Dive Brief:

• Natural Grocers announced Friday plans to close two stores in the Dallas-Fort Worth area next month as part of the specialty grocer’s efforts to boost operating efficiencies across its store fleet. Both stores are set to close on June 27.
• The announcement came one day after the grocer’s second-quarter earnings call, during which executives noted that the company planned to “close two underperforming stores as part of our ongoing efforts to drive higher store productivity.”
• There are no plans to close additional stores, Natural Grocers said Friday.

Dive Insight:

The store closures come at a time when Natural Grocers is taking steps to strengthen its store fleet, including recently introducing personalized shopping experiences with its nutritional health coaches at select locations. 

Workers at the affected stores — 120 S. Denton Tap Rd., Suite 300 and 5230 North Tarrant Parkway — will have opportunities to transfer to other stores, and those who don’t will receive a transition package, including severance and benefits, the grocer said. 

Customers can shop the store-closing sales, which will include discounts of 25% off everything, starting May 15. 

“We made the difficult decision to close two lower-performing stores, Fort Worth-North and Coppell,” Isely said in a statement, adding that the firm is not pulling out of the Dallas-Fort Worth area.

In its Q2, Natural Grocers posted $283 million in sales, up 4.2% year-over-year and a daily average comparable-store sales increase of 2.7% over the same period. 

Isely told investors that comp sales exceeded the company’s expectations as it cycled pandemic-related trends and a competitor in the Denver market was hit with a labor strike.

Isely credited the grocer’s private brands, which the company has been expanding, as a major contributor to Natural Grocers’ financial success, noting that private label accounted for 8.1% of total sales in Q2, up from 7.7% a year ago. 

The grocer recorded higher store expenses in Q2 largely due to increased wage rates and an impairment charge. It noted that its $0.03 per share impairment charge for the quarter was related to a store closure.

During Q2, Natural Grocers opened one store in McCall, Idaho, Isely said on the earnings call. The company is on track to open four to six new stores and relocate two to three locations during fiscal year 2023. 

“Over the next several years, we expect to return to opening between six and eight new stores per year as we anticipate improving construction and supply chain conditions,” Isely said. 

During the first six months of FY 2023, Natural Grocers invested $17.8 million in net capital expenditures largely aimed at opening new and relocating existing ones, CFO Todd Dissinger said on the earnings call.