Natural Grocers stands up for communities, employees as weather adds to woes

Natural Grocers by Vitamin Cottage continues to take care of its employees and the communities they serve, throughout the COVID-19 pandemic and during bizarre weather events.

February's deep freeze, which led to the deaths of at least 125 people and property damage estimates of more than $10 billion—mostly in Texas but also in the Pacific Northwest—shut down stores and reduced daily comparable sales by an estimated 70 basis points, according to Natural Grocers.

In Texas, Natural Grocers offered free filtered water at the stores, hosted food drives and raised $100,000 for Feeding Texas, the state's largest hunger-relief organization that partners with 21 food banks, company Co-president Kemper Isely said Thursday during the third-quarter earnings call.

At the same time, Natural Grocers continued to pay wages and bonuses to employees affected by the storm. That incremental pay cost $1.6 million during the second quarter, Isely said. In 2020, the company implemented a permanent $1 per hour pay raise because of the COVID-19 pandemic and continues its periodic bonus system, according to its coronavirus update webpage, which was last updated on May 4.

Lower net sales, net income were expected

As the second quarter ended on March 31, the last few weeks lapped the initial pantry surge at the beginning of the COVID-19 pandemic.

Related:Natural Grocers fiscal 2020 sales break company record

Consumers are still socially distancing and mostly eating at home, Chief Financial Officer Todd Dissinger said. One behavior that hasn't changed is consumers' shopping less frequently buy buying more per trip.

For the second quarter, daily average comparable store sales dropped 7% from Q2 of fiscal 2020. In Q2 2020, comparable store sales were 17% higher than they were in 2019.

When comparing 2021's results with those of 2019, daily average comparable store sales increased 10%, according to the company. This year's average transaction count is 13.9% lower than the count in Q2 2019, but the average basket size is 8% higher than it was for the same time two years ago, Dissinger said.

Isely said that basket sizes will likely remain high and transaction counts low until most workers return to their offices. The company has determined that the loss of local employees' making quick stops to pick up lunch, a beverage and a snack is driving the statistical changes.

All of Natural Grocers' financial results were lower in Q2 2021 than they were a year ago:

The board of directors announced Thursday that shareholders of record as of June 1 would receive a dividend of $0.7 per share on June 16.

Natural Grocers also reported results for the first six months of fiscal 2021:

What's coming to Natural Grocers

Inside the stores, Natural Grocers is expanding its private label line of vitamins and supplements; by the end of June it will include 150 formulations. Supplements are an important part of the company's business because they fulfill Natural Grocers' key principles of nutrition, quality and value.

Six other products have joined Natural Grocer's private label lineup, including bottled kombucha, Isely said. Private label products account for 7.3% of the company's sales—the same percentage they held in Q4 of 2020.

The grocer's loyalty program, Npower, now has 1.4 million members, a 17% increase from a year ago and a 5% increase from the first quarter of 2021. Sales to Npower members accounts for 70% of the company's total, Isely said.

Natural Grocers opened one store in Jefferson City, Missouri, and remodeled one in Dallas, Texas, during the second quarter. In the same period a year ago, the company opened two new stores.

Natural Grocers is reducing the number of stores it plans to open this year to three or four, with four or five remodels or relocations, because of construction problems, the company announced.

It has signed leases for stores in Colorado, Missouri, Nevada and Oregon, all of which are expected to open during fiscal 2021. A new, larger store in Pueblo, Colorado, was scheduled to open Thursday across the parking lot from the 19-year-old original store, which was the company's 17th Colorado location.