Q3 2026 Natural Grocers by Vitamin Cottage Inc Earnings Call Transcript
Key Points
- Daily average comparable store sales growth accelerated to 1.2% in Q3 from 0.5% in Q2, despite a challenging consumer environment.
- {N}power Rewards program membership gains drove net sales penetration up 2 percentage points year-over-year to 84%, with members generating growth in sales, traffic, and basket size.
- New store openings, including the first in Wisconsin, rank among the company's strongest opening day sales performances, with six stores opened fiscal year-to-date.
- Launched a new partnership with DoorDash for delivery across all stores with in-store pricing, and plans to integrate {N}power Rewards and phase in curbside pickup, expanding e-commerce capabilities.
- Natural Grocers brand penetration increased 110 basis points year-over-year to 9.7% of total sales, and the company was named 2026 Sustainability Retailer of the Year by Produce Business.
- Strong liquidity position with $17.5 million in cash, no outstanding credit facility borrowings, and $67.3 million available for borrowing.
- Gross margin decreased 60 basis points to 29.3%, driven by lower product margin due to unfavorable sales mix, higher merchandise inventory shrink, and freight costs.
- Transaction count decreased 1.8% in Q3, indicating a decline in customer visits, partially offset by a 3.1% increase in basket size.
- Adjusted EBITDA decreased $1.8 million or 7.6% to $22.5 million, including a reduction for the $2 million business interruption recovery gain.
- Pre-opening expenses increased $1.3 million or 40 basis points as a percentage of net sales, impacting diluted EPS by approximately $0.04 in the quarter.
- The company refined its fiscal 2026 outlook, lowering the comparable store sales growth range to 1.5%-2% from 1.5%-2.5% and reducing the EPS range to $2.07-$2.11 from $2.07-$2.15.
- The company elected to close stores on Labor Day, resulting in one fewer selling day in Q4, which could impact sales.
Good day, ladies and gentlemen. Welcome to the Natural Grocers third quarter fiscal year 2026 earnings conference call. (Operator Instructions) As a reminder, today's call is being recorded.
I'd now like to turn the conference over to Ms. Jessica Thiessen, Vice President/Treasurer for Natural Grocers. Ms. Thiessen, you may begin.
Good afternoon, and thank you for joining us for the Natural Grocers by Vitamin Cottage third quarter fiscal year 2026 earnings conference call.
On the call with me today are Kemper Isely, Co-President and Richard Halle, Chief Financial Officer. As a reminder, certain information provided during this conference call, including the company's outlook for fiscal 2026, contains forward-looking statements based on current expectations and assumptions and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements due to a variety of factors, including the risks and
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