Last updated on November 27th, 2017 at 11:04 am
Natural Grocers by Vitamin Cottage Inc. has released the results for its fourth quarter and fiscal year ended Sept. 30 and provided its outlook for fiscal 2018.
Highlights for the fourth quarter and fiscal 2017 compared to the fourth quarter and fiscal 2016 include: Net sales increased 9.7 percent to $198.5 million in the fourth quarter and increased 9 percent to $769.0 million in fiscal 2017; daily average comparable store sales increased 2.1 percent in the quarter and increased 0.1 percent in 2017; net income was $1.2 million with diluted earnings per share of $0.06 in the quarter and was $6.9 million with diluted earnings per share of $0.31 in 2017; and EBITDA was $10.3 million in the fourth quarter and $43.6 million for the year. The company opened 14 new stores in fiscal 2017 compared to 23 new stores in fiscal 2016, resulting in growth rates of 11.1 percent and 22.3 percent for the twelve month periods ended Sept. 30, 2017 and 2016, respectively.
“We continued to see improving sales trends during the fourth quarter, with daily average comparable store sales increasing 2.1 percent,” said Kemper Isely, co-president. “During the fourth quarter, we also saw continued improvement in mature store comparable store sales trends, which we believe reflects the effectiveness of our marketing and targeted promotional strategies. It has been an eventful year across the food retailing landscape, and we plan to continue adapting to the dynamic competitive environment in our sector. We slowed new store development during fiscal 2017; we plan to further reduce our new store growth during fiscal 2018 to allow us to focus on improving operating efficiencies and profitability across our existing store base. We will also continue our efforts to communicate our superior product standards, affordable prices and commitment to nutritional education, which we believe drive our unique positioning in this evolving marketplace.”
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Operating Results—4Q 2017 and 4Q 2016
During the fourth quarter of fiscal 2017, net sales increased $17.5 million, or 9.7 percent, to $198.5 million compared to the same period in fiscal 2016, primarily due to a $13.7 million increase in sales from new stores. Daily average comparable store sales increased 2.1 percent in the fourth quarter of fiscal 2017 compared to a 0.3 percent increase in the fourth quarter of fiscal 2016. The daily average comparable store sales increase during the fourth quarter of fiscal 2017 was driven by a 1.2 percent increase in daily average transaction count and a 0.9 percent increase in average transaction size. Daily average mature store sales decreased 0.2 percent in the fourth quarter of fiscal 2017 compared to a 1.8 percent decrease in the fourth quarter of fiscal 2016. For fiscal 2017, mature stores include all stores open during or before fiscal 2012.
Gross profit during the fourth quarter of fiscal 2017 increased 4.5 percent over the same period in fiscal 2016 to $53.2 million, primarily driven by an increase in the number of comparable stores. Gross profit reflects earnings after both product and occupancy costs. Gross margin was 26.8 percent of sales for the fourth quarter of fiscal 2017 compared to 28.1 percent of sales for the fourth quarter of fiscal 2016. The decline in gross margin was primarily driven by an increase in occupancy costs and lower product margin, both as a percentage of sales.
Store expenses during the fourth quarter of fiscal 2017 increased $3.7 million, or 8.9 percent, to $45.1 million. Store expenses as a percentage of sales decreased to 22.7 percent during the fourth quarter of fiscal 2017 compared to 22.9 percent in the fourth quarter of fiscal 2016. This decrease was primarily due to decreases in labor-related expenses driven by fewer non-comparable stores, other store expenses, utilities and marketing expenses, all as a percentage of sales.
Operating Results—FY 2017 compared to FY 2016
During fiscal 2017, net sales increased $63.5 million, or 9 percent, over the same period in fiscal 2016 to $769.0 million, primarily due to a $65.1 million increase in new store sales. Daily average comparable store sales increased 0.1 percent during fiscal 2017, which followed a 1.4 percent increase in fiscal 2016. The 0.1 percent increase in fiscal 2017 was driven by a 0.4 percent increase in average transaction size, partially offset by a 0.3 percent decrease in daily average transaction count. Daily average mature store sales decreased 1.6 percent in fiscal 2017 compared to a 1.0 percent decrease in fiscal 2016.
Gross profit during fiscal 2017 increased 5.2 percent over the same period in fiscal 2016 to $212.3 million, primarily driven by an increase in the number of comparable stores. Gross profit reflects earnings after both product and occupancy costs. Gross margin was 27.6 percent of sales during fiscal 2017 compared to 28.6 percent of sales in fiscal 2016. The decline in gross margin during fiscal 2017 was primarily driven by an increase in occupancy costs and a slight decrease in product margin, both as a percentage of sales.
Store expenses increased 11.6 percent, or $18.2 million, to $174.4 million during fiscal 2017. Store expenses as a percentage of sales increased to 22.7 percent during fiscal 2017 compared to 22.1 percent in fiscal 2016. The increase was primarily driven by an increase in labor-related expenses, depreciation, utilities and other store expenses.
Pre-opening and relocation expenses decreased $2.2 million, or 36.6 percent, during fiscal 2017 compared to fiscal 2016 due to the impact of the number and timing of new store openings and relocations. During fiscal 2017, the company opened 14 new stores and relocated two stores compared to opening 23 new stores, relocating four stores and remodeling one store during fiscal 2016.
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