Natural Grocers Starts 2025 Strong with Sales Growth & Upgraded Outlook
- Hardik Shah
- Feb 7
- 3 min read
Updated: Feb 11
Organic Grocer Sees 9.4% Revenue Growth, Higher Profit Margins, and Increased Store Expansions
TLDR
Robust Revenue Growth: Net sales increased 9.4% YoY to $330.2 million, with comparable store sales up 8.9%.
Profitability Boost: Net income surged 28.1%, while adjusted EBITDA grew 21.7% to $22.8 million.
Raised Guidance: Management increased fiscal 2025 projections, expecting higher comparable store sales growth (5-7%) and higher EPS guidance ($1.57-$1.65).
Financial Results
Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) is a specialty retailer of natural and organic groceries, dietary supplements, and body care products. The company differentiates itself with high-quality standards, exclusively offering USDA-certified organic produce and hormone-free dairy products. With 168 stores across 21 states, Natural Grocers caters to health-conscious consumers seeking affordable, clean-label food products.
Q1 2025 Performance vs. Q1 2024
Metric | Q1 2025 | Q1 2024 | YoY Change |
Net Sales | $330.2M | $301.8M | +9.4% |
Comparable Store Sales | +8.9% | - | Up |
Net Income | $9.9M | $7.8M | +28.1% |
Diluted EPS | $0.43 | $0.34 | +26.5% |
Adjusted EBITDA | $22.8M | $18.8M | +21.7% |
The company's revenue growth was driven by a 5.3% increase in transaction count and a 3.4% rise in transaction size, marking its eighth consecutive quarter of positive traffic comps.
Gross margin expanded by 50 basis points to 29.9%, benefiting from store occupancy cost leverage and improved product margins.
Operational Performance
Key Achievements
Store Growth: Two store relocations in Q1, with one new store opened in Brownsville, TX.
Brand Expansion: Private-label Natural Grocers-branded products grew to 8.9% of total sales, up from 8.5% in Q1 2024.
Customer Loyalty: The NPower Rewards program now accounts for 81% of net sales, up from 78% a year ago.
Challenges & Risks
Labor & Compensation Costs: Store expenses increased 8.1%, primarily due to higher employee wages.
Inflation & Tariffs: Management expects modest inflation but is monitoring potential impacts from tariffs on imported goods.
Market Insights
The organic and natural foods market continues to benefit from:
Health-conscious consumers prioritizing clean-label and organic foods.
Sustainability-driven purchasing behavior, which aligns with Natural Grocers' commitment to environmental responsibility.
Competitive pricing pressure, particularly against larger competitors like Sprouts Farmers Market and Whole Foods.
Natural Grocers’ focus on affordability, private-label expansion, and rewards-based customer retention strengthens its market positioning.
Strategic Initiatives
Management remains committed to expansion and efficiency improvements:
Growth Plans: The company is on track to open 4-6 new stores and relocate/remodel 2-4 stores in FY 2025.
Efficiency Gains: Increased automation in store operations and targeted marketing campaigns are driving higher productivity.
Sustainability Focus: The company continues to invest in environmentally responsible sourcing and community engagement initiatives.
Forward Guidance
“Consumers are increasingly prioritizing products that support health and sustainability, creating tailwinds for our business.” – Kemper Isely, Co-President
Comparable Store Sales Growth: 5-7% (previously 4-6%).
Diluted EPS: $1.57-$1.65 (previously $1.52-$1.60).
Capital Expenditures: $36M-$44M for new stores and remodels.
Management expects strong Q2 comps but anticipates some moderation in H2 2025, reflecting prior-year high comps.
The Bottom Line
“Our company’s ongoing financial success demonstrates that a business model dedicated to offering affordable, high-quality, natural, and organic products can deliver positive environmental and social impact while creating value for all stakeholders.” – Kemper Isely, Co-President
Natural Grocers has demonstrated strong sales growth, expanding profitability, and improved operating leverage. CEO Kemper Isely emphasized the company’s ability to align with consumer health trends, drive loyalty through rewards, and expand private-label sales.
With raised guidance and continued store expansion, Natural Grocers is well-positioned for sustainable growth, making it a compelling watch for investors in the organic grocery space.