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Natural Grocers to tighten product standards

Natural Grocers by Vitamin Cottage will soon be making “a pretty major change” in its standards for products in certain categories, co-president Kemper Isely told analysts in an earnings conference call on Thursday.

Isley did not identify the categories to be affected but said the Lakewood, Colo.-based natural foods retailer would introduce the new standards “in a month or so.” Natural Grocers standards already include selling only organic produce and will not approve items known to contain artificial colors, flavors, preservatives, sweeteners, or partially hydrogenated or hydrogenated oils.

In other remarks during the call, which reviewed financial results for the first quarter, Isely said consumer interest in the Paleolithic diet had raised raw food sales at its stores.

Net sales increased by 25.8% to $120.6 million and comparable-store sales were up by 10.6% in the quarter, which ended Dec. 31. Net earnings increased by 31.6% to $2.9 million as product margins and productivity improved, offset in part by higher lease expenses at new stores.

Gross margin was 29.3% during the first quarter of fiscal year 2014 compared to 29.0% in the first quarter of fiscal year 2013. Gross margin increased due to increases in product margin across all departments, partially offset by a shift in sales mix towards products with lower margin.

Results were largely in-line with analyst estimates. The company also confirmed its financial outlook for fiscal 2014.

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