Natural Grocers' education efforts boost supplement sales amid tepid first quarter

By Hank Schultz contact

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Natural Grocers' efforts boost supplement sales in first quarter
Dietary supplements retailer Natural Grocers by Vitamin Cottage said it has seen strong sales growth in supplements driven by its in-store education efforts. 

Centered around specific nutrients, the education efforts have sparked sales growth that seems to have legs, bolstering individual nutrients for months on end.

Strong growth in specific lines

“We believe that [it is] our nutrients education program that’s really driving that part of our business and we are seeing really substantial growth in the nutrients that we educate our customers about—sales growth in those nutrients not only in the quarter that we educate them in but in follow-on quarters afterwards,” ​Kemper Isley, CEO of Natural Grocers told analysts on a conference call about the company’s first quarter 2016 earnings posted in transcript form on the site seekingalpha.com​.

“I mean, significant, up to 200% growth in those particular nutrients in the quarter and then almost 100% growth in the follow-on quarters. That’s been very positive,”​ Isley said.

Isley said that, in concert with news out of other retail outlets, Natural Grocers had not seen any sales depression effect from negative publicity surrounding the industry.

“We have a really strong initiative to educate our customers about the benefits of various new trends and also we have a good reputation for making sure that we sell supplements that aren’t faddish,” ​he said.

Earnings details

Net sales increased 15% during the quarter to $167.8 million for the chain, which splits its stores more or less evenly between supplements and organic foods. Gross profit increased to $48.3 million and net income increased 5.2%, quarter-over-quarter and diluted earnings per share for quarter were $0.17 compared to $0.16 in the prior comparable quarter.

Average comparable store sales increased 3.6% during the quarter. Isley said these were lower than recent trends, which the company expected, in part because some of the company’s stores, which now number 107, operate in markets where oil drilling forms part of the local economy. Ultra low oil prices have depressed these local economies.  

The stock market, which has been jittery of late, reacting in a strong negative fashion to the earnings report, which missed analysts’ expectations by a fairly narrow margin on both revenue and earnings. The company’s stock price tumbled almost 17% in early trading, nearling the 52-week low before recovering a bit in later trading to close at $18.01 per share, off 13% for the day.

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2 comments

in-store education efforts

Posted by jessica,

Natural Grocers goes beyond POS and other collateral marketing materials to educate their customers. There is a certified nutritional health coach employed in each store; there are numerous free nutrition education classes and cooking demos offered regularly, community outreach projects, and a monthly science-based newsletter. All of this brought to the public by a highly-educated and trained staff and at no cost to customers. It's really wonderful!

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How are consumers getting the info?

Posted by Patton Whittington,

How is Natural Grocers educating their consumers? Is it POS stuff like counter cards, shelf talkers, flyers... or is it collateral material inserted into customers' bags as they leave?

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