Natural Grocers holding own against Amazon, earnings release indicates
Natural Grocers by Vitamin Cottage (the company’s full, formal name) operates a chain of more that 150 natural food stores in states mostly west of the Mississippi. The company was founded more than 50 years ago in Lakewood, CO, where it still has its headquarters.
Natural Grocers is unusual among health food stores in that it devotes a larger share of its square footage to the sale of dietary supplements as compared to competitors like Spouts or Whole Foods Markets.
Competing with Amazon
In the company’s most recent earnings call with analysts, CEO Kemper Isley said that in tracking the company’s NPower members (Natural Grocers’ loyalty program), it found evidence that it is competing effectively with both Amazon Prime offerings and with Whole Foods Markets.
“Our membership doesn’t cost money though, that’s kind of a big benefit. We don’t have to ship our product whereas Amazon has to ship product and lose money every time they do ship product. I don’t think it’s a big benefit to the Whole Foods members either. Whole Foods is still having troubles with keeping their prices competitive,” Isley told analysts in the call. A full transcript of the call is available on the site seekingalpha.com.
Sales of dietary supplements were helping to lead the charge for the company, partly because of a better margin structure.
“We generate a higher gross margin in dietary supplements and body care than we do in grocery. It is worth noting that both dietary supplements and body care continue to deliver comp gains along with grocery,” said Todd Dissinger, chief financial officer.
Earnings details
Natural Grocers reported that net sales increased 9.4% to $221.5 million in the first quarter. Comparable store sales increased 5.5%. That’s a good sign, as the company was struggling with comparable sales numbers a few years ago when it was more tightly focused on a rapid pace of new store openings. And operating income increased 84% to $4 million, reflecting a renewed emphasis on cost cutting.
Stock traders reacted more or less positively to teh company’s earnings, which were announced last week. The company’s share price has increased from a low of $12.92 last week to $15.10 today. But that is off from a 52-week high of $22.50 on Nov. 16, 2018.
