Natural Grocers by Vitamin Cottage, Inc., a leading retailer of natural and organic groceries and dietary supplements, has released its annual Form 10-K report for the fiscal year ending September 30, 2025. The report highlights the company’s robust financial performance, strategic initiatives, and the challenges it faces in the current market environment.
Financial Highlights
Net sales: $1,330.8 million, an increase of $89.3 million, or 7.2%, compared to the previous year, driven by an increase in comparable store sales and new store sales.Gross profit: $397.9 million, an increase of $33.1 million, or 9.1%, reflecting higher product margin and store occupancy cost leverage.Operating income: $61.99 million, an increase of $15.01 million, or 32.0%, due to higher gross profit and expense leverage.Net income: $46.44 million, an increase of $12.51 million, or 36.9%, reflecting improved operating income and lower interest expense.Net income per share: $2.00 diluted, compared to $1.47 diluted in the previous year, reflecting the increase in net income.
Business Highlights
Product Offering: Natural Grocers offers a comprehensive selection of natural and organic groceries and dietary supplements, with a strict focus on high-quality products. The company provides approximately 20,000 SKUs per store, including 6,500 SKUs of dietary supplements, ensuring customers can fulfill most of their grocery and supplement needs in one location.Store Expansion: As of September 30, 2025, Natural Grocers operated 169 stores across 21 states. The company plans to open six to eight new stores in fiscal year 2026, targeting an annual new store unit growth rate of 4% to 5% for the foreseeable future.Nutrition Education: A key differentiator for Natural Grocers is its commitment to providing free, science-based nutrition education. Each store employs a Nutritional Health Coach (NHC) to educate customers and train staff, enhancing the customer service experience and empowering customers to make informed health decisions.Sustainability Practices: The company emphasizes sustainable and ecologically responsible production methods, with product standards that support animal welfare, reduce antibiotic resistance, and protect the environment. Initiatives include reducing food waste, minimizing single-use plastics, and promoting regenerative agricultural practices.Customer Engagement: Natural Grocers continues to enhance customer engagement through its {N}power customer rewards program, which had approximately 2.7 million registered members as of September 30, 2025. The program offers digital coupons, personalized offers, and other rewards to increase customer loyalty and traffic.Operational Efficiency: The company has a scalable operating structure and a cost-effective store model that supports growth. Investments in information technology and infrastructure, such as a robust ERP system and HRIS, facilitate efficient operations and store openings.Community Involvement: Natural Grocers actively participates in community outreach, providing free educational services, engaging in health fairs, and supporting local vendors and charities. The company also implements environmentally friendly practices, such as using compostable bags and reducing energy consumption.Future Outlook: Natural Grocers anticipates continued growth in the natural and organic grocery and dietary supplement industries, driven by increasing consumer interest in health and nutrition. The company plans to leverage its core competencies in site selection and store openings to expand its footprint and increase profitability.
Strategic Initiatives
Store Base Expansion: The company is focused on expanding its store base and enhancing profitability through strategic store openings and relocations/remodels. It plans to open six to eight new stores and relocate/remodel two to three existing stores in fiscal year 2026, targeting an annual new store unit growth rate of 4% to 5%. The company is also leveraging economies of scale in sourcing products to improve cost efficiency.Capital Management: The company maintains a Credit Facility with a revolving commitment amount of $70 million, which was increased to $75 million in November 2023. The facility is secured by a lien on substantially all of the company’s assets and includes a $5 million sub-limit for standby letters of credit. The company did not repurchase any shares during the year ended September 30, 2025, but has $8.1 million remaining under its share repurchase program, which is set to terminate on May 31, 2026. The company paid a quarterly cash dividend of $0.12 per share throughout fiscal year 2025 and increased it to $0.15 per share in November 2025.Future Outlook: The company anticipates continued expansion of its store base, with plans to spend approximately $50 million to $55 million on capital expenditures in fiscal year 2026, primarily for new store openings and relocations/remodels. It expects to maintain sufficient liquidity through cash generated from operations and borrowing availability under its Credit Facility to support its growth initiatives and capital management strategies. The company also plans to continue its dividend payments and may consider future share repurchases depending on market conditions and capital needs.
Challenges and Risks
Market Risks: The company is exposed to adverse economic conditions, including inflation and disinflation, which could impact consumer spending and demand for its products. Geopolitical instability, such as conflicts in Ukraine and the Middle East, has disrupted commodity markets and contributed to global supply chain disruptions and inflation.Operational Risks: The company relies heavily on a single supplier, UNFI, for a significant portion of its purchases. Any disruption in this relationship, such as the cybersecurity incident experienced by UNFI in June 2025, could materially affect the company’s operations. Additionally, the geographic concentration of stores in Colorado and Texas exposes the company to regional economic downturns and severe weather events.Regulatory Risks: The company is subject to extensive federal, state, and local regulations. New or increased tariffs on foreign-sourced goods could materially affect the company’s financial condition. The regulatory landscape for products containing CBD remains uncertain, with potential for significant legal and compliance challenges.Emerging Risks: The company is facing increased scrutiny and potential litigation related to product claims, such as those labeled as ‘natural’ or ‘healthy.’ The evolving regulatory environment for dietary supplements and homeopathic products could also impact product availability and compliance costs.Management Strategies: Management has identified several strategies to address these challenges, including enhancing supply chain resilience, diversifying supplier relationships, and investing in technology to improve operational efficiency. The company is also focusing on maintaining competitive pricing strategies to mitigate the impact of inflation on consumer behavior.Market Risk Management: The company is exposed to market risks related to foreign currency exchange rate fluctuations, which may adversely affect its financial results. Management is monitoring these risks closely and exploring hedging strategies to mitigate potential impacts.
SEC Filing: Natural Grocers by Vitamin Cottage, Inc. [ NGVC ] – 10-K – Dec. 11, 2025
