Health-driven shoppers boost Natural Grocers in Q3

A launch of more than 100 store brand supplements during the quarter fuel gains on two-year stacked basis.
Dan Ochwat
Executive Editor
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While it celebrates 66 years in business with a slew of store brand prize packs and promotions around its own brand products, Natural Grocers also reported healthy results for its third quarter ending June 30.

The retailer is finding that shoppers are focused more on their health since dealing with the pandemic, even expanding its private brand vitamins and supplements during the quarter by more than 100 items.

In Q3, Natural Grocers by Vitamin Cottage stated that same-store sales decreased 3.6% but daily average same-store sales on a two-year stacked basis increased nearly 12%. Similarly, net sales decreased 2.4% to $258.6 million. 

"We are pleased with our third quarter results, as we were able to leverage our sales and improve our operating margins to drive higher year-over-year earnings. Our sales strength is reflective of consumers' demand for our healthy and affordable offerings, even as alternative food options become more available,” said Kemper Isely, co-president, Natural Grocers. “Our commitment to our founding principles — which includes offering high-quality natural and organic products, at always affordable prices, and being a resource for science-based nutritional education — has been fundamental to our success, particularly as consumers have become more focused on the importance of good nutrition as a result of their experiences during the pandemic."

Isely added that during the quarter, same-store transaction counts turned positive and basket size moderated as retail saw a return to pre-pandemic shopping patterns. “Our basket size in the third quarter continued to be over 20% higher than the pre-pandemic level of the third quarter of 2019,” he said. “Finally, our crew's execution of our operating strategies, including a commitment to exceptional customer service, was instrumental in driving our strong quarterly results."

Natural Grocers said its 7.4% decrease in daily average transaction size for the quarter was partially offset by a 4.1% increase in daily average transaction count. This reflects a reversal of recent trends as customers started to return to pre-pandemic shopping patterns, the company said.

The Q3 net sales dip was attributable to the rise of net sales during Q3 2020, based on increased pandemic shopping. Gross profit during the third quarter of fiscal 2021 decreased 1.2%, to $71.5 million primarily driven by lower net sales levels. Gross profit reflects earnings after both product and occupancy expenses. Gross margin increased to 27.7% during the third quarter of fiscal 2021, compared to 27.3% in the third quarter of fiscal 2020. The increase in gross margin was a result of higher product margin and lower shrink expense, as a percentage of sales, partially offset by occupancy expense deleverage.

The Lakewood, Colo.-bases store operates 161 stores in 20 states.