Natural Grocers by Vitamin Cottage Inc. reported fiscal 2026 third quarter net sales of $334.7 million, up $6.0 million – 1.8 percent – versus the year-ago period, the Lakewood, Colorado-based specialty retailer said Aug. 6. The third quarter ended June 30.
The increase comprised a $4.0 million increase in comparable store sales and a $3.1 million increase in new store sales, partially offset by a $1.1 million decrease in net sales related to closed stores.
Net income was $11.1 million, or 48 cents per diluted share, down from $11.6 million and 50 cents in the fiscal 2025 quarter.
Daily average comparable store sales in the third quarter were up 1.2 percent versus 0.5 percent in the second quarter. During the third quarter, shoppers spent more per trip while making fewer trips: Numbers showed a 3.1 percent increase in average transaction size against a 1.8 percent decline in daily average transaction count.
“We delivered positive daily average comparable store sales growth in the third quarter despite a challenging consumer environment,” said Kemper Isely, co-president. “Furthermore, our new store unit growth strategy continues to gain momentum, with six stores opened fiscal year-to-date, including three during the third quarter and two subsequent to quarter-end.”
Stores that opened during the quarter include Rock Springs, Wyoming (April 29); Walla Walla, Washington (May 20); and Lake Geneva, Wisconsin, the grocer’s first store in that state (June 10). The Natural Grocers store in Abilene, Texas, was relocated during the quarter, opening at its new address April 9.
Two opened in July, early in the fourth quarter, in McMinnville, Oregon, and Rapid City, South Dakota. Two are slated for fall openings: McAllen, Texas, and Appleton, Wisconsin, according to the grocer’s website.
Margin under pressure
Gross margin fell to 29.3 percent from 29.9 percent in the third quarter, with gross profit down slightly to $98 million. The company attributed the decline to unfavorable sales mix, higher shrink and higher freight costs.
Comparisons are complicated by last year’s cybersecurity incident at the company’s primary distributor, which affected product margin mix and shrink in the year-ago quarter, Natural Grocers said. Administrative expenses also included a $2 million business interruption insurance recovery tied to that incident, which helped drive administrative costs down to $9.5 million from $10.9 million.
Store expenses rose 0.7 percent to $72.2 million but fell as a share of sales to 21.6 percent from 21.8 percent. Pre-opening expenses jumped to $1.3 million from less than $100,000, reflecting the store openings.
Operating income was $15 million against $15.6 million in the prior-year quarter, with operating margin at 4.5 percent, down from 4.7 percent. Adjusted EBITDA was $22.5 million, down from $24.4 million a year ago.
Nine months
Net sales during the first nine months of fiscal 2026 increased $13.0 million, or 1.3 percent, to $1.01 billion, compared to the first nine months of fiscal 2025, due to an $11.3 million increase in comparable store sales and a $6.6 million increase in new store sales, partially offset by a $5.0 million decrease in net sales related to closed stores. Daily average comparable store sales increased 1.1 percent in the nine months, comprising a 1.8 percent increase in daily average transaction size and a 0.6 percent decrease in daily average transaction count.
Net income was $35.8 million, or $1.54 per diluted share, up from $34.6 million and $1.49 a year earlier. Operating income rose 2.7 percent to $47.7 million, with operating margin flat at 4.7 percent.
Store expenses during the first nine months of fiscal 2026 decreased 0.5 percent to $216.8 million, driven by expense management. Store expenses as a percentage of net sales were 21.5 percent during the first nine months of fiscal 2026, down from 21.9 percent in the first nine months of fiscal 2025.
The company held $17.5 million in cash with no borrowings on its $70 million revolving credit facility. It generated $55.1 million from operations and spent $40.3 million in net capital expenditures.
Guidance trimmed
Natural Grocers narrowed its fiscal 2026 outlook, lowering the top end of two key measures:
| Measure | Prior | Updated |
|---|---|---|
| New stores | 6 to 8 | 6 to 7 |
| Relocations/remodels | 2 to 3 | 2 |
| Daily average comp sales growth | 1.5-2.5 percent | 1.5-2.0 percent |
| Diluted EPS | $2.07-$2.15 | $2.07-$2.11 |
| Capital expenditures | $45M-$50M | $45M-$50M |
With comps running at 1.1 percent through nine months against a full-year floor of 1.5 percent, the fourth quarter would need meaningful acceleration to reach even the low end.
Natural Grocers ended the third quarter with 172 stores in 22 states; with the two that opened in July, the total is 174.