Natural Grocers Narrows 2017 Outlook Following Q2 Report
Natural Grocers has narrowed its outlook for fiscal 2017 following a decline in comparable-store sales in the second quarter and first half of fiscal 2017.
Net sales for the Lakewood, Colo.-based retailer grew 8.3 percent to $192.2 million for the quarter and 8.9 percent to $375.8 million for the first half, both due mostly to an increase in new-store revenue – $17.8 million for the quarter and $34.7 million for the half. However, comps fell 1.7 percent and 1.2 percent, respectively, during the periods, although the grocer reported “significant improvements” in comps trends as the quarter progressed.
As a result, the number of new stores planned for the year has dropped from 15 to 20 to 15 to 17, and the number of relocations from three to two. Net income as a percentage of sales has narrowed from 1.4 percent to 1.6 percent to 1.4 percent to 1.5 percent, and EBITDA as a percentage of sales has changed from 6.4 percent to 6.8 percent to 6.4 percent to 6.7 percent.
The company anticipates a stronger second half in fiscal 2017, as it's seeing positive results from its marketing initiatives, including a new television campaign in Denver that began in March.
“We have a fully developed calendar of marketing events scheduled for the third quarter, which included a broad range of promotions around Earth Day on April 22,” said Kemper Isely, co-president of Natural Grocers. “We continue to adapt proactively to the sales challenges affecting food retailers and plan to continue to closely manage our costs and capital investments. Thus far in fiscal 2017, our new-store growth has been funded entirely from operating cash flow. We expect to continue managing our new unit growth so as to allow for internally funded store growth. In view of these considerations, we continue to anticipate improved financial performance in the second half of our fiscal year."
During the second quarter, the grocer opened four new stores and relocated one, bringing its total store count to 135 stores in 19 states as of March 31. Total stores opened and relocated during the first half were nine and one, respectively, compared with nine new ones and two relocations during the same period in 2016. Unit growth rate during the first half of 2017 was 20.5 percent, compared with 17.9 percent for the same period a year prior.
At press time, the company reported one additional store in the third quarter and the signing of 13 leases for stores to open in fiscal 2017 and beyond in Arkansas, Colorado, Iowa, Missouri, Oregon, Texas and Utah.