Natural Grocers Sees Strong Earnings Growth in Q1
Natural Grocers by Vitamin Cottage, Inc. had a strong start to fiscal 2021, with first quarter results reflecting robust sales and profitability growth.
Compared to first quarter fiscal 2020, the net sales in first quarter of fiscal 2021 ended Dec. 31, 2020 increased $35.0 million, or 15.2%, to $265.0 million, driven by a $29.2 million increase in comparable store sales and a $5.8 million increase in new store sales.
According to Natural Grocer's first quarter earnings call, key sales drivers were meat, frozen, produce, dairy, grocery and bulk. The Natural Grocer branded products grew by 23.5% in the quarter and it launched two new categories, including 11 new SKUs through.
Daily average comparable store sales increased 12.7% in the first quarter of fiscal 2021 compared to a 1.9% increase in the first quarter of fiscal 2020. The daily average comparable store sales increase during the first quarter of fiscal 2021 reflected a 21.4% increase in daily average transaction size, partially offset by a 7.1% decrease in daily average transaction count.
“Our results continue to reflect strong increases in average basket size consistent with recent trends as customers made fewer shopping trips to our stores but increased their spend per trip,” said Kemper Isely, co-president. “Our success is directly attributable to our commitment to our founding principles, which include providing the highest quality, healthy foods at an Always Affordable Price. These principles truly speak to today's consumer."
The increase in net sales was primarily driven by the continued strong demand for food at home during the pandemic, in addition to marketing initiatives, promotional campaigns and increased membership in and usage of the {N}power customer loyalty program.
According to the Natural Grocers’ earnings call, the loyalty program ended the quarter with 1.3 million members.
During the first quarter, the retailer also debuted its virtual nutrition program, which includes personalized coaching sessions with the company's nutritional health coaches.
In regards to gross profit, it increased $12.5 million, or 20.7%, to $73.0 million compared to $60.5 million for same period last year. Gross margin increased to 27.6% compared to 26.3% a year ago. The increase in gross margin was primarily driven by store occupancy and shrink expense leverage, as well as an improved product margin.
In addition, online delivery sales through its partner Instacart represented a low single digit sales penetration rate, consistent with the past several quarters.
Store expenses during the first quarter of fiscal 2021 increased 17.3%, to $60.3 million, compared to the same period in fiscal 2020, while operating income increased 82.7% to $5.2 million.
Net income for the first quarter of fiscal 2021 was $3.6 million, or $0.16 of diluted earnings per share, compared to net income of $1.9 million, or $0.08 of diluted earnings per share in the first quarter of fiscal 2020.
Adjusted EBITDA increased 25.5% to $13.2 million in the first quarter of fiscal 2021 compared to $10.6 million in the first quarter of fiscal 2020.
Natural Grocers announced the declaration of a quarterly cash dividend of $0.07 per common share. The dividend will be paid on March 17 to all stockholders of record at the close of business on March 1.
During the first quarter, the retailer opened one new store, ending the quarter with a total store count of 160 stores in 20 states. As of Feb. 4, 2021, the it has signed leases for six new stores that will be located in Colorado, Missouri, Nevada and Oregon. These new stores are planned to open during fiscal 2021 and beyond.
Lakewood, Colorado-based company Natural Grocers is No. 94 on The PG 100, Progressive Grocer’s list of the top food and consumables retailers in North America.
