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Natural Grocers Sets 2020 Growth Plan

Sales increase 4.5%, comps up 1.8% in Q4
Natural Grocers
Photograph by Olivia Lieberman

For 2020, Natural Grocers by Vitamin Cottage plans to continue modest new store growth and bump up the rollout of private brand products, including new laundry and paper items.

In financial results for the fourth quarter and fiscal year ending Oct. 30, the Lakewood, Colo.-based natural foods merchant said quarterly sales increased by 4.5% to $227.2 million and comparable-store sales increased by 1.8%. The comp figure reflected an average basket increase of 1.8% and flat store traffic. Net income of $1.4 million was down 33.3% from last year’s fourth quarter although earning per share of 6 cents exceeded the company’s guidance.

Natural Grocers also announced a quarterly dividend for the first time, saying the 7-cents-per-share payment was a signal of confidence in its outlook and financial strength. The retailer also announced an amended credit facility providing $50 million of borrowing capacity through 2024 at improved rates.

“As we look forward to fiscal 2020, we remain focused on driving profitable growth and will continue to execute our operational and marketing initiatives, while leveraging our differentiated model and commitment to our founding principles,” co-President Kemper Isely said in a statement.

Natural Grocers will build five to six new stores and relocate one to two units in the new fiscal year, officials said, expecting capital expenditures of between $28 million and $32 million, in range with 2019, when the company spent $31.9 million on capital projects, including six new stores and five relocations.

The company expects comps in 2020 to be positive, between 0.5% and 2%, with net income as a percentage of sales in the range of 0.9% to 1.1%. It expects earnings per share of 37 cents to 45 cents.

Isely highlighted momentum in the business behind successful premium private label launches in 2019, including 47 new products that have resonated well with shoppers, such as chocolates and coffees. The company has plans for about 70 new private label items in 2020, including new laundry and paper lines, water in aluminum cans and pizzas. “We believe that the Natural Grocers brand has significant long-term potential, and we plan to continue to focus on its growth and expansion,” Isely said.

Isely also praised the company’s ability to identify innovative new products that support its standards, saying, for example, that hemp-derived cannabidiol, or CBD, products have been “very well-received.”

He also said the company would continue to invest behind marketing, noting the success of an anniversary sale this summer and increased digital media impressions.

Customer loyalty will be supported through a growing loyalty program and “in-store customer experience to drive sales and build customer loyalty by making our customers feel welcomed and valued through world-class customer service,” including crew and leadership training. New racking in produce departments have made a significant improvement in presentation, Isely added.

He said the company is also carefully monitoring effects of a growing delivery business “to ensure we are not jeopardizing our in-store customer experience as some of our competitors are experiencing. We will not have our stores overwhelmed by online delivery teams.”

For the fiscal year, Natural Grocers reported total sales $903.6 million, a 6.3% increase.

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