Natural Grocers’ ‘Strong Start’ to Q1 2021

“We are pleased with our strong start to fiscal 2021. We continue to see positive operating trends as we effectively navigate the challenges of the COVID pandemic and related government mandates,” said Kemper Isely, Natural Grocers by Vitamin Cottage chairman and co-president, kicking off the company’s first-quarter fiscal year 2021 earnings conference call on Feb. 4, according to a Sentieo transcript.

As consumers continue to eat at home in the pandemic, Lakewood, Colo.-based Natural Grocers generated 15.2% net sales growth to $265 million, with a 12.7% daily average comparable store sales growth, driven by an increased transaction size. “We saw further gross margin expansion driven by cost leverage and improved product margin and an inflationary tailwind,” Isely added. “And we delivered strong earnings growth with a 94.4% increase in net income.”

Natural Grocers’ comp increase was the result of a basket size increase of 21.4%, added Todd Dissinger, chief financial officer of Natural Grocers. These gains were partially offset by transaction count, which was down 7.1%.

Isely further attributed growth to several key initiatives, including the grocer’s Npower customer loyalty program, which realized 69% net sales penetration and ended the quarter with 1.3 million members; its affordably priced Feed Your Family of 4 campaign, which provides simple recipes and shopping lists for healthy meals for under $16; and its own label program, which grew by 23.5% and represented a 7.5% penetration of net sales during the first quarter, Isely noted.

On the private label front, Natural Grocers launched two new categories, including 11 new SKUs during the quarter. The grocer reports its prepackaged bulk offerings are delivering strong growth and resonating with customers who are focused on preparing healthy meals at home.

Natural Grocers also launched two new programs in the first quarter: a virtual nutrition education program, which includes personalized sessions with its nutritional health coaches, guest presenter series and cooking classes, as well as a gratitude giveaway program, honoring active community members.

Other first-quarter sales drivers included “above-average comp growth in meat, frozen, produce, dairy, grocery and bulk, consistent with recent quarterly trends,” said Dissinger, adding that dietary supplements also performed well with a 9.3% comp growth rate. Online delivery sales through its partner, Instacart, represented a low single-digit sales penetration rate, he noted.

Looking ahead to physical expansion, for fiscal 2021, Natural Grocers said it expects to open five to six new stores and relocate three to five stores.