Natural Grocers’ Stock Price Skyrockets After Earnings Call

Natural Grocers by Vitamin Cottage (NGVC) reported its highest annual net sales in company history of $1 billion at its fourth-quarter earnings call yesterday, along with the declaration of a special cash dividend of $2 per share. Today the markets responded to the grocer’s promising report and 2021 outlook, with a surge in stock prices.

NGVC stock was up by more than 17% late on Nov. 20, the highest it has been since August, according to Sentieo data.

Natural Grocers' stock over the last 52 weeks, courtesy Sentieo

While a robust fourth quarter helped the Lakewood, Colo.-based grocer to deliver a strong fiscal 2020 finish, the pandemic has fueled the entire grocery industry to new sales records. What was it that struck a chord with investors eyeing NGVC today?

“I would say that NGVC has stuck to their founding principles: the highest ingredient standards. For example, 100% pasture-based dairy products,” Jay Jacobowitz, president and founder of the Brattleboro, Vt.-based Retail Insights, told WGB. “This, coupled with ‘pin-corner,’ high-visibility, premium real estate in every location; a consistent, and fairly aggressive price-promotion posture; regular customer communications; and all of this with free nutritional counseling.”

Natural Grocers, which has long been known for its education efforts, recently took its free nutrition education program online. Customarily available in-person, the program went virtual in early October to provide customers with its health and wellness programs, while adhering to companywide COVID-19 health and safety precautions. The extended program included a specially curated guest presenter series focused on essential building blocks for improved health and wellness, as well as personalized coaching sessions with Natural Grocers’ nutritional health coaches.

The grocer has further broadened its appeal this year by bringing its rigorous quality standards to an expanding selection of wine, beer and other adult beverages sold through its new Cottage Wine and Craft Beer shops. Natural Grocers now boasts 12 wine and beer departments and 26 craft beer departments spanning stores in Colorado, Oregon and Oklahoma, with nine more beer departments and 10 more wine and beer locations in planning, according to the company.

“[Natural Grocer’s] length of time in-market—65 years—also plays a role, in total, reducing any misgivings or anxiety ‘mainstream’ consumers might have about shopping in a natural foods store for the first time,” adds Jacobowitz in response to the retailer’s stock price hike. The Company, founded in 1955, has 160 stores in 20 states.

 Some highlights of Q4 2020 vs. Q4 2019 include: Net sales increased 16.3% to $264.2 million; daily average comparable store sales increased 13.2%; operating income increased 78.7% to $5 million; and net income increased 174.2% to $3.7 million with diluted earnings per share of 16 cents. Adjusted EBITDA increased 28.1% to $13.3 million.