pandemic and related government mandates has leveraged our strong customer loyalty, which is reflected in our results.”

Like all grocers during the socially distanced pandemic, Natural Grocers has continued to see the trend of customers reducing the frequency of their shopping trips but increasing their average basket size. The company attributes its increase in net sales during the three months ending Sept. 30 to continued elevated demand for food at home as a result of the ongoing COVID-19 pandemic and related government mandates, as well as marketing initiatives, promotional campaigns and increased membership in and usage of its customer loyalty program.

As a result, Natural Grocers’ gross profit increased $13.4 million, or 22.8%, to $72.4 million, compared to $59 million in the same period last year. Gross profit reflects earnings after both product and occupancy expenses.

Gross margin increased to 27.4% for the same three-month period in 2020 compared to 26% for those three months in 2019. The company said its increase was primarily driven by improved product margin as well as a decrease in occupancy and shrink expenses, as a percentage of sales.

While the pandemic has driven sales in grocery, so too has it increased labor costs. Natural Grocers reports its store expenses during the quarter increased 20.2%  to $60.2 million. “This increase was a result of elevated labor-related expenses during the quarter, partially offset by lower marketing and depreciation expenses, all as a percentage of sales,” according to the company.

In fiscal 2020, Natural Grocers opened six new stores and relocated one store, resulting in 3.9% unit growth rates for the 12-month period ending Sept. 30. As of Nov. 19, the company has signed leases for three new stores that will be located in Missouri, Nevada and Oregon. These new stores are planned to open during fiscal 2021 and beyond.