In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) reported record sales and earnings for the second quarter of fiscal year 2025.
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Daily average comparable store sales increased by 8.9%, with a two-year acceleration to 16.4%.
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The company saw a 60% increase in diluted earnings per share, reflecting strong operational execution and expense leverage.
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The NPower rewards program saw increased engagement, with net sales penetration rising to 81% from 78% a year ago.
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Natural Grocers brand products accounted for 8.6% of total sales, driven by the launch of 22 new items.
Negative Points
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The company revised its outlook for new store openings, reducing the expected number from 4-6 to 3-4 for fiscal 2025.
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Administrative expenses as a percentage of net sales increased by 20 basis points due to technology expenses and higher compensation.
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The outlook for year-over-year gross margin is flat to slightly lower, depending on promotional investments.
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Sales comps are expected to moderate in the second half of the year as the company cycles strong comps from the prior year.
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Instacart delivery services account for only 2% of sales, indicating limited growth in this area.
Q & A Highlights
Q: What are you offering to consumers through your loyalty program in terms of perks and promotions? A: We provide individualized offers tailored to members' shopping habits, such as discounts on supplements for supplement customers. Members earn points in-store, equating to a 1% rebate when offers are loaded. Our best pricing on eggs and avocados is exclusive to members, which is a significant draw. Additionally, in-store specials are driven by our NPower rewards program.
Q: Have you observed any changes in consumer basket size due to the economy? A: No, our basket size has remained steady over the last several quarters.
Q: Are there plans to expand into new markets with the addition of 6 to 8 new stores next year? A: Yes, we are planning to enter another state and will announce the location in the coming months.
Q: How are your in-stock levels, inventory, and distribution performing? A: Our in-stock levels are back to pre-pandemic levels, running at about 97%.
Q: Do you offer pickup and delivery services, and how are they being utilized by customers? A: Yes, we offer delivery through Instacart, which has remained steady at about 2% of our sales for the last two years. We do not plan to bring delivery services in-house as it would not be profitable.