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3Q sales stabilize at Natural Grocers

Sales at Natural Grocers by Vitamin Cottage bounced back in the fiscal third quarter, with comps of 1.8% exceeding Wall Street estimates.

The Lakewood, Colo.-based natural foods retailer, coming off a second quarter that badly underperformed expectations, also met its earnings guidance as internal cost reductions and the sales lift delivered $2.7 million in earnings on $179.3 million in sales. Analysts had been expecting 0.5% comps and $178.9 million in revenue. Earnings per share of 12 cents met consensus estimates.

Natural Grocers in April revised its financial outlook for the fiscal year, saying cannibalization due to new store openings and increased competition for sales of natural foods would dampen sales and earnings for the year. Comps in the second quarter were 1%, prompting some analysts to forecast negative sales this quarter.

"We began to see some stabilization in our sales trends during the third quarter, which, combined with prudent cost measures, allowed us to deliver results consistent with our guidance," Kemper Isely, co-president, said in a statement. "We are confident that the sales initiatives we are implementing, along with new store performance that is in line with expectations, will support our growth objectives."

During the quarter, which ended June 30, sales increased 13%, primarily due to a $17.7 million increase in new store revenue and a $2.9 million increase in comparable store sales. Gross profit during the quarter increased 10.4% to $50.9 million on higher sales, although as a percent of sales margins declined to 28.4% from 29.1% in last year's third quarter.

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