Natural Grocers Reports 9.4% Net Sales Increase and Significant Net Income Growth in Q1 FY 2025

Natural Grocers by Vitamin Cottage, Inc. reported a net sales increase of 9.4% for the first quarter of fiscal year 2025, reaching $330.2 million compared to $301.8 million in the same period last year. The company's net income also rose significantly, amounting to $9.9 million, or $0.43 per diluted share, up from $7.8 million, or $0.34 per diluted share, in the prior year. This growth in profitability was attributed to a combination of increased transaction counts and higher average transaction sizes, which were bolstered by enhanced customer engagement through the company's rewards program and marketing initiatives.

In terms of operational metrics, Natural Grocers operated 167 stores across 21 states as of December 31, 2024, a slight decrease from 169 stores at the end of the previous fiscal year. The company relocated or remodeled two stores during the quarter and closed two others. Daily average comparable store sales increased by 8.9%, driven by a 5.3% rise in transaction counts and a 3.4% increase in average transaction size. The company’s gross profit for the quarter was $98.8 million, reflecting a gross margin of 29.9%, up from 29.4% in the prior year, primarily due to improved store occupancy cost leverage and higher product margins.

Natural Grocers' administrative expenses rose by 22.4% to $11.5 million, largely due to increased compensation costs associated with the transition of the Chief Financial Officer and technology investments. Store expenses increased by 8.1% to $73.5 million, but as a percentage of net sales, they decreased to 22.3% from 22.5%, indicating improved expense management relative to sales growth. The company reported a decrease in cash provided by operating activities, which fell to $2.7 million from $16.6 million in the previous year, primarily due to timing differences in accounts payable.

Looking ahead, Natural Grocers plans to continue its expansion strategy, with expectations to open four to six new stores and relocate or remodel two to four existing stores in fiscal year 2025. The company remains optimistic about its growth prospects, driven by increasing consumer interest in health and nutrition, although it acknowledges potential challenges from competitive pressures and economic conditions. As of December 31, 2024, the company had $6.3 million in cash and cash equivalents, with $61.4 million available for borrowing under its credit facility, positioning it well for future investments and operational needs.