BEST TAKEAWAYS
- The company faced tough comparisons with supplement sales in the fourth quarter of last year
- Sales plummeted as consumers returned to pre-pandemic travel and restaurant eating habits
- Low-income consumers spent less as SNAP sales fell, but demand for high-end products remained strong
Natural Grocers by Vitamin Cottage said its fiscal fourth-quarter profits were down and same-store sales were virtually flat as traffic fell and inflation gave the company less of a boost than she only did it for her conventional peers.
While the natural and organic grocer’s overall fourth-quarter sales rose $1.6 million to $274.2 million, an increase of 0.6%, from a year ago, the company attributed the gain primarily to $2.9 million from new store sales.
The 0.2% drop in comparison store sales included a 2.6% decrease in the average number of daily transactions, partially offset by a 2.5% increase in the average daily transaction size, the company said. .
On a conference call with analysts, the company said the drop in transactions reflected “a moderation in pandemic trends,” including more summer travel and more restaurants. Strong supplement sales in the fourth quarter of last year also made comparisons difficult.
The company also said it saw a 20% drop in SNAP (Supplemental Nutrition Assistance Program) purchases, indicating that lower-income consumers were shopping less or buying elsewhere.
Natural Grocers said that over three years, its fourth quarter comps increased 15.8%.
The company also said it experienced less inflation on its natural/organic product offering than its peers on conventional products. Cost inflation was estimated at 7% for the quarter and 5% for the year, Todd Dissinger, chief financial officer, said on the call.
“Historically, our inflation rate has been more stable than conventional grocers due to our specialized supply chain,” he said.
Net profit for the fourth quarter, which ended Sept. 30, fell nearly 70% to $2.2 million.
Dissinger said the company’s best-performing departments in the fourth quarter were dairy, meat and grocery. He also said the company has seen little evidence of lower consumer prices, although some consumers have switched from branded items to private label products. Private label items whose sales growth outpaced comparable branded items include bread, bulk cereals and supplements.
Meanwhile, demand for premium products such as pastured eggs and grass-fed milk remained high, “suggesting that many of our customers still prioritize product features over price” , Dissinger said.
For the full year, Natural Grocers said net income rose about 4% to $21.4 million on a 3.2% increase in sales to about $1.1 billion. of dollars. Average daily comparable store sales for the full year increased 2.6%, reflecting a 2.1% increase in average daily transaction size and a 0.4% increase in average daily number of transactions.
The company opened three new stores during the year and ended the year with 164 locations in 21 states. It expects to open between four and six new stores in fiscal 2023 and expects full-year comparison store sales to be between -2% and 1%.
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