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Natural Grocers posts flat Q4 comps amid traffic declines

Weaker inflation on natural/organic products, changes in consumer routines also impact sales


  • Company faced difficult comparisons with supplement sales in last year’s Q4
  • Sales hit as consumers returned to pre-pandemic travel and restaurant-dining routines
  • Lower-income consumers spent less as SNAP sales declined, but demand for premium products remained strong

Natural Grocers by Vitamin Cottage said its fiscal fourth-quarter profits were down, and comparable-store sales were basically flat, as traffic declined and inflation gave the company less of a boost than it did for its conventional peers.

While overall fourth-quarter sales at the natural-and-organic grocer rose $1.6 million, to $274.2 million, an increase of 0.6%, over a year ago, the company attributed the gain primarily to $2.9 million from new-store sales.

The 0.2% decrease in comp-store sales included a 2.6% decrease in daily average transaction count, partially offset by a 2.5% increase in daily average transaction size, the company said.

In a conference call with analysts, the company said the decline in transactions reflected “a moderation of pandemic trends,” including more summer travel and more restaurant dining. Strong fourth quarter supplement sales last year also made comparisons challenging.

The company also said it has seen a 20% decline in SNAP (Supplemental Nutrition Assistance Program) purchases, indicating that lower-income consumer bought less or shopped elsewhere.  

Natural Grocers said that on a three-year basis, its fourth-quarter comps were up 15.8%.

The company also said it experienced less inflation on its natural/organic product offering than its peers did on conventional products. Cost inflation was an estimated 7% for the quarter and 5% for the year, Todd Dissinger, chief financial officer, said during the call.

“Historically, our inflation rate has been more stable than conventional grocers due to our specialized supply chain,” he said.

Net income in the fourth quarter, which ended Sept. 30, was down almost 70%, to 2.2 million.

Dissinger said the company’s best-performing departments in the fourth quarter were dairy, meat, and grocery. He also said the company saw little evidence of consumers trading down, although some consumers did switch from name-brand items to private label. Among the private label items that saw sales growth outpace comparable branded items were bread, bulk grains, and supplements.

Meanwhile, demand for premium products such as pasture-raised eggs and grass-fed milk, remained elevated, “suggesting that many of our customers are still prioritizing product attributes over price,” Dissinger said.

For the full fiscal year, Natural Grocers said net income was up about 4%, to $21.4 million, on a 3.2% increase in sales, to about $1.1 billion. Daily average comparable-store sales for the full year were up 2.6%, reflecting a 2.1% increase in daily average transaction size and a 0.4% increase in daily average transaction count.

The company opened three new stores during the year and ended the year with 164 locations in 21 states. It plans to open between four and six new stores in fiscal 2023 and is projecting full-year comp-store sales be between -2% and 1%.

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