Natural Grocers Plans Oregon Expansion

LAKEWOOD, Colo. — Fast-growing specialty chain Natural Grocers by Vitamin Cottage [2] here said it is planning its first locations in Oregon this spring and summer, in the cities of Medford and Salem.

In a conference call with analysts discussing first-quarter results, Kemper Isely, co-president, said the natural and organic retailer expects to open a total of 12 new locations in fiscal 2013, in addition to one relocation and two remodels of existing stores.

“We continue to be pleased with how well our new stores are performing,” he said in the call.

The company reported that comparable-store sales for the first quarter were up 12.9% over year-ago levels, and it boosted its sales and EBITDA outlook for the year. Natural Grocers is now projecting comps of 8% to 9% for fiscal 2013 — up 0.5% over previous projections — and EBITDA as a percent of sales of 7.2% to 7.4%, vs. previous projections of 7% to 7.2%.

Net income for the first quarter, which ended Dec. 31, was up 124.3%, to about $2.2 million. On a pro-forma basis — reflecting the acquisition of a five-store group as if it had been included in year-ago results — net income was up 91.5%.

Sales for the quarter totaled $95.8 million, up 28.1% over year-ago levels, including $11.3 million in sales from new stores. The comp-store gains included an 8.3% increase in transaction counts over the year-ago quarter.

Isely cited produce as supplements as being particularly strong performers in the quarter, and acknowledged that the strong flu season might be helping drive the latter category.

Read more: Natural Grocers Cites Sales Gains, Plans New Stores [3]

Customers “take their vitamin D and oscillococcinum, and we have a good supply of both of those,” Isely said. “It’s definitely helpful. I can’t say that it’s not.”

Asked about the impact of inflation, Isely explained that the chain prices at a fixed margin, passing along increases as it receives them from suppliers.

“Other than whey protein, inflation has been pretty much normal, comparatively speaking,” he said.

In addition to the two Oregon locations, Isely said the company has also signed a lease for a new store in Kalispell, Mont., and expects “imminent signings” for several additional leases for stores it plans to open by the end of September.

Isely also said in response to a question that it was not seeing any adverse effects from the labor strike at a United Natural Foods Inc. warehouse in Auburn, Wash.

“They seem to have their operational issues ironed out,” he said.

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