Natural Grocers Racks Up Double-Digit Q4 Sales Amid Pandemic
Food retailers in the age of COVID-19 continue to turn in solid performances. Case in point: For its fourth quarter of fiscal year 2020 ended Sept. 30, Natural Grocers by Vitamin Cottage Inc. reported a net sales increase of 16.3% to $264.2 million, while daily average comparable-store sales rose 13.2%. The company’s operating income grew 78.7% to $5 million, and its net income soared 174.2% to $3.7 million, with diluted earnings per share of 16 cents. Adjusted EBITDA climbed 28.1% to $13.3 million.
“Fourth-quarter results continue to reflect strong sales and profitability trends,” noted Natural Grocers Co-President Kemper Isely. “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. Our focus continues to be on safely providing the highest-quality healthy foods at Always Affordable Prices. Our good4u Crew members’ commitment to our founding principles has been the driving force behind our ongoing success. As we continue to navigate this evolving environment, we are guided by our core principles and are focused on the well-being of our crew members and customers. We are extremely thankful for each of our crew members’ dedication to the communities we serve.”
Isely went on to note that Natural Grocers’ board of directors has declared a special cash dividend on $2 per common share, on top of its quarterly cash dividend of 7 cents per share, citing the company's “strong cash flow, financial position and confidence in our business outlook.”
For its fourth quarter of fiscal 2020, Natural Grocers' net sales increased $37 million, or 16.3%, to $264.2 million versus the year-ago period, spurred by a $29.9 million increase in comps and a $7.1 million rise in new store sales. Daily average comps grew 13.2% in the fourth quarter of fiscal 2020 compared with a 1.8% bump last year. The daily average comparable-store sales increase during the fourth quarter of fiscal 2020 reflected a 23.7% increase in daily average transaction size, partly offset by an 8.5% decline in daily average transaction count. In its fourth quarter of fiscal 2020, customers continued to reduce the frequency of their shopping trips while growing their average basket size as a result of social distancing. The rise in net sales during the three months ended Sept. 30 was mainly attributable to ongoing higher demand for food at home amid the COVID-19 pandemic and related government mandates, along with marketing initiatives, promotional campaigns and higher membership in, and usage of, the grocer’s {N}power customer loyalty program.
Natural Grocers’ gross profit rose $13.4 million, or 22.8%, to $72.4 million in its fourth quarter of fiscal 2020, compared to $59 million for the year-ago period. Its gross margin grew to 27.4% for the three months ended Sept. 30, 2020, versus 26% for the three months ended Sept. 30, 2019. According to the company, the increase in gross margin was primarily a result of improved product margin in addition to a decrease in occupancy and shrink expenses, as a percentage of sales.
During its fourth quarter of fiscal 2020, Natural Grocers opened no new stores and relocated one, leading to a 3.9% new store growth rate for the 12-month period ended Sept. 30, 2020.
For fiscal 2020, the company’s net sales rose $133.3 million, or 14.7%, to $1 billion — the highest net sales in its history — compared with fiscal 2019, mainly because of a $111 million increase in comps and a $22.5 million increase in new store sales, partly offset by a $0.2 million dip in sales from a store that closed during the first quarter of fiscal 2019. Daily average comps sales grew 12% in fiscal 2020 versus 3.1% increase last year. The daily average comp increase during fiscal 2020 reflected a 17.2% increase in average transaction size, partly offset by a 4.5% decrease in daily average transaction count as a result of consumers' social-distancing practices and demand for food at home during the pandemic. Other factors that Natural Grocers said contributed to net sales growth in fiscal 2020 were marketing initiatives, promotional campaigns and growth of the {N}power program.
Gross profit during fiscal 2020 rose 18.6% to $283.1 million, while gross margin was 27.3% of sales for fiscal 2020, compared with 26.4% of sales for fiscal 2019. The company attributed the increase in gross margin primarily to its leverage of occupancy and shrink expenses, both as a percentage of sales and as improved product margin.
The company’s fiscal 2020 operating income skyrocketed 65.5% to $27.7 million, versus $16.8 million in fiscal 2019. Its operating margin climbed 80 basis points to 2.7%, from 1.9% last year.
Natural Grocers’ net income for fiscal 2020 was $20 million, or 89 cents of diluted earnings per share, compared with $9.4 million, or 42 cents of diluted earnings per share, for fiscal 2019.
During fiscal 2020, the company opened six new stores and relocated one, compared with opening six new stores and relocating five in fiscal 2019, leading to 3.9% and 3.4% unit growth rates for the 12-month periods ended Sept. 30, 2020 and Sept. 30, 2019, respectively.
Natural Grocers has opened one new store in New Mexico and signed leases for three new stores to be located in Missouri, Nevada and Oregon. These three locations are slated to open during fiscal 2021 and beyond.
The company also introduced its fiscal 2021 outlook, reflecting current trends in light of the rapidly evolving COVID-19 environment and related government mandates: five to six new stores, three to five relocations, daily average comp growth of -2% to 2%, diluted earnings per share of 60 cents to 70 cents, and capital expenditures of $28 million to $35 million.
Natural Grocers has more than 3,500 employees and operates 160 stores in 20 states. The Lakewood, Colorado-based company is No. 94 on The PG 100, Progressive Grocer’s list of the top food and consumables retailers in North America.
