Is Natural Grocers Stock Worth Picking?


Retailer specializing in organic and dietetic foods Natural Grocers by Vitamin Cottage (NGVC -0.06%) continues to expand its presence in an important and growing market segment. With sales of organic products up 5.5% in 2021, more than double those of conventional products, Natural Grocers is well positioned to be a future leader.

Based in Lakewood, Colorado, Natural Grocers operates 162 stores in 20 states and boasts that it is “the largest family-operated organic and natural grocery retailer in the United States.” But in the face of fierce competition, including Whole Foods and Trader Joe’s, as well as high inflation, Natural Grocers will need to retain and grow its loyal following of healthy, planet-friendly shoppers.

A company with a conscience

Founded in 1955, Natural Grocers was ahead of its time, inspired by core values ​​such as sustainability and a fairer food system.

“The company was built on our five founding principles and remains committed to these five founding principles: quality, natural and organic products, always affordable prices, nutrition education, crew and community. These principles continue to guide our business practices, emphasizing the focus on the health and well-being of our communities and the planet,” says Natural Grocers Co-Chair Kemper Isely.

Already known for its sustainability and regenerative agriculture, Natural Grocers also recently released its first Environmental, Social and Governance (ESG) report, highlighting its commitment to building a healthy and environmentally responsible future. According to the report, for a footprint of its size, it is the only specialty food store in the United States to offer 100% organic products, 100% non-GMO bulk products, 100% dairy products raised in pasture and 100% humanely raised products. and sustainably sourced meat and seafood.

Natural Grocers continues to see its {N}Power Loyalty program is also growing, recently citing a 19% increase in membership over last year. {N}Power members represent 73% of sales, compared to 70% last year.

Staffing challenges and new competition

With a hiring spurt to fill nearly 500 jobs across the country, Natural Grocers’ main challenge right now is keeping its stores fully staffed. To entice potential grocers to apply, the retailer recently raised salaries for some positions and is offering other unique employee benefits, including free immune-boosting and stress-relieving supplements.

Despite staffing issues, Natural Grocers announced plans to open its first South Dakota store in Sioux Falls on July 27.

Competition in the grocery industry is tough, with other specialty food retailers like Whole Foods, Thrive Market, Cabbage growers market, and Trader Joe’s to contend with. And with large areas like walmart and Kroger increasing their natural and organic offerings to meet increased demand, Natural Grocers will need to be creative, resilient and nimble to keep prices “always affordable”.

Natural Grocers takes a grassroots marketing approach to further stand out from the crowd, offering its surrounding communities benefits such as free personalized nutrition coaching sessions and donations to local hunger-related charities.

A solid 2022 so far

Natural Grocers has emerged stronger than ever from the COVID-19 pandemic, overcoming supply chain challenges, personnel issues and other risks.

Reporting stronger-than-expected financial results for the second quarter of fiscal 2022, the company increased sales by nearly 5%. Operating profit increased by 32% and net profit by 35%. The company also announced that shareholders as of May 31, 2022 will receive a cash dividend of $0.10 per share.

Natural Grocers also raised its outlook for the remainder of the fiscal year, based on a strong first half of 2022, current consumer trends and business expectations. Although construction delays have slowed it down, Natural Grocers plans to open six additional new stores, five of which will open this year.

The company continues to break records, with consecutive net sales records for fiscal 2020 and 2021. Although publicly traded only since 2012, last year was the 18th consecutive year of positive same-store sales growth for Natural Grocers. If this company can continue its growth trajectory, it could soon take a bigger slice of a market that topped $800 billion last year.


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