Dive Brief:
- Natural Grocers recorded a net sales increase during its third quarter of 6.3%, to roughly $329 million, and saw comparable-store sales growth of $19 million the retailer announced last week.
- Natural Grocers posted another strong quarter even though the cyberattack in June that impacted its primary distributor, United Natural Foods, Inc., resulted in a 1% to 1.5% drag on the grocer’s comps, Kemper Isely, Natural Grocers co-president, said on an earnings call last week.
- Natural Grocers was able to deliver strong Q3 results even as it recorded its slowest growth in two years.
Dive Insight:
The UNFI cyberattack led to product shortages in June and July at Natural Grocers, Isely said on the call, noting that the grocer worked with UNFI to “minimize disruptions and restore normalized levels of product distribution to our stores.”
Natural Grocers estimates the cyberattack impacted its Q3 net sales by $3.5 million to $4 million.
“Our operations have substantially normalized, and we do not expect the disruption to materially impact our operations or financial performance in the future,” Isely said.”
Natural Grocers’ daily average comparable store sales increased 7.4%, which executives attributed to ongoing transaction growth and an increase in the number of items per basket. The grocer’s daily average comps sales increase in Q3 was driven by modest product cost inflation and a slight increase in items per basket, Natural Grocers CFO Richard Hallé said on the earnings call. Isely noted that net sales penetration of the grocer’s {N}power loyalty program was 82% during the quarter, up from 80% a year ago.
Natural Grocers saw its slowest net sales growth in Q3 in two years
“We will continue to focus on our key priorities to drive growth, including communicating our differentiated offering, further enhancing customer engagement through our {N}power rewards program, expanding our selection of natural grocers brand products, and driving new store development and existing store productivity,” Hallé said.
Natural Grocers’ sales remained strong during Q3 across product categories, with the highest comparable store sales growth in differentiated offerings such as meat, dairy and produce, Isely said.
So far this year, Natural Grocers has opened two stores, closed two and remodeled one, Isely said. This summer, Natural Grocers is planning to open a store in Ruidoso, New Mexico, as well as remodel its location in Centennial, Colorado.
“Store unit growth and development is a company priority,” Isely said.
During the call, Isely announced that Natural Grocers is accelerating its store growth, with plans to open six to eight locations in fiscal 2026. He added that the company has already signed leases for five future new stores and is in negotiations for another five sites.
Natural Grocers currently has over 160 stores in 21 states and operates a bulk food repackaging facility and distribution center in Golden, Colorado.
Natural Grocers updated its fiscal 2025 outlook in conjunction with its earnings report. The grocer now expects daily average comparable store sales growth of 7.25% to 7.75%, up from the previously forecast 6.5% to 7.5%, and higher diluted earnings per share of $1.90 to $1.95, up from $1.78 to $1.86. The grocer lowered its capital expenditures estimate to $30 million to $33 million.
