Natural Grocers sees shopper loyalty remain steadfast during Q2

As consumers continue to focus on healthy eating, Lakewood, Colorado-based Natural Grocers’ shoppers remain steadfast in their loyalty to the natural-and-organic retailer.

“An increase in customer traffic drove the 2.7% increase in comparable-store sales, which was ahead of expectations and is prompting us to raise our comparable-store sales guidance for the year,” Kemper Isely, Natural Grocers by Vitamin Cottage chairman and co-president, reported Thursday during the company’s second quarter earnings report, according to a transcript from financial services site Sentieo.

“The strength of our  sales trends indicate that we have a loyal and resilient customer base that prioritizes our healthy and sustainably focused offerings,” Isely said.

During the second quarter, net sales increased $11.4 million, or 4.2%, to $283.2 million, compared to the year-ago period, due to a $7.4 million increase in same-store sales and a $4.9 million increase in new store sales, partially offset by a $0.9 million decrease in sales related to one store that closed in fiscal 2022, the company reported.

Isley said the proposed Kroger-Albertsons merger is not a threat. Rather, it's potentially beneficial to Natural Grocers, given the number of stores that will likely need to be divested and the impact that will have on the overall company.

“Well, I think it's pretty substantial. I think that if the merger goes through, they'll probably make them spin off quite a few of the Safeway locations that are in our market areas. And I don't think that that's going to make the new spin-off company stronger. So, I think in the overall end of things, it would be beneficial to us,” Isely said.

Natural Grocers also reported that gross profit during the second quarter increased $5.7 million, or 7.4%, to $82.5 million, compared to $76.8 million during the same period last year. Net income for the second quarter of fiscal 2023 was $5.9 million, or $0.26 diluted earnings per share, compared to net income of $6.4 million, or $0.28 diluted earnings per share, last year.

A continued interest in private-label products also gave Natural Grocers a boost during the second quarter.

“One contributor to our success is our Natural Grocers branded products, which represent value and uncompromising quality,” Isely said. “In the second quarter, our Natural Grocers brand accounted for 8.1% of total sales, up from 7.7% a year ago. We believe that our Natural Grocers brand has a long runway, and we are targeting sales penetration to grow by approximately 1 percentage point annually.”

Looking ahead to brick-and-mortar expansion, Natural Grocers said it expects to open four to six new stores and relocate two to three stores in fiscal 2023. On Friday, the retailer announced its plans to close two stores due to low performance in the Dallas-Fort Worth area on June 27.

Natural Grocers, which was founded in 1955, sells natural and organic groceries, body care products and dietary supplements at 166 stores in 21 states.