Natural Grocers breaks $1 billion barrier partly due to private label supplement sales

Natural Grovers by Vitamin Cottage, to use the company’s full name, is a chain of more than 160 stores in 20 states.  The retailer was founded more than 66 years ago in Lakewood, CO.

Natural Grocers, which sells organic groceries as well as dietary supplements, differs from some of its competitors in devoting a bigger percentage of store square footage to supplement sales.

Private label sales

And it was that part of the store that drove the company’s strong fourth quarter and full year financial results.  Chief Financial Officer Todd Dissinger said the company benefited both from high demand for supplements generally as well as a favorable response to the company’s relaunch of its private label supplements in 2021.

“We believe the success we are seeing in this category is largely attributable to consumers continuing interest in supplementing their nutritional intake associated with the pandemic, coupled with the strong response to our branded supplements,”​ Dissinger said.  He made his comments as part of an earnings call with stock analysts that was posted in transcript form on the site seekingalpha.com.

Private label supplement sales continue to make up an ever larger portion of the company’s revenue.

“In the fourth quarter private brands represented 7.1% of sales. In total for fiscal 2021, we grew our private brands offerings by 195 SKUs.  . . . Our branded supplements growth exceeded the category growth in the fourth quarter, demonstrating customer’s interest in our high quality and affordable offerings,”​ said CEO Kemper Isley.

Earning details

Natural Grocers regained its strong sales momentum that had cooled somewhat earlier in the year.  For the fourth quarter of its fiscal 2021, the company notched $272.6 million in net sales, representing a 3.2% increase over the same quarter a year previously.  Sales in the third quarter of 2021 had been down by more than 2% year over year, which partly reflected a difficult comparison to the same period in 2020, when consumers were denuding stores shelves during the early pandemic stock up spree.

For the full year the company recorded $1.1 billion in net sales.  CEO Kemper Isley said that in the past decade Natural Grocers has grown sales by four times and has tripled its store footprint.  

The company no longer adheres to the breakneck pace of new store development it was known for in the mid 2010s, when it would sometimes open as many as five new stores per quarter.  Still, the company continues to expand. In fiscal 2021 the company opened three new stores and remodeled or relocated another five.   The company plans to open four to six new stores and relocate an additional three or four in the coming year.