Natural Grocers Q3 2025 Earnings: EPS Jumps 25% on Solid Comp Sales and Loyalty Gains
- Hardik Shah
- Aug 7
- 3 min read
TLDR
• Revenue Strength: Net sales rose 6.3% YoY to $328.7M despite a distributor disruption.
• Margin Trends: Gross margin expanded 70 bps to 29.9% on effective promotions.
• Forward Outlook: FY25 EPS guidance was raised; store growth to accelerate in FY26.
Business Overview
Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) operates 169 stores across 21 states, focusing on natural and organic groceries, dietary supplements, and body care products. With a strict ingredient standard and a reputation for nutritional education, the company targets health-conscious consumers. NGVC's format emphasizes in-store shopping with a loyalty-driven model—its Empower Rewards program accounts for 82% of sales.
Natural Grocers Earnings Q3'25
Topline Performance
Net Sales: $328.7M (+6.3% YoY), despite a $3.5M–$4M impact from a temporary UNFI distribution disruption
Comparable Store Sales (Daily Avg): +7.4% YoY, +14.6% on a two-year stack
Transaction Metrics:
Comparable transactions: +4.8%
Transaction size: +2.4% (driven by ~2% inflation and more items per basket)
Profitability
Gross Margin: 29.9% (+70 bps YoY), aided by promotional effectiveness
Operating Margin: 4.7% (+50 bps YoY)
Operating Income: $15.6M (+21.3%)
Net Income: $11.6M (+26%)
Diluted EPS: $0.50 (+25%)
Adjusted EBITDA: $24.4M (+10.1%)
Forward Guidance
FY25 daily average comparable store sales growth: 7.25%–7.75% (up from 6.5%–7.5%)
FY25 diluted EPS: $1.90–$1.95 (previously $1.78–$1.86)
Capital expenditures revised downward to $30M–$33M (from $36M–$44M) due to delays in store openings
Risks & Opportunities
UNFI’s June cybersecurity incident temporarily affected product flow but has since normalized
Continued resilience in consumer demand; no evidence of trade-down or weaker basket sizes
Operational Performance
Loyalty penetration: Empower Rewards accounted for 82% of sales, up 200 bps YoY
Store Development:
FY25: 2 new stores opened YTD (vs. prior guidance of 3–4)
FY26: Plan to accelerate to 6–8 new store openings
Pipeline: Signed leases for 5 new stores; active negotiations for 5 more; vetted list of ~75 future locations
“We are accelerating store unit growth and plan to open six to eight new stores in fiscal 2026.” — Kemper Isely, Co-President
Market Insights
Sales growth was broad-based across geographies and product lines, especially in meat, dairy, and produce—NGVC’s most differentiated categories
Management reported no signs of weakening demand or inflationary fatigue among shoppers
Increased productivity and promotions led to better customer retention and larger baskets
Consumer Behavior & Sentiment
No signs of trade-down or reduced spend from core customers
Continued engagement from loyal customer base
Value and quality perception remain strong amid broader macro uncertainty
“We continue to monitor consumer trends closely. To date, we have not observed any indicators of softer demand, trade down, or fewer items per basket.” — Richard Halle, CFO
Strategic Initiatives
Private Label: Expansion of Natural Grocers brand products
Tech Investment: Modest rise in admin expense tied to tech upgrades
Marketing & Engagement: Deeper integration of Empower Rewards to build retention and spend
Store Relocations/Remodels: 3 relocations/remodels expected in FY25
“Sales performance was strong across geographies and vintages… driving transaction size comp growth.” — Kemper Isely, Co-President
Capital Allocation
Dividend: Paid $0.12/share in Q3; next payout set for Sept. 17
Buybacks: No share repurchases in Q3; $8.1M remains authorized
Liquidity:
Cash: $13.2M
No debt
$69.5M available on credit revolver
Free cash flow of $16.8M YTD
The Bottom Line
Natural Grocers delivered another strong quarter, outperforming on comp sales, margin expansion, and earnings. Its loyalty program, effective promotional strategy, and disciplined cost controls continue to fuel growth, even amid macro uncertainty.
Looking ahead, investors should watch:
Execution of FY26 store acceleration
Continued margin resilience amid input inflation
Customer loyalty and traffic momentum vs. competition
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