Natural Grocers Reports Rocky Q3

Natural Grocers reported a difficult third quarter of fiscal 2017, falling short of Wall Street estimates and updating its outlook for the year.

The Lakewood, Colo.-based grocer reported sales growth of 8.6 percent to $194.7 million during the quarter, compared with Wall Street analysts' prediction of $196.7 million. The increase primarily resulted from a $16.7 million increase in sales from new stores.

Comparable-store sales inched up 0.4 percent, compared with a 0.7 percent increase during the same period a year prior. The daily average store sales increase resulted from a 0.3 percent decrease in daily average transaction count and a 0.7 percent increase in average transaction size during the third quarter of fiscal 2017.

During the quarter, Natural Grocers opened five new stores, bringing its total store count to 140 stores in 19 states. It opened 14 new stores and relocated one during the first nine months of fiscal 2017, compared with 15 openings, three relocations and one remodel during the same period a year prior. 

Natural Grocers CEO Kemper Isely acknowledged the challenging quarter, but emphasized that he was encouraged by improvements in comps and mature store sales trends, noting that they reflect the positive impact of recent marketing initiatives.

"I was pleased with the strong sales lift we've experience in our relocated Boulder store, and am excited about the recent relocation of our downtown Denver store,” he said. “Looking ahead, we have moderated new unit growth to reflect the challenging competitive environment, and have no additional new store openings planned for the fourth quarter of fiscal 2017. With comparable-stores sales trending in the right direction, including good momentum exiting the third quarter, we intend to refocus our efforts on controlling expenses and improving earnings performance."

Although no new stores are planned for the rest of 2017, the company has signed nine leases for stores planned to open in 2018, including locations in Iowa, Missouri, Oregon, Texas and Utah.

Additionally, Natural Grocers updated its fiscal 2017 outlook from an actual -0.7 percent comps growth during the first nine months to between -1 percent and 0.5 percent for the year, and net income from 1 percent during the first nine months to between 0.9 percent and 1 percent for the year.