Natural Grocers by Vitamin Cottage Reports Strong Q3 Fiscal 2025 Performance

Natural Grocers by Vitamin Cottage, Inc., a prominent player in the organic and natural grocery market, recently announced its financial results for the third quarter of fiscal 2025, ending June 30. The company exhibited notable growth, with net sales reaching $328.7 million, marking a 6.3% rise compared to the same period in the previous year. This growth is reflective of the company's effective strategies and response to the increasing consumer demand for health-conscious products.

Business Highlights

The performance of Natural Grocers surpassed expectations across critical metrics. Daily average comparable store sales improved by 7.4%, with a remarkable 14.6% increase when compared to two years earlier. Net income surged by 26% to $11.6 million, resulting in a diluted earnings per share of $0.50, a significant improvement over the previous year's earnings. Moreover, adjusted EBITDA saw an upswing, rising by 10.1% to $24.4 million.

Kemper Isely, Co-President of Natural Grocers, attributed this success to the company's commitment to delivering high-quality, affordable natural products. This mission has resonated with a consumer base increasingly prioritizing wellness and nutritious food options. The effective promotions and operational enhancements contributed to a 50 basis point improvement in the operating margin.

"Our third-quarter performance exceeded our expectations, and we believe our value proposition appeals strongly to consumers focused on health and wellness," Isely stated.

Addressing Challenges

In June 2025, Natural Grocers faced a challenge when its primary distributor, United Natural Foods, Inc. (UNFI), experienced a cybersecurity incident that temporarily disrupted product distribution. Fortunately, Natural Grocers collaborated closely with UNFI to manage the situation, minimizing the impact on operations. The company estimates this disruption led to a sales dip of approximately 1.0 to 1.5 percentage points in daily average comparable store sales and a reduction in diluted earnings per share by $0.04 to $0.05.

As of the announcement date, operations have mostly returned to normal, and the company expects no further significant impact on its financial performance.

Financial Growth

The financial data highlights a considerable increase in gross profit, which grew by 8.8% to $98.3 million, driven predominantly by higher product margins. This increase stemmed from effective promotional strategies. Despite rising store expenses, the percentage of expenses relative to net sales improved from 21.9% to 21.8%.

Administrative costs also rose, primarily due to investments in technology and workforce compensation. Operating income for the third quarter climbed 21.3% to $15.6 million, with the operating margin improving to 4.7% from 4.2% a year earlier.

For the first nine months of fiscal 2025, Natural Grocers experienced an 8.2% increase in net sales, achieving a total of $994.7 million. This success is attributed to a strong comparable store sales performance and a higher average transaction size.

Looking Ahead

The positivity from Q3 results has prompted Natural Grocers to raise its fiscal 2025 outlook, anticipating a stronger daily average comparable store sales growth and earnings per share. The company has adjusted its forecasts for the number of new stores, relocations, and capital expenditures, aiming for continued growth in fiscal 2026.

Dividend Declaration

Additionally, Natural Grocers has declared a quarterly cash dividend of $0.12 per share, which is planned to be paid on September 17, 2025, to stockholders recorded by September 2, 2025. This move further reflects the company’s commitment to rewarding its shareholders amidst growing financial performance.

Natural Grocers, known for adhering to stringent quality standards, continues to set itself apart in the organic grocery industry. With over 169 stores across 21 states, the company remains poised for future expansion and success, leveraging its focus on healthful product offerings and community engagement. For more information about store locations and its product line, visit Natural Grocers.