Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

February 5, 2026

Kemper Isely: Good day, ladies and gentlemen. Welcome to the Natural Grocers First Quarter Fiscal Year 2026 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session, and the instructions will be given at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Ms. Jessica Thiessen, Vice President Treasurer for Natural Grocers. Ms. Thiessen, you may begin.

Operator: Good day, ladies and gentlemen. Welcome to the Natural Grocers First Quarter Fiscal Year 2026 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session, and the instructions will be given at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Ms. Jessica Thiessen, Vice President Treasurer for Natural Grocers. Ms. Thiessen, you may begin.

Speaker #1: gentlemen. Welcome to the Natural Grocers first quarter fiscal year 2026 earnings conference call. At this time, all participants will be in a listen-only mode.

Speaker #1: Later, we will conduct a question-and-answer session, and the instructions will be given at that time. As a reminder, today's conference call is being recorded.

Speaker #1: I would now like to turn the conference over to Ms. Jessica Thiessen, Vice President and Treasurer for Natural Grocers. Ms. Thiessen,

Speaker #1: you may begin.

Speaker #2: Good

Speaker #2: Good afternoon, and thank you for joining us for the Natural Grocers by Vitamin Cottage first quarter fiscal year 2026 earnings conference call. On the call with me today are Kemper Isely, Co-President, and Richard Hall, Chief Financial Officer.

Jessica Thiessen: Good afternoon, and thank you for joining us for the Natural Grocers by Vitamin Cottage Q1 Fiscal Year 2026 Earnings Conference Call. On the call with me today are Kemper Isely, Co-President, and Richard Hallé, 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 uncertainties detailed in the company's most recently filed forms, 10-Q and 10-K. The company undertakes no obligation to update forward-looking statements. Our remarks today include references to Adjusted EBITDA, which is a non-GAAP measure. Please see our earnings release for a reconciliation of Adjusted EBITDA to net income.

Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

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Natural Grocers By Vitamin Cottage

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Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

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Thursday, February 5th, 2026 at 9:30 PM

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Speaker #2: 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.

Speaker #2: Actual results could differ materially from those described in the forward-looking statements due to risks and uncertainties detailed in the company's most recently filed Forms 10-Q and 10-K.

Speaker #2: The company undertakes no obligation to update forward-looking statements. Our remarks today include references to adjusted EBITDA, which is a non-GAAP measure. Please see our earnings release for reconciliation of adjusted EBITDA to net income.

Speaker #2: Today's earnings release is available on the company's website, and a recording of this call will be available on the website at investors.naturalgrocers.com. Now, I will turn the call over to

Jessica Thiessen: Today's earnings release is available on the company's website, and a recording of this call will be available on the website at investors.naturalgrocers.com. Now, I will turn the call over to Kemper.

Speaker #2: Kemper. Thank you,

Kemper Isely: Thank you, Jessica, and good afternoon, everyone. During today's call, I will provide an overview of our financial results, highlight the key drivers of our performance, and share an update on our key operational initiatives. Then Rich will discuss the Q1 results in greater detail and review our fiscal year guidance. Our Q1 results were in line with expectations, including daily average comparable store sales growth of 1.7% and diluted earnings per share growth of 14% to $0.49. Based on our Q1 performance and outlook for the remainder of the fiscal year, we are maintaining our full-year guidance. There are several key underlying trends that I would like to highlight. The Q1 sales comp increase of 1.7% was cycling an 8.9% comp last year. The two-year comp of 10.6% continues to reflect a robust growth rate relative to the broader grocery retail industry.

Speaker #3: Jessica, and good afternoon, everyone. During today's call, I will provide an overview of our financial results, highlight the key drivers of our performance, and share an update on our key operational initiatives.

Speaker #3: Then Rich will discuss the first quarter results in greater detail and review our fiscal year guidance. Our first quarter results were in line with expectations.

Speaker #3: Including daily average comparable store sales growth of 1.7%, and diluted earnings per share growth of 14% to 49 cents. Based and outlook for the remainder of the fiscal year, we are maintaining our full year guidance.

Speaker #3: There are several key underlying trends that I would like to highlight. The first quarter sales comp increase of 1.7% was cycling, an 8.9% comp last year.

Speaker #3: The two-year comp of 10.6% continues to reflect a robust growth rate relative to the broader grocery retail industry. While first-quarter sales were consistent with our outlook, we believe these trends reflected cautious consumer spending behaviors, observed broadly across the grocery retail sector.

Kemper Isely: While Q1 sales were consistent with our outlook, we believe these trends reflected cautious consumer spending behaviors observed broadly across the grocery retail sector. Additionally, the sales comp primarily reflected trends with customers who do not participate in our rewards program. We continue to see stronger sales growth by our NPower Rewards Program members. We believe that our differentiated offering of high-quality natural and organic products at always affordable prices continues to deliver strong value for our customers and reinforce our competitive position amid economic uncertainty. Furthermore, we believe that our company's initiatives position us well to achieve sustainable long-term growth. Next, I will review the performance of key operational initiatives. During Q1, NPower Rewards Program net sales penetration increased two percentage points to 83%, supported by strong membership gains and higher traffic by NPower customers.

Speaker #3: Additionally, the sales comp primarily reflected trends with customers who do not participate in our rewards program. We continue to see stronger sales growth by our empowered rewards program members.

Speaker #3: We believe that our differentiated offering of high-quality natural and organic products, at always affordable prices, continues to deliver strong value for our customers. And reinforce our competitive position amid economic uncertainty.

Speaker #3: Furthermore, we believe that our company's initiatives position us well to achieve sustainable, long-term growth. Next, I will review the performance of key operational initiatives.

Speaker #3: During the first quarter, Empowered Rewards Program net sales penetration increased 2 percentage points to 83%, supported by strong membership gains and higher traffic by Empowered customers.

Speaker #3: The continued expansion of both membership and sales penetration highlights our customers' appreciation for the program's value and benefits. Empowered remains an effective tool for optimizing promotional activity and strengthening customer engagement.

Kemper Isely: The continued expansion of both membership and sales penetration highlights our customers' appreciation for the program's value and benefits. NPower remains an effective tool for optimizing promotional activity and strengthening customer engagement. Our Natural Grocers Brand products represent value through premium quality at compelling prices. In Q1, our private label products accounted for 9.6% of total sales, up 70 basis points from a year ago. The strong growth reflects rising customer awareness, driven in part by more prominent marketing efforts as well as the impact of new product introductions. During Q1, we relocated one store. Relocations are a key element of our store development strategy as they typically generate accelerated sales growth off a higher sales base.

Speaker #3: Our Natural Grocers brand products represent value through premium quality at compelling prices. In the first quarter, our private label products accounted for 9.6% of total sales.

Speaker #3: Up 70 basis points from a year ago. The strong growth reflects rising customer awareness, driven in part by more prominent marketing efforts, as well as the impact of new product introductions.

Speaker #3: During the first quarter, we relocated one store. Relocations are a key element of our store development strategy, as they typically generate accelerated sales growth off a higher sales base.

Speaker #3: Additionally, today we are affirming our plan of opening six to eight new stores in fiscal 2026, and we are targeting 4 to 5% annual new store unit growth for the foreseeable future.

Kemper Isely: Additionally, today we are affirming our plan of opening 6 to 8 new stores in fiscal 2026 and are targeting 4% to 5% annual new store unit growth for the foreseeable future. Yesterday, our company released its fiscal year 2025 sustainability report. The featured topic is our differentiated nutrition education program. Since my parents founded our company in 1955, we have offered free nutrition education because we believe it empowers our customers, crew, and communities to improve their well-being. This longstanding commitment earned us The Shelby Report 2025 Sustainability in the Food Industry Award for advancing sustainable practices in the food sector and driving meaningful change through our nutrition education program. For further information about our nutrition education program, our rigorous product standards, and commitment to our crew and communities, please refer to our sustainability report or visit our company's website.

Speaker #3: Yesterday, our company released its fiscal year 2025 sustainability report. The feature topic is our differentiated nutrition education program. Since my parents founded our company in 1955, we have offered free nutrition education.

Speaker #3: Because we believe it empowers our customers, Crew, and communities to improve their well-being. This longstanding commitment earned us the Shelby Report 2025 Sustainability in the Food Industry Award for advancing sustainable practices in the food sector and driving meaningful change through our nutrition education program.

Speaker #3: For further information about our nutrition education program, our rigorous product standards, and commitment to our crew and communities, please refer to our sustainability report or visit our company's website.

Speaker #3: Last but not least, an important component of our differentiated model is the best-in-class customer service provided by our Good4U Crew. I wish to express my deep appreciation to our crew for their continued commitment to delivering an exceptional shopping experience.

Kemper Isely: Last but not least, an important component of our differentiated model is the best-in-class customer service provided by our Good For You crew. I wish to express my deep appreciation to our crew for their continued commitment to delivering an exceptional shopping experience. Now, I will turn our call over to Rich to discuss our financial results in greater detail and fiscal 2026 guidance.

Speaker #3: Now, I will turn our call over to Rich to discuss our financial results in greater detail, and fiscal 2026 guidance.

Speaker #1: Thank you, Kemper, and good afternoon. Our first quarter net sales increased 1.6% from the prior year period to 335.6 million dollars. Daily average comparable store sales increased 1.7%, and on a two-year basis increased 10.6%.

Richard Hallé: Thank you, Kemper, and good afternoon. Our Q1 net sales increased 1.6% from the prior year period to $335.6 million. Daily average comparable store sales increased 1.7% and on a two-year basis increased 10.6%. Our daily average comparable transaction count increased 1%. The daily average comparable transaction size increase of 0.7% included annualized product inflation of approximately 2% to 2.5%. Items per basket were down less than half an item year-over-year. We continue to see the greatest sales growth in meat, dairy, and produce, which are some of our most differentiated offerings. We saw a modest decline in the number of transactions using SNAP EBT in Q1. SNAP represents approximately 2% of net sales, and the reduction in SNAP transactions was immaterial to our overall sales comp for the quarter.

Speaker #1: Our daily average comparable transaction count increased 1%. The daily average comparable transaction size increase of 0.7% included annualized product inflation of approximately 2% to 2.5%.

Speaker #1: Items per basket were down less than half an item year over year. We continue to see the greatest sales growth in meat, dairy, and produce, which are some of our most differentiated offerings.

Speaker #1: We saw a modest decline in the number of transactions using SNAP EBT in the first quarter. SNAP represents approximately 2% of net sales, and the reduction in SNAP transactions was immaterial to our overall sales comp for the quarter.

Speaker #1: Gross margin decreased 40 basis points to 29.5%, driven by lower product margin, primarily due to higher inventory shrink, the majority of which was driven by isolated events.

Richard Hallé: Gross margin decreased 40 basis points to 29.5%, driven by lower product margin, primarily due to higher inventory shrink, the majority of which was driven by isolated events. Store expenses decreased 0.7%, primarily driven by expense management. Administrative expenses decreased 5.9%, primarily driven by cost incurred in the prior year period related to the Chief Financial Officer transition. Operating income increased 9.7% to $14.6 million. Net income increased 14% to $11.3 million, and diluted earnings per share increased 14% to $0.49 in Q1. Adjusted EBITDA increased 3.1% to $23.5 million. Turning to the balance sheet and cash flow, we ended Q1 in a strong liquidity position, including $23.2 million in cash and cash equivalents, no outstanding borrowings, and $67.6 million available for borrowing on our revolving credit facility.

Speaker #1: Store expenses decreased 0.7%, primarily driven by expense management. Administrative expenses decreased 5.9%, primarily driven by costs incurred in the prior-year period related to the Chief Financial Officer transition.

Speaker #1: Operating income increased 9.7% to $14.6 million. Net income increased 14% to $11.3 million, and diluted earnings per share increased 14% to $0.49 in the first quarter.

Speaker #1: Adjusted EBITDA increased 3.1% to $23.5 million. Turning to the balance sheet and cash flow, we ended the first quarter in a strong liquidity position, including $23.2 million in cash and cash equivalents, no outstanding borrowings, and $67.6 million available for borrowing on our revolving credit facility.

Speaker #1: During the first quarter, we generated cash from operations of $21.1 million and invested $9.6 million in net capital expenditures, primarily from new and relocated stores, resulting in free cash flow of $11.6 million.

Richard Hallé: During the first quarter, we generated cash from operations of $21.1 million and invested $9.6 million in net capital expenditures, primarily from new and relocated stores, resulting in Free Cash Flow of $11.6 million. Today, we are affirming the company's fiscal year outlook that we originally provided in November. It continues to reflect both the opportunities we see in our differentiated market position and appropriate caution given the current consumer environment. Our outlook includes the following: open six to eight new stores with the pace of openings weighted towards the back half of the fiscal year; relocate or remodel two to three existing stores; achieve daily average comparable store sales growth between 1.5% and 4%; achieve Diluted Earnings Per Share between $2 and $2.15; and direct $50 to $55 million towards capital expenditures to support our growth initiatives.

Speaker #1: Today, we are affirming the company's fiscal year outlook that we originally provided in November. It continues to reflect both the opportunities we see in our differentiated market position, and appropriate caution given the current consumer environment.

Speaker #1: Our outlook includes the following: open six to eight new stores with the pace of openings weighted towards the back half of the fiscal year, relocate or remodel two to three existing stores, achieve daily average comparable store sales growth between 1.5% and 4%, achieve diluted earnings per share between $2 and $2.15, and direct 50 to 55 million dollars towards capital expenditures to support our growth initiatives.

Speaker #1: In addition, our current expectation is that sales comps will be at the low end of our outlook range through the second quarter, as we cycle strong comps in the prior year, while increasing slightly in the second half of the year as we cycle lower comps.

Richard Hallé: In addition, our current expectation is that sales comps will be at the low end of our outlook range through Q2 as we cycle strong comps in the prior year while increasing slightly in the second half of the year as we cycle lower comps. Additionally, the comp range reflects the uncertainty in the consumer environment. We expect modest inflation throughout the year in line with current trends. Our outlook anticipates that year-over-year gross margin will be relatively flat, primarily depending on the level of promotional activity. We expect that year-over-year store expenses as a percentage of net sales will be relatively flat to slightly lower. Lastly, in fiscal 2026, we are investing approximately $0.12 of diluted earnings per share in new store openings, primarily through higher pre-opening expenses and store expenses. Now, we'd like to open the line for questions. Thank you.

Speaker #1: Additionally, the comp range reflects the uncertainty in the consumer environment. We expect modest inflation throughout the year, in line with current trends. Our outlook anticipates that year-over-year gross margin will be relatively flat, primarily depending on the level of promotional activity.

Speaker #1: We expect that year over year store expenses as a percentage of net sales will be relatively flat to slightly lower. Lastly, in fiscal 2026, we are investing approximately 12 cents of diluted earnings per share in new store openings.

Speaker #1: Primarily through higher pre-opening expenses and store expenses. Now, we'd like to open the line for questions. Thank you.

Speaker #2: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Scott Mushkin with R5 Capital. Please go ahead.

Speaker #2: If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two. And at this time, we'll pause momentarily to assemble our roster.

Speaker #2: Any first question will come from Scott Mushkin with R5 Capital. Please go ahead.

Speaker #3: Hey, guys. Thanks for taking my questions. So, I actually wanted to start off where you guys left off on the $0.12 headwind from the new stores.

Scott Mushkin: Hey, guys. Thanks for taking my questions. So I actually wanted to start off where you guys left off on the $0.12 headwind from the new stores. As we think about that going forward, is it going to be as dramatic? I would think it wouldn't be as dramatic, kind of the headwind, as we think about next year and the year after. How should we think about that type of drag as we move out beyond this year?

Speaker #3: As we think about that going forward, is it going to be as dramatic? I would think it wouldn't be as dramatic—the kind of headwind—as we think about next year and the year after.

Speaker #3: How should we think about that type of drag as we move out beyond this year?

Speaker #4: Well, this year we're accelerating our growth from two new stores to eight, so that definitely gives us quite a bit more pre-opening expense for six more stores with pre-opening expense.

Kemper Isely: Well, this year we're accelerating our growth from 2 new stores to 8. So that definitely gives us quite a bit of more pre-opening expense for 6 more stores with pre-opening expense. So that's where that 12 basis points came from. Next year, if we open a consistent 8 new stores and do a couple remodels, it should be fairly flat going forward. If we accelerated to 10 or 12, then there would be a little bit more headwind. But it'll probably be flat next year to eight, again, 8 to 9 new stores again next year.

Speaker #4: So that's where that 12 basis points came from. Next year, if we open a consistent eight new stores and do a couple of remodels, it should be fairly flat going forward.

Speaker #4: If we add, if we accelerate it to 10 or 12, then there would be a little bit more headwind. But it'll probably be flat next year to eight—again, eight to nine new stores again next year.

Speaker #3: And was it 12 cents or 12 basis points?

Scott Mushkin: Was it $0.12 or 12 basis points? I just want to make sure I answered that.

Speaker #3: I just want to make sure. 12 basis points.

Kemper Isely: 12 basis. Wasn't it 12 basis points?

Speaker #4: basis points. Wasn't it 12 basis points? 12

Scott Mushkin: 12 cents.

Kemper Isely: 12 cents.

Scott Mushkin: $0.12. Okay.

Speaker #4: 12 cents. cents.

Speaker #3: 12 cents.

Scott Mushkin: $0.12. Okay.

Speaker #3: Okay. Yeah. Okay. So, conceivably, a pretty good tailwind, I guess, as you look out, depending on what happens with the rest of the business.

Kemper Isely: Yeah.

Scott Mushkin: Okay. So conceivably a pretty good tailwind, I guess, as you look out, depending on what helps with the rest of the business. Okay. So then switching gears to get some more thoughts on the shrink. I know you guys said that was kind of the biggest issue with the gross margin, and you called out, I think, some one-time isolated events. Can you give any more color on that? And are those isolated events going to continue, or was it just, "Hey, this gross margins actually would have been a lot better if this hadn't happened"?

Speaker #3: Okay. So then switching gears to get some more thoughts on the shrink. I know you guys said that was kind of the margin. And you called out, I think, biggest issue with the gross some one-time isolated events.

Speaker #3: Can you give any more color on that? And are those isolated events going to continue, or is that just, hey, this gross margin actually would have been a lot better if this hadn't—

Speaker #3: happened? Yeah.

Richard Hallé: Yeah, Scott. This is Rich.

Speaker #4: Scott, this is Rich. So.

Speaker #3: Hey, Rich.

Scott Mushkin: Hey, Rich.

Speaker #4: Hi. And one of the big items was we're cycling fairly low shrink into one of last year. So, last year was probably running about 15% below our three-year average.

Richard Hallé: Hi. And one of the big items, we're cycling fairly low shrink in Q1 of last year. So last year was probably running about 15% below our three-year average. This quarter, we're probably running about 10% above our three-year average. So I would say a lot of that is sales velocity. And then we had some one-time items related to weather-related power outages that were obviously unexpected. We had some incremental shrink related to store closures as well. So that would be, and then I'd say, yeah, a little bit of execution, operational execution that you tend to see quarter to quarter, but nothing overly material.

Speaker #4: This quarter, we're probably running about 10% above our three-year average. So I would say a lot of that is sales velocity. And then we had some one-time items related to weather-related power outages.

Speaker #4: That were obviously unexpected. We had some incremental shrink related to store closures, as well. So that would be and then I'd say a little bit of execution operational execution that you tend to see quarter to quarter, but nothing overly material.

Speaker #3: So it sounds like a lot. Do you have any sense of that—of the percentage of the decline in gross margins that would be attributed to power outages and stuff like that, or no?

Scott Mushkin: It sounds like a lot. Do you have any size of that, of the percentage of the decline in gross margins that would be attributed to power outages and stuff like that, or no?

Speaker #4: Well, I think in terms of just the cycling, the cycling was about 50% of that variance. And then I would say some of these anomalies were probably another 25%.

Richard Hallé: Well, I think in terms of just the cycling, the cycling was about 50% of that variance. And then I would say some of these anomalies were probably another 25%. And then the balance of it would have been, I'd say, just standard variances.

Speaker #4: And then the balance of it would have been, I'd say, just standard variances.

Speaker #3: Right. All right. That’s great color. Then my final question is just around the environment. And I’ve been doing this a long time, and I think a stack comp is useful, but also not necessarily the end-all, be-all when an industry should be generally growing faster than it is right now.

Scott Mushkin: All right. That's great color. Then my final question is just around the environment. And I've been doing this a long time, and I think a stack comp is useful, but also not necessarily the end-all, be-all when an industry should be generally growing faster than it is right now. And this is not a statement to you guys, just kind of a general thought. And if you kind of look at your customer base, and you guys gave some good color on the NPower, but if you look at it by segment, by age, who's coming in and driving a lot of that growth, are there any consistencies there that you would say, "Hey, this demographic has definitely pulled back a little bit"?

Speaker #3: And this is not as a statement to you guys, just kind of a general thought. I was just—if you kind of look at your customer base, and you guys gave some good color on the Npower, but if you look at it by segment, by age, who is coming in and driving a lot of that growth, are there any consistencies there that you would say, 'Hey, this demographic has definitely pulled back a little?'

Speaker #3: bit"? Well, the demographic

Kemper Isely: Well, the demographic that's income-constrained has pulled back. That's where you're losing customers right now. They're just nervous, and their paychecks aren't keeping up with the rate of inflation. They're looking for as inexpensive of alternatives as they possibly can find. And so that's where we've lost customers right now.

Speaker #4: that's income-constrained is pulled back. And that's where you're losing customers right now. They're just nervous, and they're paychecks aren't keeping up with the rate of inflation.

Speaker #4: And they're looking for inexpensive alternatives, as inexpensive as they can find. And so that's where you—where we've lost.

Speaker #4: customers right Is there an.

Speaker #4: now. Have you seen an age

Scott Mushkin: Have you seen an age reflection there? We've seen some data that suggests that the younger households are the most impacted, or are you guys not really seeing that?

Speaker #3: reflection there? We've seen some data that suggests that the younger households are the most impacted, or are you guys not really seeing that?

Speaker #4: Not really. I mean, there's definitely if their income-constrained, then they're pulling back. If that makes sense to you. Yeah. But with demographic-wise, I mean, great data.

Kemper Isely: Not really. I mean, there's definitely, if they're income-constrained, then they're pulling back, if that makes sense to you.

Richard Hallé: Yeah. But with demographic-wise, I mean, great data. We haven't seen sort of a shift in our demographics from third-party data that we get, so nothing material there. And I think that the shrinking basket that we've been seeing is really all around sort of cautious consumers who are very much seeking value. And the pullback that we've seen has not been in our NPower customers, but our less engaged customers.

Speaker #4: We haven't seen sort of a shift in our demographics from third-party data that we get, so nothing material there. And I think that shrinking basket that we've been seeing is really all around sort of cautious consumers who are very much seeking value, and the pullback that we've seen has not been in our end-power customers, but our less engaged.

Speaker #3: Okay. customers. All

Scott Mushkin: Okay. All right, guys.

Speaker #3: right, guys. I mean,

Kemper Isely: I mean, our NPower customers, actually, were really robust.

Speaker #4: our end-power customers actually were really

Speaker #4: robust. Yeah.

Scott Mushkin: Yeah. It's a tough environment out there, so I was glad to see the numbers you put up. So anyway. All righty. Appreciate it.

Speaker #3: And it's tough environment out there. So I was glad to see the numbers you put up. So anyway, all righty. Appreciate it.

Speaker #4: Thanks, Scott. Thanks,

Kemper Isely: Thanks, Scott.

Richard Hallé: Thanks, Scott.

Speaker #2: Scott, your next question will come from...

Operator: Your next question will come from Chuck Cerankosky with North Coast Research. Please go ahead.

Speaker #3: Chuck Sierakowsky with North Coast Research. Please go ahead.

Speaker #5: Good afternoon, everyone. I want to dive in a little bit on the new store opening program for this year. You've got six to eight new openings.

Chuck Cerankosky: Good afternoon, everyone. I want to dive in a little bit on the new store opening program for this year. You've got 6 to 8 new openings. You've done 1 relo so far. Now, that would count as a new opening and a closure. Any net closures for the year? And what's your definition of a relo and a remodel? Are they coincident events as we look at the store program for this year?

Speaker #5: You've done one relo so far. Now, that would count as a new opening and a closure. Any net closures for the year? And what's your definition of a relo and a remodel?

Speaker #5: Are they coincident events as we look at the storing program for this year?

Speaker #4: No. We've had the one closure. We had one closure in our Austin Harbor store in Texas, in October. And we don't—we won't have any more closures this year.

Kemper Isely: No. We've had the one closure. We had one closure in our Arbor Walk store in Texas in October. We won't have any more closures this year. Probably not any next year either. Anyway, the one relocation, that's a relocation. So we'll have 6 to 8 actual new stores and 1 to 3 relocations or remodels this year. So overall, we'll be from 8 to 11, I mean, 9, excuse me, 8 to 11 actual moves and new stores.

Speaker #4: Probably not any next year either. Anyway, the one relocation, that's a relocation. So we'll have 68 actual new stores and one to three relocations or remodels this year.

Speaker #4: So overall, we'll be from 8 to 11—I mean, 9—losing my math—8 to 11 actual remodel moves and new.

Speaker #4: stores.

Speaker #5: Okay. That's

Chuck Cerankosky: Okay. That's helpful. And as you're talking about the three strongest categories, which tend to be some of the more expensive purchases, how does that square with the cautious consumer, or is that reflected in the reduction in the items per basket?

Speaker #5: Helpful. And as you're talking about the three strongest categories, which tend to be some of the more expensive purchases, how does that square with the cautious consumer?

Speaker #5: Or is that reflected in the reduction in the items per basket?

Speaker #4: Well, supplements, which is our highest margin category, had a slight decline in sales for the quarter, but there was zero inflation in the supplement sector, which kind of explains the decline in the category.

Kemper Isely: Well, supplements, which is our highest margin category, had a slight decline in sales for the quarter, but there was 0 inflation in the supplement sector, which kind of explains the decline in the category. So we had a very slight drop in items sold in the supplement area because we had 0 inflation in that category. Our other, I would guess, what would the other ones be that you would?

Speaker #4: So we had a slight, very slight drop in items sold in the supplement area because we had zero inflation in that category. Our other I would guess what the other ones would be that you would body care was similar.

Richard Hallé: Bodycare.

Kemper Isely: care was similar. And grocery, we actually had good growth.

Speaker #4: And grocery, we actually had good growth.

Speaker #5: Growth in units? Okay.

Chuck Cerankosky: Growth in units?

Speaker #4: Yes.

Kemper Isely: Yes.

Chuck Cerankosky: Okay. Great. Thank you.

Speaker #5: Great. Thank

Speaker #5: you. Yes.

Kemper Isely: Yeah. So I mean, yeah, it was definitely body care and supplements where we saw the biggest decline in units. And then also household items.

Speaker #4: I mean, yeah, it was definitely body care and supplements where we saw the biggest decline in units, and then also household.

Speaker #5: Okay. And with supplements being a high gross margin category, that showed up in the overall P&L, then?

Chuck Cerankosky: Okay. With supplements being a high gross margin category, that showed up in the overall P&L then?

Speaker #4: Yes, it did. It had a slight impact. But I mean, overall, our cash register ring margin was flat for the quarter. So we had some pickup in margin in some of the other

Kemper Isely: Yes, it did. It had a slight impact. But I mean, overall, our cash register ring margin was flat for the quarter. So we had some pickup in margin in some of the other categories.

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Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

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Natural Grocers By Vitamin Cottage

Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

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Natural Grocers By Vitamin Cottage

Q1 2026 Natural Grocers By Vitamin Cottage Inc Earnings Call

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