Natural Grocers Earnings Surge on Record Sales, Upgraded 2025 Outlook
- Hardik Shah
- May 8
- 3 min read
TLDR
Record Q2 performance: Net sales up 9% to $335.8M; EPS up 60% to $0.56.
Upgraded guidance: 2025 EPS outlook raised to $1.78–$1.86 (from $1.57–$1.65).
Loyalty & private label drive growth: {N}power® penetration hits 81%; private label sales up.
Business Overview
Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) is a specialty retailer of natural and organic groceries, body care products, and dietary supplements. Known for its rigorous quality standards, the company exclusively sells USDA-certified organic produce and pasture-raised dairy. It operates 169 stores across 21 states and offers a smaller-store format with competitive pricing under its Always AffordableSM commitment.
Natural Grocers Earnings - Q2'25 Highlights
Net Sales: Q2 FY25 net sales rose 9.0% YoY to $335.8 million, driven by a 5.9% increase in transaction count and 2.8% growth in transaction size.
Gross Margin: Improved 100 bps to 30.3% due to effective promotions.
Net Income: Jumped 64.6% YoY to $13.1 million; diluted EPS reached $0.56.
Adjusted EBITDA: Rose 33.3% to $26.3 million, with margins benefiting from leverage on higher sales.
Operating Margin: Expanded by 150 bps to 5.2%.
Free Cash Flow: $20.8M for H1 FY25.
Dividend: Declared a $0.12 per share quarterly dividend payable June 11, 2025.
Forward Guidance
Revised Fiscal 2025 Outlook:
EPS: Raised to $1.78–$1.86 (from $1.57–$1.65).
Comparable Store Sales Growth: Updated to 6.5%–7.5%.
Store Openings: Adjusted to 3–4 (previously 4–6).
Capital Expenditures: Maintained at $36–$44 million.
Management noted the guidance reflects continued sales momentum, balanced performance across categories, and an enduring shift in consumer prioritization of health and nutrition.
Operational Performance
New Stores: Opened in Brownsville and Waco, Texas.
Loyalty Program ({N}power®): Penetration rose to 81% of sales, aided by tailored offers and exclusive pricing (e.g., eggs, avocados).
Private Label: Natural Grocers brand products accounted for 8.6% of sales, driven by 22 new SKUs.
Traffic Trends: Positive comp traffic for the 9th consecutive quarter; no signs of trade-down or smaller baskets.
Delivery: Online sales via Instacart steady at 2% of revenue; no plans to bring fulfillment in-house.
“The quality, breadth, and longevity of our sales performance are extraordinary for grocery retail,” said Co-President Kemper Isely.
Market Insights
Consumer Behavior: Resilient demand across all demographics, with millennials increasingly attracted to NGVC’s authentic, health-focused messaging.
Category Strength: Highest comps in differentiated categories—meat, seafood, organic produce, pasture-raised dairy.
Inflation: Modest cost inflation (~2%) did not deter basket size or sales volume.
“We believe the behaviors adopted by consumers to support their health and wellness are enduring,” Isely noted.
Strategic Initiatives
Customer Engagement: Increased marketing personalization, higher {N}power® utilization.
Product Innovation: Continued expansion of private label, supporting margin accretion and loyalty.
Store Growth: Planning 6–8 new stores annually long-term; remodeling and relocations continue on an opportunistic basis.
Capital Allocation
Dividend Policy: $0.12/share quarterly dividend sustained.
Liquidity: $21.2M in cash; no outstanding debt on $72.5M revolver.
Investment: $15.9M in capex YTD, primarily for new store development and remodels.
“We ended the second quarter in a strong liquidity position... and generated $20.8 million in free cash flow,” CFO Richard Halle shared.
The Bottom Line
Natural Grocers delivered its best-ever Q2, with growth across transactions, basket size, and margins. The upgraded outlook reflects management's confidence in the brand’s differentiated positioning and disciplined execution. Continued momentum in loyalty engagement and private label expansion, along with disciplined capital allocation, position NGVC to thrive in a health-conscious, value-seeking consumer environment.
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