Dive Brief:
- Natural Grocers’ board of directors has unanimously approved converting the company from a Delaware corporation to a Texas corporation, according to a Securities and Exchange Commission filing by the grocer.
- The specialty grocer cited its strong foothold in Texas and further plans to grow in the state as part of its reasoning to reincorporate.
- The company said in the filing that the reincorporation won’t result in any changes in business, jobs, management, properties, office or store locations, or number of employees. The Natural Grocers name will also remain unchanged.
Dive Insight:
Texas is currently home to roughly two dozen Natural Grocers locations, making it the second-largest state by store count after Colorado, where the specialty grocer’s headquarters is based. Natural Grocers said in the filing that it expects its footprint, workforce and customer base to “continue to expand” in the Lone Star State.
“By contrast, [Natural Grocers] has no meaningful connection to Delaware other than its current state of incorporation,” the filing said, noting that Natural Grocers has no stores, executives or operations in that state.
Plans for reincorporation were first discussed at a Natural Grocers Board of Directors meeting in early May and approved on Sept. 9, according to the filing.
The grocer noted in the SEC filing that while Delaware has historically been the “jurisdiction of choice for U.S. corporations,” the competitive landscape has shifted in recent years, making Texas, as well as Nevada, a more attractive environment for corporations.
Natural Grocers took into account Texas’ charter and bylaws, which the SEC filing says were drafted “with the intent to parallel in substance” the one in Delaware. The filing also stated that Natural Grocers’ board determined that Texas’ statute-based approach to corporate law offers more defined protections for directors, officers and the larger company against “frivolous and opportunistic litigation” than what Delaware law provides.
Natural Grocers’ board said in the filing that it perceives Texas as having been “deliberate in adopting legislation and regulation designed to support investment, job creation, innovation and economic growth,” which will better serve long-term company growth and the creation of stockholder value.
Despite a tough macroeconomic environment, Natural Grocers has held its own, with its most recent quarterly results showing a net sales increase of nearly 2% and comparable-store sales accelerating 1.2%, up from the 0.5% increase in the previous quarter.
Earlier this year, during the specialty grocer’s first-quarter earnings call, co-President Kemper Isely told investors that Natural Grocers is targeting 4% to 5% annual new-store growth “for the foreseeable future.
