Natural Grocers’ Sales Momentum From 2021 Continues Into 2022

The momentum that Natural Grocers by Vitamin Cottage saw in its fiscal fourth quarter of 2021—including comp sales growth of 2.5% year over year and record net sales of $1.1 billion for the year—has continued into fiscal 2022, with net sales for the first quarter increasing 4.6% year over year $277.3 million, the company reported Feb. 3.

The grocer attributed the increase in net sales to customers' response to recent trends associated with the COVID-19 pandemic as well as marketing initiatives, promotional campaigns and increased engagement in its Npower customer loyalty program.

For the quarter ending Dec. 31, 2021, Natural Grocers also saw a 3.8% increase in daily average comparable store sales. Daily average transaction counts increased 3%, and average transaction sizes increased 0.8%. On a two-year stack, daily average comp sales increased 16.5%.

"Our differentiated offering of the highest-quality natural and organic products at 'Always Affordable' prices continues to drive robust demand from consumers," Natural Grocers Co-President Kemper Isely said in a news release.

Gross profit during the first quarter of fiscal 2022 increased 7.8% to $78.7 million, while gross margin increased to 28.4% vs. 27.6% in first-quarter 2021. Natural Grocers said the increase in gross margin was driven primarily by improved product margin and store occupancy leverage.

Net income for first-quarter 2022 increased 145.5% to $8.9 million, or 39 cents of diluted earnings per share, vs. $3.6 million, or 16 cents of diluted earnings per share, in first-quarter 2021. Meanwhile, adjusted EBITDA increased 44.7% to $19.5 million vs. $13.5 million in first-quarter 2021.

During the quarter, Natural Grocers relocated/remodeled one store but did not open any new stores, which put its store count at 162 stores in 20 states. As of Feb. 3, however, the company has signed leases or acquired property for an additional six new stores planned to open in fiscal 2022 and beyond. Natural Grocers also this week announced plans to close a downtown Salt Lake City store by March 31.

Fiscal 2022 Outlook

Natural Grocers confirmed its fiscal 2022 outlook, which reflects current trends such as the uncertain COVID-19 pandemic environment.

For the year, the grocer expects to open four to six new stores; relocate or remodel three to four stores; report daily average comparable store sales growth of zero to 2%; and have diluted earnings per share of 75 cents to 87 cents. By comparison, Natural Grocers opened three stores and relocated or remodeled five stores in fiscal 2021.

"Like many companies, we face risks and uncertainties related to the COVID-19 pandemic, labor availability and the supply chain," Isely said. "Our response to these challenges and the strong start to fiscal 2022 give us confidence in our outlook, and we expect they will position us to deliver enhanced value for all stakeholders."