An increase in customer count at Natural Grocers by Vitamin Cottage was the driving force behind a second-quarter 2.7% growth in comparable-store sales and testimony to the company’s ability to resonate with customers.
“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 Chairman and Co-president. “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 grew $11.4 million, or 4.2%, to $283.2 million, compared to the same quarter last year, due to a $7.4 million boost in same-store sales and a $4.9 million increase in new store sales. Isely said the planned Kroger-Albertsons merger is not a worry for the natural and organic retailer. In fact, it could potentially benefit Natural Grocers, given the number of assets that will need to be reduced and the overall impact that could have on the company as a result.
“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.
The continued success of their private-label products also gave Natural Grocers a lift 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 one percentage point annually.”
Recently, the retailer added five new canned seafood offerings to its family of Natural Grocers brand products, as well as three new organic mustards.
The departments making the strongest showing in Q2 were dairy, meat, and grocery. “The supplement sales comp was similar to the total company comp,” said CFO Todd Dissinger during the Q2 earnings call. “Our {N}power loyalty program membership grew 18% to more than 1.9 million members by the end of the second quarter.”
Looking ahead to plans for 2023 expansion, Natural Grocers said it expects to open four to six new stores and relocate two to three stores within the fiscal year. Over the next few years, Natural Grocers forecasts opening between six and eight new stores per year, with the anticipation that construction and supply conditions will see improvement.
The grocer is also increasing its comparable-store sales direction for the year, based on year-to-date trends and current performance. Natural Grocers now anticipates daily average comparable-store sales growth of 1%- to 2%. “We continue to be encouraged by our operating trends and are confident in our ability to continue to drive growth and enhance value for all stakeholders,” said Dissinger.
Established in 1955 by the Isely family, Natural Grocers sells natural and organic food products, body care items and dietary supplements at 166 stores across 21 states.
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