Natural Grocers by Vitamin Cottage, Inc.

Third-quarter net sales increased 1.8% year over year to $334.7 million. Daily average comparable store sales increased 1.2%, driven by a 3.1% increase in basket size and a 1.8% decline in transaction count. Gross margin was 29.3%, down 60 basis points from the prior year. Net income was $11.1 million, or $0.48 diluted EPS, versus $11.6 million, or $0.50 diluted EPS in the third quarter of fiscal 2025. Adjusted EBITDA decreased 7.6% to $22.5 million. For the first nine months, cash from operations was $55.1 million, net capital expenditures were $40.3 million, and free cash flow was $14.8 million. Fiscal 2026 outlook was refined to 6 to 7 new stores, 2 store relocations/remodels, daily average comparable store sales growth of 1.5% to 2%, diluted EPS of $2.07 to $2.11, and capital expenditures of $45 million to $50 million.

Kemper Isely emphasized that the business is still seeing positive comp growth even in a weak consumer environment, with customers gravitating toward value, health, and wellness. He said the company’s always-affordable pricing, natural/organic standards, and {N}power Rewards program are helping drive loyalty and traffic, while new store openings are performing strongly. His tone was confident about long-term growth, especially around unit expansion, brand awareness in new markets, and new e-commerce capabilities through DoorDash, Instacart, and curbside pickup.

Richard Hallé highlighted that third-quarter net sales were $334.7 million, comp sales were up 1.2%, and gross margin was 29.3%, down 60 basis points because of lower product margin, mix, shrink, and freight. He noted administrative expenses fell to $9.5 million from $10.9 million, though that included a $2 million insurance recovery gain, and preopening expense reduced EPS by about $0.04 in the quarter and $0.08 for the full year. He also pointed to a strong balance sheet with $17.5 million in cash, no revolver borrowings, and $67.3 million available on the credit facility, plus $55.1 million of operating cash flow year-to-date. Guidance was narrowed modestly for comp sales and EPS while capex stayed at $45 million to $50 million.

Analysts pressed on whether downtrading or competitor pricing was hurting margins; management said it has not seen much downtrading in its stores and believes the gross-margin pressure was tied to unusual, largely one-time comparisons. They also asked why the new stores are opening so strongly, and management credited effective pre-opening marketing and brand resonance in new markets such as Wisconsin and South Dakota. On {N}power, management said it stands out because it offers targeted discounts on valued items like eggs and avocados, personalized offers, and games, rather than just generic fuel discounts. Another question focused on the GMO disclosure court ruling, and management said Natural Grocers was a plaintiff and sees it as supportive of its clean-diet positioning.