GroceryNews: Natural Grocers Q4 Comps Up 10.7%

LAKEWOOD, Colo. — Natural Grocers by Vitamin Cottage here posted double-digit comparable-store sales in the recently ended fourth quarter, but noted that increasing sales of grocery products were pressuring margins.

The company, which operates 74 small-format stores specializing in vitamins, supplements and organic grocery products, said comps for the fourth quarter rose 10.7% on a daily average basis, and were up 11.1% for the full fiscal year.

Net income was up 129% in the fourth quarter, to $2.2 million, on a 28.1% increase in sales, to $115.2 million. For the year net income was up 58.7%, to $10.6 million, on a 28% increase in sales, to $430.7 million.

Gross margin for the year, which ended Sept. 30, was 29.2% of sales, vs. 29.4% the preceding fiscal year. The company attributed the decrease to a shift in sales mix toward products with lower margins, offset by purchasing improvements. In addition, margins decreased for bulk products due to increased production costs as a result of the relocation to a larger bulk food repackaging and distribution center in September of last year.

“We continue to see a shift in sales mix toward grocery products and the shift has helped drive customer traffic, which in the long-term, will help drive our sales in other departments,” said Sanda M. Buffa, chief financial officer, ina conference call with analysts Thursday.

She said the company recorded a 5.9% increase in daily average transaction count and a 4.9% increase in average transaction size for the year.

Read more: Natural Grocers Donates Thanksgiving Turkeys

“We're pleased with the financial strength and solid execution we have experienced over the past fiscal year,” said Kemper Isely, chairman and co-president.

In the fourth quarter, Natural Grocers opened stores in Omaha, Neb.; Beaverton and Bend, Ore.; and Topeka, Kan. It has since opened two additional stores in Tulsa, Okla., and Idaho Falls, Idaho.

The company has signed leases for 10 additional stores scheduled to open in fiscal 2014 in Colorado, Idaho, Kansas, New Mexico, Oregon, Texas, Utah and Washington.

The company projected it would open 15 new stores in fiscal 2014, and achieve daily average comparable-store sales growth of 8.5% to 9.5%, with EBITDA margins of 7.8% to 8%, net income margins of 2.4% to 2.6%, and diluted earnings per share of between 58 cents and 63 cents. Capital expenditures are projected between $35 million and $37

Read More: http://supermarketnews.com/retail-amp-financial/natural-grocers-q4-comps-107#ixzz2lfWmN3b8

Sprouts Seeks Fuel for Growth in IPO in Plan for 1000 Store Expansion

Sprouts Seeks Fuel for Growth in IPO

(Article written by Jon Springer for Supermarketnews.com and can be found here)

PHOENIX — Sprouts Farmers Markets is touting rapid sales growth and the potential to add more than 1,000 new stores in a prospectus detailing plans for an initial public offering of stock.

The retailer here, which operated 157 stores as of May 1, said it plans to grow its store count by at least 12% annually over the next five years, with the potential to operate as many as 1,200 nationwide. Sprouts posted comparable sales growth of 9.7% in 2012, according to the filing, and has marked positive comps for 23 consecutive quarters.

Sales for 2012, including Sunflower assets added during the year, totaled $2 billion. The company posted $20 million in net earnings for the year.

Spouts, which is controlled by the private investor Apollo Capital Management, did not indicate how much it intended to raise in the IPO, but said it intended to use proceeds to service debt from its recent refinancing and for general corporate purposes.

Sprouts in the filing said its combination of natural and organic foods and low prices in produce gives it broader appeal than "high end" natural and organic retailers. Its strategy is to use low prices in produce to attract and then transition conventional grocery shoppers into more loyal "lifestyle" shoppers.

"The foundation of our value proposition is fresh, high-quality produce which we offer at prices we believe are significantly below those of conventional food retailers and even further below high-end natural and organic food retailers," the company said. "We believe that by combining our scale in and self-distribution of produce, we ensure that our produce meets our high quality standards and can be delivered to customers at market leading prices. In addition, our scale, operating structure and deep industry relationships position us to consistently deliver ‘Healthy Living for Less.’ We believe we attract a broad customer base, including conventional supermarket customers, and appeal to a much wider demographic than other specialty retailers of natural and organic food."

The IPO would follow those of other growth-oriented speciality food chains that have tapped the public markets recently, including Natural Grocers by Vitamin Cottage, The Fresh Market, and Fairway Holdings.