Natural Grocers by Vitamin Cottage, Inc. Q1 FY2026 earnings call

• First quarter results were in line with expectations, with daily average comparable store sales growth of 1.7% and diluted EPS growth of 14%. • Cautious consumer spending behaviors were observed, but the two-year comp of 10.6% remains robust. • nPower Rewards program net sales penetration increased to 83%, supported by membership gains. • Private label products accounted for 9.6% of total sales, up 70 basis points. • Relocated one store in the first quarter, and plans to open 6-8 new stores in fiscal 2026. • Released fiscal year 2025 sustainability report highlighting nutrition education program. • Appreciation for crew's commitment to exceptional customer service.

First quarter net sales increased 1.6% from the prior year period to $335.6 million. Daily average comparable store sales grew 1.7%, and diluted earnings per share grew 14% to $0.49. Private label products accounted for 9.6% of total sales, up 70 basis points from the prior year.

• Affirmed fiscal year outlook, including opening 6-8 new stores, relocating/remodeling 2-3 existing stores. • Daily average comparable store sales growth between 1.5% and 4%. • Diluted earnings per share between $2 and $2.15. • Capital expenditures of $50 million to $55 million. • Sales comps expected to be at the low end of the range through Q2, then increase in the second half. • Modest inflation expected, flat year-over-year gross margin, and store expenses as a percent of net sales relatively flat to slightly lower. • $0.12 of diluted earnings per share invested in new store openings.

• Shrinkage issues due to isolated events like recycling, weather-related power outages, and store closures impacted gross margin. • Cautious consumer spending behavior affecting sales performance. • Uncertainty in the consumer environment impacting comparable store sales growth.

Q: Scott Mushkin asked about the $0.12 headwind from new stores and its future impact.

A: Kemper Isely and Richard Helle discussed that the headwind is due to increased preopening expenses for more stores, with it likely to be flat going forward if opening pace remains consistent.

Q: Scott Mushkin asked about shrinkage color.

A: Richard Helle explained shrinkage was due to factors like recycling, power outages, and operational variances, with cycling, anomalies, and standard variances contributing to the gross margin decline.

Q: Scott Mushkin asked about customer base by age and demographics.

A: Kemper Isely and Richard Helle discussed income-constrained demographics pulling back, with younger households being impacted, but no material shift in company demographics from third-party data.

Q: Chuck Cerankosky asked about new store openings, relocations, and category performance.

A: Kemper Isely explained details on new store openings, relocations, and how cautious consumer behavior affected categories like supplements and body care, but other categories like grocery had growth.