Natural Grocers by Vitamin Cottage (NGVC) delivered a solid Q1 FY2025, signaling ongoing momentum across product categories and geographies. Net sales rose 9.4% year over year to $330.2 million, with daily average comparable store sales up 8.9% and a two-year basis increase of 15.1%. The quarterly performance was driven by broad-based demand for high-quality, affordable natural and organic groceries, supported by improving customer engagement through the NPower rewards program and a rising share of private-label brand items. Margins benefited from occupancy leverage and higher product margins, producing a 50-basis-point gross margin expansion to 29.9% and a 23.6% gain in operating income to $13.3 million; net income rose 28.1% to $9.9 million, and diluted EPS climbed 26.5% to $0.43. Management underscored continued leverage from efficiency initiatives, brand/product expansion, and disciplined store growth.
The company increased its fiscal 2025 outlook on daily average comparable store sales growth (5%–7% vs prior 4%–6%) and EPS ($1.57–$1.65 vs prior $1.52–$1.60), and reiterated capex guidance of $36–$44 million to support growth. NGVC highlighted key strategic drivers including stronger loyalty penetration (NPower at 81% of net sales penetration, up from 78%), a growing Natural Grocers brand presence (8.9% of sales vs 8.5% prior year), and 23 new private-label items launched in the quarter. Nonetheless, management acknowledged tariff uncertainties and the potential impact on product costs, signaling a balanced approach to margin progression as it cycles relatively strong prior-year comps in the second half of the year. The liquidity position remained solid but modest, with $6.3 million in cash and $61.4 million available on a revolving facility, offset by elevated debt levels relative to cash on hand. Investors should monitor: sustained comp growth, store rollout cadence (4–6 openings in 2025 with 2–4 relocations/remodels), price/relief from input costs, and the company’s ability to translate top-line gains into meaningful margin expansion given ongoing cost pressures.