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What changed in Natural Grocers by Vitamin Cottage, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Natural Grocers by Vitamin Cottage, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+279 added−265 removedSource: 10-K (2025-12-11) vs 10-K (2024-12-12)

Top changes in Natural Grocers by Vitamin Cottage, Inc.'s 2025 10-K

279 paragraphs added · 265 removed · 239 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+6 added−3 removed127 unchanged
Biggest changeThe naturally raised meat products we offer come from animals that are not known to have been treated with antibiotics, hormones or growth promoters, fed animal by-products or raised in concentrated animal feeding operations. Additionally, we only buy from companies we believe employ humane animal-raising practices.
Biggest changeWe offer a broad selection of natural chocolate bars and energy, protein and food bars. ■ Meats and Seafood. We only offer humanely and sustainably sourced meat and seafood products. Our product standards do not allow meat from animals known to have been treated with antibiotics, hormones or growth promoters, fed animal by-products or raised in concentrated animal feeding operations.
The Drug Exclusion Provision states that a dietary supplement may not be marketed if a dietary supplement ingredient was an ingredient in a drug or the subject of a clinical investigation for drug use prior to the marketing of the supplement. The FDA has taken certain steps to exclude certain dietary supplements under this provision.
The Drug Exclusion Provision states that a dietary supplement may not be marketed if a dietary supplement ingredient was an ingredient in a drug or the subject of a clinical investigation for drug use prior to the marketing of the supplement. The FDA has taken steps to exclude certain dietary supplements under this provision.
Our competition varies by market and includes supermarkets such as Kroger and Safeway; mass or discount retailers such as Wal-Mart and Target; natural and gourmet markets such as Whole Foods and The Fresh Market; foreign-based discount retailers such as Aldi, Lidl and Ahold Delhaize; specialty food retailers such as Sprouts and Trader Joe’s; warehouse clubs such as Sam’s Club and Costco; dietary supplement retailers such as GNC and The Vitamin Shoppe; online retailers; independent health food stores; drug stores; farmers’ markets; food co-ops; and multi-level marketers.
Our competition varies by market and includes supermarkets such as Kroger and Safeway; mass or discount retailers such as Wal-Mart and Target; natural and gourmet markets such as Whole Foods and The Fresh Market; foreign-based discount retailers such as Aldi, Lidl and Ahold Delhaize; specialty food retailers such as Sprouts Farmers Market and Trader Joe’s; warehouse clubs such as Sam’s Club and Costco; dietary supplement retailers such as GNC and The Vitamin Shoppe; online retailers; independent health food stores; drug stores; farmers’ markets; food co-ops; and multi-level marketers.
We also plan to utilize targeted marketing efforts to reach our existing customers, including through {N}power, to identify and send personalized offers to our customers, which we anticipate will drive customer transactions, increase average transaction size and convert occasional, single-category customers into core, multi-category customers. Improve operating margins.
We also utilize targeted marketing efforts to reach our existing customers, including through {N}power, to identify and send personalized offers to our customers, which we anticipate will drive customer transactions, increase average transaction size and convert occasional, single-category customers into core, multi-category customers. Improve operating margins.
In addition to the FDA’s regulatory control over product labeling, the FTC also exercises jurisdiction over the advertising of foods and dietary supplements, including health benefit claims, claims about environmental benefits (such as claims about whether product packaging is recyclable or compostable), and claims about the geographic origin of products (e.g.
In addition to the FDA’s regulatory control over product labeling, the FTC also exercises jurisdiction over the advertising of foods, dietary supplements, and cosmetics, including health benefit claims, claims about environmental benefits (such as claims about whether product packaging is recyclable or compostable), and claims about the geographic origin of products (e.g.
We believe our emphasis on science-based nutrition education differentiates us from our competitors and creates a unique shopping experience for our customers. Our NHCs are a core element of our nutrition education program. Every store has a NHC position to educate customers and train Crew members on nutrition.
We believe our emphasis on science-based nutrition education differentiates us from our competitors and creates a unique shopping experience for our customers. Our NHCs are a core element of our nutrition education program. Every store has an NHC position to educate customers and train Crew members on nutrition.
Many of our stores are near other supermarkets or gourmet food retailers, and we complement their conventional product offerings with high-quality, affordable natural and organic groceries and dietary supplements in an efficient and convenient retail setting.
Many of our stores are near supermarkets or gourmet food retailers, and we complement their conventional product offerings with high-quality, affordable natural and organic groceries and dietary supplements in an efficient and convenient retail setting.
While we believe that our nutrition education practices are compliant with federal and state requirements, a finding to the contrary could pose significant issues with respect to our business and our reputation among our customers or otherwise have a material adverse effect on our business. 16 Table of Contents New or revised federal, state and local laws and regulations affecting our business or our industry, such as those relating to industrial hemp products, genetically modified (bioengineered) foods, or the presence of per- and polyfluoroalkyl substances (PFAS) in our products, whether intentional or unintentional, could result in additional compliance costs and civil remedies.
While we believe that our nutrition education practices are compliant with federal and state requirements, a finding to the contrary could pose significant issues with respect to our business and our reputation among our customers or otherwise have a material adverse effect on our business. 16 Table of Contents New or revised federal, state and local laws and regulations affecting our business or our industry, such as those relating to industrial hemp products, genetically modified (bioengineered) foods, ultra processed foods and ingredients, or the presence of per- and polyfluoroalkyl substances (PFAS) in our products, whether intentional or unintentional, could result in additional compliance costs and civil remedies.
Our new store promotional activities include gift card and prize giveaways, sweepstakes, musical performances, appearances by our sponsorship partners, cash donations to local food banks, and participation by local community leaders and organizations. Pre-Ordering of Holiday Turkeys . We offer an in-store and online process to pre-order organic and free-range turkeys for the Thanksgiving and Christmas holidays.
Our new store promotional activities include gift card and prize giveaways, sweepstakes, appearances by our sponsorship partners, cash donations to local food banks, and participation by local community leaders and organizations. Pre-Ordering of Holiday Turkeys . We offer an in-store and online process to pre-order organic and free-range turkeys for the Thanksgiving and Christmas holidays.
We also employ regional managers to oversee all store operations for regions consisting of approximately 10 to 14 stores. Each regional manager reports to, and is supported by, a director of store operations and other staff. To ensure a high level of service, all employees receive training and guidance on customer service skills, product attributes and nutrition education.
We also employ regional managers to oversee all store operations for regions consisting of approximately 11 to 14 stores. Each regional manager reports to, and is supported by, a director of store operations and other staff. To ensure a high level of service, all employees receive training and guidance on customer service skills, product attributes and nutrition education.
In 1998, the second generation of the Isely family, including Kemper Isely, Zephyr Isely, Heather Isely and Elizabeth Isely, purchased our predecessor and the Vitamin Cottage ® trademark and assumed control of the business. Since then, we have grown our store count from 11 stores in Colorado to 169 stores in 21 states as of September 30, 2024.
In 1998, the second generation of the Isely family, including Kemper Isely, Zephyr Isely, Heather Isely and Elizabeth Isely, purchased our predecessor and the Vitamin Cottage ® trademark and assumed control of the business. Since then, we have grown our store count from 11 stores in Colorado to 169 stores in 21 states as of September 30, 2025.
We have an established set of standard operating procedures to manage our human capital management function, including hiring and human resource policies, training practices and operational instruction manuals. This allows each store to operate with strict accountability and still maintain independence to respond to its unique circumstances. Culture and Engagement.
We have an established set of standard operating procedures to manage our human capital management function, including hiring and human resource policies, training practices and operational instruction manuals. This allows each store to operate with strict accountability and still maintain independence to respond to its unique circumstances.
We believe our core customers consider us a destination stop for their nutritional education and information, natural and organic products and dietary supplements. 5 Table of Contents Our Store Format. Our stores range from approximately 7,000 to 16,000 selling square feet, and average approximately 11,000 selling square feet.
We believe our core customers consider us a destination stop for their nutritional education and information, natural and organic products and dietary supplements. 5 Table of Contents Our Store Format. Our stores range from approximately 7,000 to 17,000 selling square feet, and average approximately 11,000 selling square feet.
We operate both a full-service natural and organic grocery store and a dietary supplement store within a single retail location. The following is a breakdown of our sales mix for the year ended September 30, 2024: The products in our stores include: ● Grocery.
We operate both a full-service natural and organic grocery store and a dietary supplement store within a single retail location. The following is a breakdown of our sales mix for the year ended September 30, 2025: The products in our stores include: ● Grocery.
We regularly train our in-store Crew members to provide an educational customer service approach that is ethical, honest and accurate and that does not cross over into a scope of practice reserved for licensed healthcare professionals.
We regularly train our in-store Crew members to provide an educational customer service approach that is ethical, honest and accurate and that does not cross over into the scope of practice reserved for licensed healthcare professionals.
Please see the Consolidated Financial Statements of the Company for the year ended September 30, 2024, set forth in Part IV of this Form 10-K, for financial information regarding this segment. Available Information Our website is located at www.naturalgrocers.com .
Please see the Consolidated Financial Statements of the Company for the year ended September 30, 2025, set forth in Part IV of this Form 10-K, for financial information regarding this segment. Available Information Our website is located at www.naturalgrocers.com .
We use a robust merchandise management and perpetual inventory system that values goods at moving average cost. We manage most shelf stock based on weeks-on-hand relative to sales, resupply time and minimum economic order quantity. Sourcing and Vendors. We source from approximately 900 suppliers and offer approximately 2,800 brands. These suppliers range from small independent businesses to multinational conglomerates.
We use a robust merchandise management and perpetual inventory system that values goods at moving average cost. We manage most shelf stock based on weeks-on-hand relative to sales, resupply time and minimum economic order quantity. Sourcing and Suppliers. We source from approximately 900 suppliers and offer approximately 2,600 brands. These suppliers range from small independent businesses to multinational conglomerates.
Crew Member Development and Promotion. Investing in the development of our Crew members is an important area of focus to ensure the sustainability of our business. We prioritize promoting leaders from within our organization and strive to support career development through regular training and leadership development opportunities.
Investing in the development of our Crew members is an important area of focus to ensure the sustainability of our business. We prioritize promoting leaders from within our organization and strive to support career development through regular training and leadership development opportunities.
The risks associated with these laws and regulations are further described under the caption “Risk Factors.” Segment Information We have a single reporting segment, natural and organic retail stores, through which we conduct all of our business.
The risks associated with these laws and regulations are further described under the caption “Risk Factors.” Segment Information We have a single reportable segment, natural and organic retail stores, through which we conduct all of our business.
As of September 30, 2024, our store managers and assistant managers at comparable stores had average tenures of approximately five years with us. In addition, we have a track record of promoting store management personnel from within.
As of September 30, 2025, our store managers and assistant managers at comparable stores had average tenures of approximately five years with us. In addition, we have a track record of promoting store management personnel from within.
Since the second generation of the Isely family assumed control of the business in 1998, we have grown our store count from 11 stores to 169 stores as of September 30, 2024 by remaining dedicated to our founding principles.
Since the second generation of the Isely family assumed control of the business in 1998, we have grown our store count from 11 stores to 169 stores as of September 30, 2025 by remaining dedicated to our founding principles.
In addition, we donated 1% of all our sales on one day in February for Crew member appreciation month and one day during our 69 th anniversary to our Natural Grocers Heroes in Aprons Fund. Website and Social Media.
In addition, we donated 1% of all our sales on one day in February for Crew member appreciation month and one day during our 70 th anniversary to our Natural Grocers Heroes in Aprons Fund. Website and Social Media.
In addition, we have received the registration of service marks for EDAP – Every Day Affordable Price ® , {N}power ® , Organic Headquarters ® , Organic Month Headquarters ® , Organic Produce Headquarters ® , Natural Grocers Cottage Wine and Craft Beer ® , Natural Grocers Cottage Craft Beer ® and Resolution Reset Day ® and registrations of trademarks for These Came First ® and Natural Grocers Top 10 Nutrition Trends ® .
In addition, we have received the registration of service marks or trademarks for EDAP – Every Day Affordable Price ®, {N}power ® , Natural Grocers Top 10 Nutrition Trends ® , Organic Headquarters ® , Organic Month Headquarters ®, Organic Produce Headquarters ® , Natural Grocers Cottage Wine and Craft Beer ®, Natural Grocers Cottage Craft Beer ®, Resolution Reset Day ®, Resolution Reset Week ®, and These Came First ® .
The printed version of the Health Hotline magazine is mailed to subscribers and distributed in our stores. In addition, an electronic version of the Health Hotline magazine is distributed to subscribers via the internet and posted on our website. Our Products Product Selection Guidelines. We have a set of strict quality guidelines covering all products we sell.
In addition, an electronic version of the Health Hotline magazine is distributed to subscribers via the internet and posted on our website. Our Products Product Selection Guidelines. We have a set of strict quality guidelines covering all products we sell.
Food Products. The FDA has comprehensive authority to regulate the safety of food and food ingredients (including pet food and pet food ingredients but excluding meat, poultry, catfish and certain egg products, which are regulated by USDA) under the Federal Food, Drug, and Cosmetic Act (the FDCA).
Food Products. The FDA has comprehensive authority to regulate the safety of food and food ingredients (including dietary supplements and pet foods but excluding meat, poultry, catfish and certain egg products, which are regulated by USDA) under the Federal Food, Drug, and Cosmetic Act (the FDCA).
We had approximately 2.4 million registered {N}power members as of September 30, 2024 compared to approximately 2.1 million {N}power members as of September 30, 2023. Health Hotline and Holly Deals. The Health Hotline is a four-color magazine that contains a mix of in-depth health and nutrition articles, along with a selection of popular sale items.
We had approximately 2.7 million registered {N}power members as of September 30, 2025 compared to approximately 2.4 million {N}power members as of September 30, 2024. Health Hotline and Holly Deals. The Health Hotline is a four-color magazine that contains a mix of in-depth health and nutrition articles, along with a selection of popular sale items.
Our comparable stores sell an average of approximately 21,000 SKUs of natural and organic products per store, including an average of approximately 6,700 SKUs of dietary supplements. Set out below is the layout for our new stores: Site Selection. Our real estate strategy is adaptable to a variety of market conditions.
Our comparable stores sell an average of approximately 20,000 SKUs of natural and organic products per store, including an average of approximately 6,500 SKUs of dietary supplements. Set out below is the layout for our new stores: Site Selection. Our real estate strategy is adaptable to a variety of market conditions.
In fiscal year 2024, our four new stores and four relocations/remodels averaged approximately 10,000 selling square feet. Approximately one quarter of our stores’ selling square footage is dedicated to dietary supplements. Most of our stores also include a dedicated community room available for public gatherings, a demonstration kitchen for cooking education and/or a lecture space.
In fiscal year 2025, our two new stores and three relocations/remodels averaged approximately 10,000 selling square feet. Approximately one quarter of our stores’ selling square footage is dedicated to dietary supplements. Most of our stores also include a dedicated community room available for public gatherings, a demonstration kitchen for cooking education and/or a lecture space.
In some instances, laws and regulations may be amended in the future to allow for private rights of action to enforce laws and regulations through lawsuits. At present, many consumer class action lawsuits are based on violations of federal or state laws, regulations, rules and guidance where the claim is that the alleged violation results in consumer deception.
In some instances, laws and regulations may be amended in the future to allow for private rights of action through lawsuits as a means of enforcement. At present, many consumer class action lawsuits are based on violations of federal or state laws, regulations, rules and guidance where the claim is that the alleged violation results in consumer deception.
Special Promotions and Sponsorships During fiscal year 2024, we organized special promotions to coincide with certain calendar events, such as Resolution Reset Week in January, Earth Day in April, and on the 69 th anniversary of the Company’s founding in August.
Special Promotions and Sponsorships During fiscal year 2025, we organized special promotions to coincide with certain calendar events, such as Resolution Reset Week in January, Earth Day in April, and on the 70 th anniversary of the Company’s founding in August.
We offer our customers an average of approximately 21,000 Stock Keeping Units (SKUs) of natural and organic products per comparable store (stores open for 13 months or longer), including an average of approximately 6,700 SKUs of dietary supplements.
We offer our customers an average of approximately 20,000 Stock Keeping Units (SKUs) of natural and organic products per comparable store (stores open for 13 months or longer), including an average of approximately 6,500 SKUs of dietary supplements.
For example: ● we do not approve for sale food known to contain artificial flavors, preservatives or sweeteners, synthetic colors, or partially hydrogenated or hydrogenated oils, regardless of the proportion of its natural or organic ingredients; ● we only sell USDA certified organic produce; ● we only sell dairy products from pasture-raised, non-confined livestock and only sell eggs from free-range or pastured hens; ● we only sell meats from naturally raised animals that are not known to have been treated with antibiotics, hormones or growth promoters, or fed animal by-products; ● we only sell seafood from sustainable fisheries or ecologically responsible farm-raised operations; and ● we do not sell distilled spirits, tobacco products or e-cigarettes.
For example: ● we do not approve for sale food known to contain artificial flavors, preservatives or sweeteners, synthetic colors, or partially hydrogenated or hydrogenated oils, regardless of the proportion of its natural or organic ingredients; ● we only sell USDA certified organic produce; ● we only sell dairy products from pasture-raised, non-confined livestock and only sell eggs from free-range or pastured hens; ● we only sell humanely and sustainably sourced meats, and our standards do not allow meat from animals known to have been treated with antibiotics, hormones or growth promoters, or fed animal by-products; ● we only sell seafood from sustainable fisheries or ecologically responsible farm-raised operations; and ● we do not sell distilled spirits, tobacco products or e-cigarettes.
Our accelerated store manager training program provides high-potential store department managers with management training, including leadership skills and financial aspects of management, equipping participants for potential management roles within the Company upon completion. We provide all new store managers and assistant store managers with five weeks of in-person operational and managerial training at our facility in Golden, Colorado.
Our accelerated store manager training program provides high-potential store department managers with management training, including leadership skills and financial aspects of management, equipping participants for potential management roles within the Company upon completion. We provide all new store managers and assistant store managers with four weeks of in-person operational and managerial training.
During fiscal year 2024, the measures we took that were aimed at enhancing our brand awareness included: (i) featuring promotions through our {N}power ® customer rewards program ({N}power), with a focus on local store marketing; (ii) continuing to make enhancements to our monthly Health Hotline magazine; (iii) organizing month-long seasonal and topical special promotions; (iv) expanding our social media reach through increased investment in paid and organic placements on platforms, such as Instagram, TikTok, Facebook, X, and YouTube and social media influencer campaigns; (v) conducting television, radio, newspaper, outdoor advertising and targeted direct mail campaigns in select markets; (vi) continuing home delivery services; and (vii) supporting local vendors and charities.
During fiscal year 2025, the measures we took that were aimed at enhancing our brand awareness included: (i) featuring promotions through our {N}power® customer rewards program ({N}power), with a focus on local store marketing; (ii) continuing to make enhancements to our monthly Health Hotline magazine; (iii) organizing month-long seasonal and topical special promotions; (iv) expanding our digital and social media reach through increased investment in paid and organic placements on platforms, such as Instagram, Facebook, TikTok, Threads, consumer credit card platforms, mobile application display, internet search and social media influencer campaigns; (v) conducting television, radio, newspaper, outdoor advertising and targeted direct mail campaigns in select markets; (vi) continuing home delivery services; and (vii) supporting local vendors, schools and charities.
In December of 2022, FTC issued its Health Products Compliance Guidance that suggests that at least one randomized clinical trial may be necessary for any claim regarding the health benefits of a product.
In December of 2022, FTC issued its non-binding Health Products Compliance Guidance that suggests that at least one randomized clinical trial may be necessary to substantiate any claim regarding the health benefits of a product.
Similarly, cosmetic products labeling must also contain certain information, including the nature and use of the product such as net quantity/weight, ingredient statements, and contact information for the manufacturer/packer/distributor.
Cosmetic products labeling must also contain certain information, including the nature and use of the product such as net quantity/weight, ingredient statements, contact information for the manufacturer/packer/distributor, applicable warnings and directions for safe use.
The FDA also regulates the use of claims made about these products, including structure/function claims ( e.g., “calcium builds strong bones”), qualified health claims ( e.g., "adequate calcium throughout life may reduce the risk of osteoporosis"), and nutrient content claims ( e.g., “high in antioxidants”), and others. “Organic” claims, however, are primarily regulated by the USDA.
The FDA also regulates the use of claims made about these products, including structure/function claims ( e.g., “calcium builds strong bones”), qualified health claims ( e.g., "adequate calcium throughout life may reduce the risk of osteoporosis"), and nutrient content claims ( e.g., “high in antioxidants”), and others.
We have also undertaken a number of initiatives designed to engage our workforce, including conducting an annual employee survey to solicit feedback from our Crew members, conducting regular focus groups with our store Crew members to identify opportunities for process improvement at our stores, and conducting monthly calls with our store leadership to review priorities and celebrate accomplishments.
We have also undertaken a number of initiatives designed to engage our workforce, including conducting surveys to solicit feedback from our Crew members, conducting regular focus groups with our store Crew members to identify opportunities for process improvement at our stores, and conducting monthly calls with our store leadership to review priorities and celebrate accomplishments. Crew Member Development and Promotion.
As of September 30, 2024, we purchased approximately 78% of the goods we sell from our top 20 suppliers. For the year ended September 30, 2024, approximately 68% of our total purchases were from United Natural Foods Inc. and its subsidiaries (UNFI).
As of September 30, 2025, we purchased approximately 84% of the goods we sell from our top 20 suppliers. For the year ended September 30, 2025, approximately 69% of our total purchases were from United Natural Foods Inc. and its subsidiaries (UNFI).
Our executive management team has an average of 39 years of experience in the natural grocery industry, while our entire management team has an average of 32 years of relevant experience.
Our executive management team has an average of 40 years of experience in the natural grocery industry, while our entire management team has an average of 33 years of relevant experience.
As of September 30, 2024, we employed 3,332 full-time and 813 part-time (less than 30 hours per week) Crew members, including a total of 388 Crew members at our home office and our bulk food repackaging facility and distribution center. We believe we have good relations with our Crew members.
As of September 30, 2025, we employed 3,455 full-time and 795 part-time (less than 30 hours per week) Crew members, including a total of 410 Crew members at our home office and our bulk food repackaging facility and distribution center. We believe we have good relations with our Crew members.
Our body care offerings range from bargain-priced basics to high-end formulations. ■ Pet Care. We offer a full line of natural pet care and food products that comply with our human food guidelines. ■ Household and General Merchandise.
Our body care offerings range from bargain-priced basics to high-end formulations. ■ Pet Care. We offer a full line of natural pet care and food products that satisfy our product standards for human food. ■ Household and General Merchandise.
We also organized social media influencer campaigns in key markets. We expect to continue investing in digital engagement activities during fiscal year 2025. Our Natural Grocers mobile application provides a compelling and complementary marketing channel to deliver the same content strategy already in place for our website. 13 Table of Contents Advertising.
We expect to continue investing in digital engagement activities during fiscal year 2026. Our Natural Grocers mobile application provides a compelling and complementary marketing channel to deliver the same content strategy already in place for our website. 13 Table of Contents Advertising.
In addition, we only sell pasture-raised, non-confinement dairy products, free-range eggs ( i.e., from chickens that are not only cage-free but also provided with sufficient space to move) and naturally raised meats ( i.e., from animals that are not known to have been treated with antibiotics, hormones or growth promoters, or fed animal by-products).
In addition, we only sell pasture-raised, non-confinement dairy products, free-range eggs ( i.e., from chickens that are not only cage-free but also provided with sufficient space to move) and humanely and sustainably sourced meats, fish and seafood (our product standards do not allow meat from animals known to have been treated with antibiotics, hormones or growth promoters, or fed animal by-products).
Changes in legal trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers and changes in discount rates could all affect ultimate settlements of claims. We evaluate our insurance requirements and providers on an ongoing basis.
Changes in legal trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers and changes in discount rates could all affect ultimate settlements of claims.
We intend to continue expanding our store base through new store openings in existing markets, as well as penetrating new markets, by leveraging our core competencies of site selection and efficient store openings. In fiscal years 2024 and 2023, we opened four and three new stores, respectively.
We intend to continue expanding our store base through new store openings in existing markets, as well as penetrating new markets, by leveraging our core competencies of site selection and efficient store openings.
Our advertising activities in fiscal year 2024 included: (i) conducting television advertising campaigns; (ii) conducting radio advertising campaigns in support of new store openings and store relocations; (iii) conducting outdoor advertising campaigns; (iv) conducting targeted direct mail campaigns; (v) newspaper advertising; (vi) utilizing organic search, search engine marketing, search engine optimization and display advertisements to deliver more customer traffic to our website and stores; and (vii) investments in paid and organic placements on social media platforms.
Our advertising activities in fiscal year 2025 included: (i) conducting television advertising campaigns; (ii) conducting radio advertising campaigns in support of new store openings and store relocations; (iii) conducting outdoor advertising campaigns; (iv) conducting targeted direct mail campaigns; (v) newspaper advertising; (vi) utilizing organic search, search engine marketing, search engine optimization and paid search to drive more customer traffic to our website and stores; (vii) investments in paid and organic placements on social media platforms including social media influencer campaigns; and (viii) local store marketing campaigns focused on enhancing customer retention and loyalty in highly competitive markets.
Our website is interlinked with other online and social media outlets, including Facebook, Instagram, TikTok, X, Pinterest and YouTube. During fiscal year 2024, we continued to increase our investment in paid and organic placements on platforms such as Facebook, Instagram, TikTok, YouTube and mobile in-app display, resulting in enhanced brand reach.
Our website is interlinked with other online and social media outlets, including Facebook, Instagram, TikTok, Threads, Pinterest and YouTube. During fiscal year 2025, we continued to increase our investment in paid and organic placements on platforms such as Facebook, Instagram, TikTok, Threads and Pinterest, resulting in enhanced brand reach. We also organized social media influencer campaigns in key markets.
We also organized month-long special promotions such as the “Autumnfest” campaign in October, the “Body Care & Beauty Bonanza” in May, the “Rock the Grill” campaign during June, the “Splash into Savings” and “{N}power 2-Day Sale” campaigns in July, and the “Organic Month” campaign during September. Our special promotions frequently include product discounts, sweepstakes, charitable fundraisers and nutrition education classes.
We also organized monthly special promotions such as the “Autumnfest” campaign in October, the “Body Care & Beauty Bonanza” in May, the “Rock the Grill” campaign during June, the “Splash into Savings” and “{N}power 2-Day Sale” campaigns in July, and the “Organic Month” campaign during September.
The Dietary Supplement Health and Education Act (DSHEA), enacted in 1994, greatly expanded the FDA’s regulatory authority over dietary supplements. Through DSHEA, dietary supplements became a separately regulated subcategory of food, and the FDA was empowered to establish good manufacturing practice regulations governing key aspects of the production of dietary supplements, including quality control, record keeping, packaging and labeling.
Through DSHEA, dietary supplements became a separately regulated subcategory of food, and the FDA was empowered to establish good manufacturing practice regulations governing key aspects of the production of dietary supplements, including quality control, record keeping, packaging and labeling.
The articles aim to be relevant, science-based and written to reflect the most recent research findings. During fiscal year 2024, we continued to enhance our Health Hotline magazine. The Health Hotline magazine was published 11 times during fiscal year 2024, and we expect comparable publication frequency during fiscal year 2025.
The articles aim to be relevant, science-based and written to reflect the most recent research findings. The Health Hotline magazine was published 11 times during fiscal year 2025, and we expect comparable publication frequency during fiscal year 2026. The printed version of the Health Hotline magazine is mailed to subscribers and distributed in our stores.
In fiscal 2024, we continued to improve and promote our Natural Grocers mobile application, which provides {N}power members with enhanced access to exclusive {N}power offers, digital coupons, recipes and articles through their smartphones and tablets. We believe these steps have helped to increase membership in the {N}power program.
We also continue to improve and promote our Natural Grocers mobile application, which provides {N}power members with access to exclusive digital coupons, interactive features, recipes and articles, as well as improved direct communication and engagement through their smartphones and tablets. We believe these steps have helped to increase membership in the {N}power program.
Additionally, our NHCs are an onsite resource for nutrition training and education for our Crew members. Each NHC trains our Crew members to use a compliant educational approach to customer service without attempting to diagnose or treat specific conditions or ailments. We believe our NHC position is a competitive differentiator and represents a key element of our customer service model.
Each NHC trains our Crew members to use a compliant educational approach to customer service without attempting to diagnose or treat specific conditions or ailments. We believe our NHC position is a competitive differentiator and represents a key element of our customer service model. Our training and education programs are supplemented by outside experts, online materials and printed handouts.
During fiscal year 2024, we organized a number of charitable sponsorships, including collecting donations from customers on behalf of local food banks and an environmental non-profit organization.
We expect to continue offering similar special promotions and events in the future. During fiscal year 2025, we organized a number of charitable sponsorships, including collecting donations from customers on behalf of local food banks and an environmental non-profit organization.
Our training and education programs are supplemented by outside experts, online materials and printed handouts. We also use our Health Hotline magazine to educate our customers. The Health Hotline magazine, which was published 11 times in fiscal year 2024, includes in-depth articles on health and nutrition, along with a selection of sale items.
We also use our Health Hotline magazine to educate our customers. The Health Hotline magazine, which was published 11 times in fiscal year 2025, includes in-depth articles on health and nutrition, along with a selection of sale items. The printed version of the Health Hotline magazine is mailed to subscribers and distributed in our stores.
Our seafood items are generally frozen at the time of processing and sold from our freezer section, thereby ensuring freshness and reducing food spoilage and safety issues. The seafood we sell is generally sourced from sustainable fisheries or ecologically responsible farm-raised operations and excludes endangered species. 8 Table of Contents ■ Dairy Products, Dairy Substitutes and Eggs.
The seafood we sell is generally sourced from sustainable fisheries or ecologically responsible farm-raised operations and excludes endangered species. 8 Table of Contents ■ Dairy Products, Dairy Substitutes and Eggs.
Trademarks and Other Intellectual Property We believe that our intellectual property is important to the success of our business.
We evaluate our insurance requirements and providers on an ongoing basis. 14 Table of Contents Trademarks and Other Intellectual Property We believe that our intellectual property is important to the success of our business.
We maintain NaturalGrocers.com as our official Company website to host store information, sale and discount offers, educational materials, product and standards information, policies and contact forms, advocacy and news items and e-commerce capabilities. Our website is intended to be part of an overall enhanced branding strategy to more effectively communicate our brand’s unique and compelling attributes, including our founding principles.
We maintain NaturalGrocers.com as our official Company website to host store information, sale and discount offers, recipes and educational materials, product and standards information, policies and contact forms, advocacy and news items and e-commerce capabilities.
Our trademarks are generally valid and may be renewed indefinitely as long as they are in use and their registrations are properly maintained. 14 Table of Contents Information Technology Systems We have made significant investments in overhead and information technology infrastructure, including purchasing, receiving, inventory, point of sale, store scheduling, warehousing, distribution, accounting, reporting and financial systems.
Information Technology Systems We have made significant investments in overhead and information technology infrastructure, including purchasing, receiving, inventory, point of sale, store scheduling, warehousing, distribution, accounting, reporting and financial systems.
We plan to open four to six new stores in fiscal year 2025, none of which opened during the first quarter of fiscal year 2025 prior to the filing of this Form 10-K. 4 Table of Contents Store locations as of September 30, 2024. Increase sales from existing customers and grow our customer base.
In fiscal years 2025 and 2024, we opened two and four new stores, respectively. We plan to open six to eight new stores in fiscal year 2026, none of which opened during the first quarter of fiscal year 2026 prior to the filing of this Form 10-K.
Additionally, we seek to enhance the nutrition knowledge of current and prospective customers through the distribution of printed and digital versions of our broad range of educational resources, including the Health Hotline magazine. In addition to offering nutrition education, our strategy is to retain current customers and attract new customers with our Always Affordable Price .
Additionally, we seek to enhance the nutritional knowledge of current and prospective customers through the distribution of printed and digital versions of our broad range of educational resources, including the Health Hotline magazine and our “ Meet Your Farmer ” film series.
Generally, we negotiate with our suppliers for significantly lower costs on Health Hotline featured sale items, which in turn allows us to offer lower sale prices to our customers. Focused staff training at all locations occurs concurrently with the release of each Health Hotline to ensure that store staff are familiar with the content in each issue.
Focused staff training at all locations occurs concurrently with the release of each Health Hotline to ensure that store staff are familiar with the content in each issue.
We do not own or license for use any patents, franchises or concessions that are material to our business.
We do not own or license for use any patents, franchises or concessions that are material to our business. Our trademarks are generally valid and may be renewed indefinitely as long as they are in use and their registrations are properly maintained.
Home Delivery Services . As of September 30, 2024, we offered online ordering and home delivery services at 160 of our stores in partnership with a third party. New Store Openings . We use various targeted marketing efforts to support the successful introduction of our new stores in their individual markets.
Home Delivery and Pickup Services . As of September 30, 2025, in partnership with a third party, we offered online ordering, with home delivery services at 164 of our stores and pickup services at 17 of our stores. We are continuing to expand these services to more of our stores. New Store Openings .
During fiscal year 2024, we organized in-store scavenger hunts to increase store traffic and launched a number of promotions in collaboration with local businesses and non-profit schools to friends and family of our Crew members to increase brand awareness. We expect to continue offering similar special promotions and events in the future.
Our special promotions frequently include product discounts, sweepstakes, giveaways, charitable fundraisers and nutrition education classes. During fiscal year 2025, we organized in-store scavenger hunts to increase store traffic and launched a number of promotions in collaboration with local businesses, schools and non-profit organizations to positively impact our communities and increase brand awareness.
During fiscal year 2024, we promoted internal candidates to fill 100% of our vacant regional manager positions, approximately 91% of our vacant store manager positions, approximately 76% of our vacant assistant store manager positions, and approximately 74% of our vacant department manager positions.
During fiscal year 2025, we promoted internal candidates to fill 100% of our vacant regional manager positions, approximately 67% of our vacant store manager positions, approximately 69% of our vacant assistant store manager positions, and approximately 72% of our vacant department manager positions. We believe that setting Crew members up for success begins with a strong foundation.
Our website features enhanced product and recipe search interfaces and improved functionality with mobile and tablet devices. We believe the continued growth of site visitors, page views and other metrics of our website activity indicates that our content is timely and informative to the communities we serve.
Our website is intended to be part of an overall enhanced branding strategy to more effectively communicate our brand’s unique and compelling attributes, including our founding principles. Our website features enhanced product and recipe search interfaces and improved functionality with mobile and tablet devices. We believe that our website content is timely and informative to the communities we serve.
During fiscal year 2024, we continued to enhance the personalization, frequency and range of our {N}power offerings and featured {N}power promotions, with a focus on local store marketing.
We believe the {N}power program is enhancing customer loyalty and engagement while increasing customer traffic and average basket size. We continue to enhance the personalization and interactivity of our {N}power offerings and featured {N}power promotions, with a focus on local store marketing.
The printed version of the Health Hotline magazine is mailed to subscribers and distributed in our stores. In addition, an electronic version of the Health Hotline magazine and a weekly electronic Health Hotline newsletter are distributed to subscribers via email.
In addition, an electronic version of the Health Hotline magazine and a weekly electronic Health Hotline newsletter are distributed to subscribers via email. Generally, we negotiate with our suppliers for significantly lower costs on Health Hotline featured sale items, which in turn allows us to offer lower sale prices to our customers.
We offer a wide variety of natural and organic dry, frozen and canned groceries, including cereals, soups, baby foods, frozen entrees and snack items. We offer a broad selection of natural chocolate bars and energy, protein and food bars. ■ Meats and Seafood. We only offer naturally raised or organic meat products.
During fiscal year 2025, we expanded our line of Natural Grocers brand products with 119 new offerings. ■ Dry, Frozen and Canned Groceries. We offer a wide variety of natural and organic dry, frozen and canned groceries, including cereals, soups, baby foods, frozen entrees and snack items.
During fiscal year 2024, our NHCs launched a new partnership with a national non-profit organization to promote health nutritional habits for children through in-store nutrition classes geared toward families. We believe that our NHCs’ focus on relationship-building opportunities in our communities and with our customers helps to enhance our marketing and branding initiatives.
We believe that our NHCs’ focus on relationship-building opportunities in our communities and with our customers helps to enhance our marketing and branding initiatives. Additionally, our NHCs are an onsite resource for nutrition training and education for our Crew members.
Certain new food labeling requirements, primarily related to the Nutrition Facts Label, went into full effect on January 1, 2021. 15 Table of Contents Dietary Supplements. The FDA also has comprehensive authority to regulate the safety of dietary supplements, dietary ingredients, labeling and current good manufacturing practices.
“Organic” claims, however, are primarily regulated by the USDA. 15 Table of Contents Dietary Supplements. The FDA also has comprehensive authority to regulate the safety of dietary supplements, dietary ingredients, labeling and current good manufacturing practices. The Dietary Supplement Health and Education Act (DSHEA), enacted in 1994, greatly expanded the FDA’s regulatory authority over dietary supplements.
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During fiscal year 2024, we expanded our line of Natural Grocers brand products with 80 new offerings. As of September 30, 2024, we offered approximately 800 discrete Natural Grocers brand private label product SKUs. ■ Dry, Frozen and Canned Groceries.
Added
We believe we have significant opportunity for store footprint expansion by selectively pursuing in-fill opportunities in existing markets where we already have a strong presence, continuing to penetrate existing states where we have recently expanded our footprint, and entering new geographic regions that satisfy our site selection guidelines.
Removed
We are committed to inclusion and diversity in our approach to hiring and promotion, including among our store management. As of September 30, 2024, approximately 46% of our store managers and approximately 57% of our assistant store managers were women. We believe that setting Crew members up for success begins with a strong foundation.
Added
We intend to continue to target an annual new store unit growth rate of 4% to 5% for the foreseeable future. 4 Table of Contents Store locations as of September 30, 2025. Increase sales from existing customers and grow our customer base.
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We believe the {N}power program has enhanced customer loyalty and engagement while increasing customer traffic and average basket size. In recent years, we have enhanced the {N}power program to simplify the accumulation of rewards for users and improve the customer rewards program experience.
Added
In addition to offering nutrition education, our strategy is to retain current customers and attract new customers with our Always Affordable Price .
Added
Additionally, we only buy from companies we believe employ humane animal-raising practices. Our seafood items are generally frozen at the time of processing and sold from our freezer section, thereby ensuring freshness and reducing food spoilage and safety issues.
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As of September 30, 2025 and through the date of this report, none of our stores are unionized or subject to any collective bargaining agreement. Culture and Engagement.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur reputation could also suffer from real or perceived issues involving the labeling or marketing of products we sell as “natural.” Although the FDA and the USDA have each issued statements regarding the appropriate use of the word “natural,” and the FDA has indicated it intends to define the term, there is currently no single U.S. government-regulated definition of the term “natural” for use in the food industry.
Biggest changeThese events could interrupt the marketing and sales of products in our stores, damage our brand reputation and public image, increase the cost of products in our stores, result in product recalls or litigation, impede our ability to deliver merchandise in sufficient quantities or quality to our stores, and potentially expose us to litigation seeking substantial damages, which could result in a material adverse effect on our business, financial condition, results of operations and cash flows. 31 Table of Contents Our reputation could also suffer from real or perceived issues involving the labeling or marketing of products we sell as “natural.” Although the FDA and the USDA have each issued non-binding statements regarding the appropriate use of the word “natural,” there is currently no single U.S. government-regulated definition of the term “natural” for use in the food, dietary supplement, or cosmetics industries.
Should we become subject to similar lawsuits or claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is ultimately determined to be unfounded. Adverse publicity about these matters may discourage consumers from buying our products.
Should we become subject to similar lawsuits or claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is ultimately determined to be unfounded. Adverse publicity about these matters may discourage consumers from buying our products.
According to the FDA, homeopathic products posing the greatest risk are those with reported safety concerns, that contain or purport to contain ingredients associated with potentially significant safety concerns, that are administered via routes other than orally or topically, that claim to treat or prevent serious and/or life-threatening diseases and conditions, are marketed to vulnerable populations (e.g., children, pregnant women, and the elderly), or that have significant quality issues.
According to the FDA, homeopathic products posing the greatest risk are those that have reported safety concerns, contain or purport to contain ingredients associated with potentially significant safety concerns, are administered via routes other than orally or topically, claim to treat or prevent serious and/or life-threatening diseases and conditions, are marketed to vulnerable populations (e.g., children, pregnant women, and the elderly), or have significant quality issues.
Our principal intellectual property rights include registered marks on Natural Grocers ® , Vitamin Cottage ® , Health Hotline ® , Natural Grocers by Vitamin Cottage ® , Vitamin Cottage Natural Grocers ® , EDAP - Every Day Affordable Price ® , {N}power ® , Organic Headquarters ® , Organic Month Headquarters ® , Organic Produce Headquarters ® , Natural Grocers Cottage Wine and Craft Beer ® , Natural Grocers Cottage Craft Beer ® , Resolution Reset Day ® , These Came First ® and Natural Grocers Top 10 Nutrition Trends ® , common law intellectual property rights in certain other marks used in our business, copyrights of our website content, rights to our domain names, including www.naturalgrocers.com and www.vitamincottage.com , and trade secrets and know-how with respect to our product sourcing, sales and marketing and other aspects of our business.
Our principal intellectual property rights include registered marks on Natural Grocers ® , Vitamin Cottage ®, Health Hotline ® , Natural Grocers by Vitamin Cottage ®, Vitamin Cottage Natural Grocers ®, EDAP - Every Day Affordable Price ® , {N}power ® , Organic Headquarters ® , Organic Month Headquarters ® , Organic Produce Headquarters ® , Natural Grocers Cottage Wine and Craft Beer ® , Natural Grocers Cottage Craft Beer ® , Resolution Reset Day ® , Resolution Reset Week ® , These Came First ® and Natural Grocers Top 10 Nutrition Trends ®, common law intellectual property rights in certain other marks used in our business, copyrights of our website content, rights to our domain names, including www.naturalgrocers.com and www.vitamincottage.com , and trade secrets and know-how with respect to our product sourcing, sales and marketing and other aspects of our business.
A variety of factors affect our store sales growth and quarterly financial performance, including: ● changes in our merchandising strategy or product mix; ● the performance of our newer and remodeled stores; ● the effectiveness of our inventory management; ● the timing and concentration of new store openings, and the related additional human resource requirements and pre-opening and other start-up costs; ● slowing in the natural and organic retail sector; ● the cannibalization of existing store sales by our new store openings; ● levels of pre-opening expenses associated with new stores; ● the timing and effectiveness of our marketing activities; ● consumer preferences, buying trends and spending levels; ● food and commodity price inflation or deflation; ● the number and dollar amount of customer transactions in our stores; ● seasonal fluctuations due to weather conditions and extreme weather-related disruptions; ● our ability to generate new and repeat visits to our stores and adequate levels of customer engagement; 20 Table of Contents ● actions by our existing or new competitors, including pricing changes and delivery and fulfillment options; ● regulatory changes affecting availability and marketability of products; ● supply shortages or other operational disruptions; ● general United States economic conditions and, in particular, the retail sales environment; ● executive, legislative or regulatory actions that restrict or limit our access to foreign-sourced goods; and ● the impact of global health pandemics on our operations and the U.S. economy.
A variety of factors affect our store sales growth and quarterly financial performance, including: ● changes in our merchandising strategy or product mix; ● the performance of our newer and remodeled stores; ● the effectiveness of our inventory management; ● the timing and concentration of new store openings, and the related additional human resource requirements and pre-opening and other start-up costs; ● slowing in the natural and organic retail sector; ● the cannibalization of existing store sales by our new store openings; ● levels of pre-opening expenses associated with new stores; ● the timing and effectiveness of our marketing activities; 20 Table of Contents ● consumer preferences, buying trends and spending levels; ● food and commodity price inflation or disinflation; ● the number and dollar amount of customer transactions in our stores; ● seasonal fluctuations due to weather conditions and extreme weather-related disruptions; ● our ability to generate new and repeat visits to our stores and adequate levels of customer engagement; ● actions by our existing or new competitors, including pricing changes and delivery and fulfillment options; ● regulatory changes affecting availability and marketability of products; ● supply shortages or other operational disruptions; ● general United States economic conditions and, in particular, the retail sales environment; ● executive, legislative or regulatory actions that restrict or limit our access to foreign-sourced goods; and ● the impact of global health pandemics on our operations and the U.S. economy.
Due to increased adherence by food and dietary supplement companies to FDA regulations regarding the current requirements for “healthy” claims, plaintiffs’ consumer class action lawyers have filed lawsuits asserting that certain advertising terms are equivalent to “healthy” (e.g., “nutritious”) and the challenged products either do not meet the FDA’s current requirements for “healthy,” or, even if they do, the products contain too much added sugar to qualify as healthy as set forth in draft regulations recently proposed by the FDA.
Due to increased adherence by food and dietary supplement companies to FDA regulations regarding the current requirements for “healthy” claims, plaintiffs’ consumer class action lawyers have filed lawsuits asserting that certain advertising terms are equivalent to “healthy” (e.g., “nutritious”) and the challenged products either do not meet the FDA’s current requirements for “healthy,” or, even if they do, the products contain too much added sugar to qualify as healthy as set forth in draft regulations proposed by the FDA.
We believe our success depends, in substantial part, on our ability to: ● anticipate, identify and react to natural and organic grocery and dietary supplement trends and changing consumer preferences in a timely manner; ● translate market trends into appropriate, saleable product and service offerings in our stores; and ● develop and maintain vendor relationships that provide us access to the newest merchandise, and products that satisfy our standards, on reasonable terms.
We believe our success depends, in substantial part, on our ability to: ● anticipate, identify and react to natural and organic grocery and dietary supplement trends and changing consumer preferences in a timely manner; ● translate market trends into appropriate, saleable product and service offerings in our stores; and ● develop and maintain vendor relationships that provide us with access to the newest merchandise, and products that satisfy our standards, on reasonable terms.
Products that we sell may carry claims as to the origin, purity, potency, and identify of ingredients, and claims regarding efficacy or health benefits, one example is the use of the term “natural.” Although the FDA and USDA each has issued statements regarding the appropriate use of the word “natural,” there is no single United States government-regulated definition of the term “natural” for use in the food industry.
Products that we sell may carry claims as to the origin, purity, potency, and identify of ingredients, and claims regarding efficacy or health benefits, one example is the use of the term “natural.” Although the FDA and USDA each has issued statements regarding the appropriate use of the word “natural,” there is no single United States government-regulated definition of the term for use in the food industry.
To the extent our competitors lower their prices, our ability to maintain sales levels and operating margins may be negatively impacted. In addition, some of our competitors are expanding their natural and organic food offerings, increasing the space allocated to natural and organic foods and enhancing options of engaging with and delivering their products to customers.
To the extent our competitors lower their prices, our ability to maintain sales levels and operating margins may be negatively impacted. In addition, some of our competitors are expanding their natural and organic food offerings, increasing the space allocated to natural and organic foods and enhancing options for engaging with and delivering their products to customers.
In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of our common stock. Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate (unless further extended) on May 31, 2026.
In May 2016, our Board of Directors (the Board) authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of our common stock. Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate (unless further extended) on May 31, 2026.
The FDA requires the submission of a premarket notification (NDIN) to the FDA at least 75 days before a product containing an NDI is sold. The FDA’s enforcement of the pre-market notification requirements for NDIs could result in the removal of certain dietary supplement products that we sell.
The FDA requires the submission of a premarket notification (NDIN) at least 75 days before a product containing an NDI is sold. The FDA’s enforcement of the pre-market notification requirements for NDIs could result in the removal of certain dietary supplement products that we sell.
Unexpected side effects, illness, injury or death caused by the products we sell could result in the discontinuance of sales of the products we sell or prevent us from achieving market acceptance of the affected products. Such side effects, illnesses, injuries and death could also expose us to product liability or negligence lawsuits.
Unexpected side effects, illness, injury or death caused by the products we sell could result in the discontinuance of sales of the products we sell or prevent us from achieving market acceptance of the affected products. Such side effects, illnesses, injuries and death could also expose us to product liability lawsuits.
Risks related to our business and operations ● We may not be successful in our efforts to grow profitably and our growth and financial performance may fluctuate; ● If we are unable to successfully identify market trends and react, our sales may decrease; ● Adverse economic conditions (including inflation and deflation), pandemics and political instability could adversely affect our business; ● An inability to compete, maintain or increase our operating margins, or maintain traffic in our stores could adversely affect our results of operations; ● Product recalls, withdrawals or seizures could reduce our sales; ● Our future business, results of operations and financial condition may be adversely affected by reduced availability of certified organic products, products that meet our other internal standards, or issues related to our suppliers; ● Adverse weather conditions, natural disasters and the effects of climate change could disrupt our supply chain and adversely impact our sales and financial performance; ● Acts of violence at or threatened against our stores or the shopping centers where they are located could materially adversely affect our financial performance; 17 Table of Contents ● The current geographic concentration of our stores creates exposure to local economies, regional downturns, severe weather and other catastrophic occurrences; ● If we fail to maintain our reputation and the value of our brand, or fail to retain or attract key personnel, our sales may decline; ● Perishable food product losses or interruptions to our bulk food repackaging facility could materially impact our results of operations; ● Higher wage and benefit costs or union activity among our Crew members or third parties could adversely affect our business; ● Future events could result in impairment of long-lived assets, which may result in charges that adversely affect our results of operations and capitalization; ● Our significant lease obligations may adversely affect our liquidity; ● Any material disruption to, failure of, or cyber-attacks against our information systems could negatively impact our operations or expose us to litigation and reputational harm; ● Claims under our self-insurance program may differ from our estimates, which could negatively impact our results of operations; ● If we are unable to protect our intellectual property rights, our ability to compete and the value of our brand could be harmed; ● Energy costs are a significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability; ● Legal proceedings and adverse tax changes or examinations could adversely affect our business, financial condition and results of operations; and ● Failure to maintain effective internal control over financial reporting could lead to material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline.
Risks related to our business and operations ● We may not be successful in our efforts to grow profitably and our growth and financial performance may fluctuate; ● If we are unable to successfully identify market trends and react, our sales may decrease; ● Adverse economic conditions (including inflation and disinflation), pandemics and political instability could adversely affect our business; ● An inability to compete, maintain or increase our operating margins, or maintain traffic in our stores could adversely affect our results of operations; ● Product recalls, withdrawals or seizures could reduce our sales; ● Our future business, results of operations and financial condition may be adversely affected by reduced availability of certified organic products, products that meet our other internal standards, or issues related to our suppliers; ● Adverse weather conditions, natural disasters and the effects of climate change could disrupt our supply chain and adversely impact our sales and financial performance; ● Acts of violence at or threatened against our stores or the shopping centers where they are located could materially adversely affect our financial performance; 17 Table of Contents ● The current geographic concentration of our stores creates exposure to local economies, regional downturns, severe weather and other catastrophic occurrences; ● If we fail to maintain our reputation and the value of our brand, or fail to retain or attract key personnel, our sales may decline; ● Perishable food product losses or interruptions to our bulk food repackaging facility could materially impact our results of operations; ● Higher wage and benefit costs or union activity among our Crew members or third parties could adversely affect our business; ● Future events could result in impairment of long-lived assets, which may result in charges that adversely affect our results of operations and capitalization; ● Our significant lease obligations may adversely affect our liquidity; ● Any material disruption to, failure of, or cyber-attacks against our information systems or those of third parties, such as our suppliers and payment processors, could negatively impact our operations or expose us to litigation and reputational harm; ● Claims under our self-insurance program may differ from our estimates, which could negatively impact our results of operations; ● If we are unable to protect our intellectual property rights, our ability to compete and the value of our brand could be harmed; ● Energy costs are a significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability; ● Legal proceedings and adverse tax changes or examinations could adversely affect our business, financial condition and results of operations; and ● Failure to maintain effective internal control over financial reporting could lead to material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline.
In addition, because these holders have the ability to elect all of our directors, they are able to control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payments of dividends on our common stock and entering into extraordinary transactions, and their interests may not in all cases be aligned with our stockholders’ interests. 36 Table of Contents We may not be able to continue paying dividends on our common stock.
In addition, because these holders have the ability to elect all of our directors, they are able to control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payments of dividends on our common stock and entering into extraordinary transactions, and their interests may not in all cases be aligned with our stockholders’ interests. 37 Table of Contents We may not be able to continue paying dividends on our common stock.
If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us under our Credit Facility or otherwise in amounts sufficient to enable us to fund our liquidity needs, our business, financial condition and results of operations may be adversely affected. 35 Table of Contents Our liquidity needs may require us to raise additional capital through debt or equity financings.
If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us under our Credit Facility or otherwise in amounts sufficient to enable us to fund our liquidity needs, our business, financial condition and results of operations may be adversely affected. 36 Table of Contents Our liquidity needs may require us to raise additional capital through debt or equity financings.
As a “controlled company,” certain exemptions under NYSE standards free us from the obligation to comply with certain corporate governance requirements of the NYSE, including the requirements: ● that a majority of our Board consists of “independent directors,” as defined under the rules of the NYSE; ● that our director nominees be selected, or recommended for our Board’s selection, either: (i) by a majority of independent directors in a vote by independent directors, pursuant to a nominations process adopted by a Board resolution or (ii) by a nominating and governance committee composed solely of independent directors with a written charter addressing the nominations process; and ● that the compensation of our executive officers be determined, or recommended to the Board for determination, by a majority of independent directors in a vote by independent directors, or a compensation committee composed solely of independent directors.
As a “controlled company,” certain exemptions under NYSE standards free us from the obligation to comply with certain corporate governance requirements of the NYSE, including the requirements: 38 Table of Contents ● that a majority of our Board consists of “independent directors,” as defined under the rules of the NYSE; ● that our director nominees be selected, or recommended for our Board’s selection, either: (i) by a majority of independent directors in a vote by independent directors, pursuant to a nominations process adopted by a Board resolution or (ii) by a nominating and governance committee composed solely of independent directors with a written charter addressing the nominations process; and ● that the compensation of our executive officers be determined, or recommended to the Board for determination, by a majority of independent directors in a vote by independent directors, or a compensation committee composed solely of independent directors.
In some cases, we may lose customers and sales because our political advocacy activities are perceived to be contrary to those customers’ points of view, political affiliations, political beliefs or voting preferences. 34 Table of Contents Risks related to our indebtedness and liquidity Our credit facility could limit our operational flexibility.
In some cases, we may lose customers and sales because our political advocacy activities are perceived to be contrary to those customers’ points of view, political affiliations, political beliefs or voting preferences. 35 Table of Contents Risks related to our indebtedness and liquidity Our credit facility could limit our operational flexibility.
Any or all of such requirements could materially and adversely affect our business, financial condition and results of operations. 32 Table of Contents Our sale of products containing cannabidiol (CBD) could lead to regulatory action by federal, state and/or local authorities or legal proceedings brought by or on behalf of consumers.
Any or all of such requirements could materially and adversely affect our business, financial condition and results of operations. 33 Table of Contents Our sale of products containing cannabidiol (CBD) could lead to regulatory action by federal, state and/or local authorities or legal proceedings brought by or on behalf of consumers.
The occurrence of any such developments could negatively impact the perception of our brand, our sales, our ability to attract new customers and liability for governmental or third party claims. 33 Table of Contents Consumers or regulatory agencies may challenge certain claims made regarding the products we sell.
The occurrence of any such developments could negatively impact the perception of our brand, our sales, our ability to attract new customers and liability for governmental or third-party claims. 34 Table of Contents Consumers or regulatory agencies may challenge certain claims made regarding the products we sell.
Prolonged unfavorable economic conditions or political instability may have an adverse effect on our sales and profitability. 21 Table of Contents Inflation or deflation could adversely affect our business. Our financial performance could be adversely impacted by relative rates of inflation or deflation, which are subject to market conditions.
Prolonged unfavorable economic conditions or political instability may have an adverse effect on our sales and profitability. 21 Table of Contents Inflation or disinflation could adversely affect our business. Our financial performance could be adversely impacted by relative rates of inflation or disinflation, which are subject to market conditions.
We may be unable to generate sufficient cash flow to satisfy our debt service obligations, which could adversely impact our business. As of September 30, 2024, we had no outstanding indebtedness under our Credit Facility. We may incur additional indebtedness in the future, including borrowings under our Credit Facility.
We may be unable to generate sufficient cash flow to satisfy our debt service obligations, which could adversely impact our business. As of September 30, 2025, we had no outstanding indebtedness under our Credit Facility. We may incur additional indebtedness in the future, including borrowings under our Credit Facility.
During fiscal year 2024, we invested in increased wages for our store Crew members and may be required to do so in the future. Union activity among our Crew members or at third party transportation companies could disrupt our operations and harm our business.
During fiscal year 2025, we invested in increased wages for our store Crew members and may be required to do so in the future. Union activity among our Crew members or at third party transportation companies could disrupt our operations and harm our business.
During fiscal year 2024, we did not repurchase any shares of common stock. Such borrowings will reduce the amount of capital available under our Credit Facility for other purposes, including our working capital needs, capital expenditures and funding the execution of our growth strategy.
During fiscal year 2025, we did not repurchase any shares of common stock. Such borrowings will reduce the amount of capital available under our Credit Facility for other purposes, including our working capital needs, capital expenditures and funding the execution of our growth strategy.
For more information on our results of operations for fiscal years 2024 and 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Adverse economic conditions and political instability could adversely affect our business, results of operations and financial condition and could negatively impact our ability to execute our growth strategy.
For more information on our results of operations for fiscal years 2025 and 2024, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Adverse economic conditions and political instability could adversely affect our business, results of operations and financial condition and could negatively impact our ability to execute our growth strategy.
As a result, new store openings may negatively impact our financial results in the short-term due to the effect of store opening costs and lower sales and contribution to overall profitability during the initial period following opening. 19 Table of Contents If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease.
As a result, new store openings may negatively impact our financial results in the short-term due to the effect of store opening costs and lower sales and contribution to overall profitability during the initial period following opening. If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease.
We generally cannot cancel our leases, so if we decide to close or relocate a location, we may nonetheless be committed to perform our obligations under the applicable lease including paying the base rent for the remaining lease term.
We generally cannot cancel our leases, so if we decide to close or relocate a store, we may nonetheless be committed to perform our obligations under the applicable lease including paying the base rent for the remaining lease term.
Voluminous regulations and rules issued under the FSMA have been promulgated. In addition, the FSMA requires the FDA to establish science-based minimum standards for the safe production and harvesting of produce and increase inspection of foreign and domestic facilities.
Extensive regulations and rules issued under the FSMA have been promulgated. In addition, the FSMA requires the FDA to establish science-based minimum standards for the safe production and harvesting of produce and increase inspection of foreign and domestic facilities.
Any such situation could adversely impact customer traffic and make it more difficult to fully staff our stores, which could have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents The current geographic concentration of our stores creates exposure to local economies, regional downturns, severe weather and other catastrophic occurrences.
Any such situation could adversely impact customer traffic and make it more difficult to fully staff our stores, which could have a material adverse effect on our business, financial condition and results of operations. The current geographic concentration of our stores creates exposure to local economies, regional downturns, severe weather and other catastrophic occurrences.
In recent years, we experienced levels of inflation that were higher than we have historically experienced, resulting in part from various supply disruptions, geopolitical instability, including the conflicts in Ukraine and the Middle East, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, monetary policy actions, other disruptions and the uncertain economic environment.
In recent years, we experienced levels of inflation that were higher than we have historically experienced, resulting in part from various supply disruptions, geopolitical instability, including the conflicts in Ukraine and the Middle East, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, monetary policy actions, tariffs and trade restrictions, other disruptions and the uncertain economic environment.
Any of these situations could have a material adverse effect on our business, financial condition and results of operations. Acts of violence at or threatened against our stores or the shopping centers in which they are located, including active shooter situations and terrorist acts, could adversely impact our sales, which could materially adversely affect our financial performance.
Any of these situations could have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents Acts of violence at or threatened against our stores or the shopping centers in which they are located, including active shooter situations and terrorist acts, could adversely impact our sales, which could materially adversely affect our financial performance.
Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims or in our products, themselves, would be difficult and costly to overcome and may significantly reduce our brand value.
Any loss of confidence on the part of consumers in the truthfulness of our labeling or marketing claims, or in our products, themselves, would be difficult and costly to overcome and may significantly reduce our brand value.
We are party to a $72.5 million revolving loan facility and, prior to its repayment in September 2024, a $35.0 million term loan (our Credit Facility). Our Credit Facility is secured by a lien on substantially all of our assets and contains usual and customary restrictive covenants relating to our management and the operation of our business.
We are party to a $70.0 million revolving loan facility and, prior to its repayment in September 2024, a $35.0 million term loan (our Credit Facility). Our Credit Facility is secured by a lien on substantially all of our assets and contains usual and customary restrictive covenants relating to our management and the operation of our business.
Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events and usage errors by our Crew members.
Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, cybersecurity incidents, catastrophic events and usage errors by our Crew members.
The FDA has yet to establish a regulatory framework for the manufacture and sale of products containing CBD, and has sent warning letters, sometimes in concert with the Federal Trade Commission (FTC), to certain CBD manufacturers that are alleged to have marketed their products in violation of the FDCA.
The FDA has yet to establish a regulatory framework for the manufacture and sale of products containing CBD, and has sent warning letters, sometimes in concert with the FTC, to certain CBD manufacturers that are alleged to have marketed their products in violation of the FDCA.
In addition, plaintiffs’ class action lawyers have begun filing lawsuits relating to PFAS, either under the theory that the presence of PFAS renders certain advertising claims false or misleading or actual product liability claims for injury based on the presence of PFAS in human blood.
In addition, plaintiffs’ class action lawyers have filed lawsuits relating to PFAS, either under the theory that the presence of PFAS renders certain advertising claims false or misleading or actual product liability claims for injury based on the presence of PFAS in human blood.
The loss of any certifications could reduce the availability of organic products that we can sell in our stores and harm our business. Disruptions affecting our significant suppliers, or our relationships with such suppliers, could negatively affect our business. UNFI is our single largest third-party supplier, accounting for approximately 68% of our total purchases in fiscal year 2024.
The loss of any certifications could reduce the availability of organic products that we can sell in our stores and harm our business. Disruptions affecting our significant suppliers, or our relationships with such suppliers, could negatively affect our business. UNFI is our single largest third-party supplier, accounting for approximately 69% of our total purchases in fiscal year 2025.
Furthermore, our response to any union organizing efforts could adversely impact our reputation, adversely impact our relationship with our Crew members, expose us to legal and regulatory actions, or require us to incur additional costs to defend any such actions. Furthermore, independent third-party transportation companies deliver the majority of our merchandise to our stores and to our customers.
Furthermore, our response to any union organizing efforts could adversely impact our reputation, adversely impact our relationship with our Crew members, expose us to legal and regulatory actions, or require us to incur additional costs to defend any such actions. 26 Table of Contents Furthermore, independent third-party distribution and transportation companies deliver the majority of our merchandise to our stores and to our customers.
On December 6, 2022, the FDA issued final guidance on homeopathic drugs, stating that the agency intends to take a risk-based approach to reviewing how some homeopathic drug products are marketed, under which it will prioritize enforcement and regulatory actions for homeopathic products posing the greatest risk to patients.
The FDA has issued final guidance on homeopathic drugs, stating that the agency intends to take a risk-based approach to reviewing how some homeopathic drug products are marketed, under which it will prioritize enforcement and regulatory actions for homeopathic products posing the greatest risk to patients.
These increased demands and operating complexities could cause us to operate our business less efficiently, which could materially and adversely affect our operations, financial performance and future growth. We may not be able to open new stores on schedule or operate them successfully.
These increased demands and operating complexities could cause us to operate our business less efficiently, which could materially and adversely affect our operations, financial performance and future growth. 19 Table of Contents We may not be able to open new stores on schedule or operate them successfully.
The FDA prohibits the inclusion of CBD in the food supply and dietary supplements even if they are derived from industrial hemp on the basis that CBD is an active ingredient in FDA-approved drugs, and, therefore, its addition to foods and dietary supplements is unlawful under the federal Food, Drug, and Cosmetic Act (the FDCA).
The FDA prohibits the inclusion of CBD in the food supply and dietary supplements even if they are derived from industrial hemp on the basis that CBD is an active ingredient in FDA-approved drugs, and, therefore, its addition to foods and dietary supplements is unlawful under the FDCA.
We paid a quarterly cash dividend of $0.10 per share of common stock during each quarter of fiscal years 2024 and 2023, and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.
We paid a quarterly cash dividend of $0.12 and $0.10 per share of common stock during each quarter of fiscal years 2025 and 2024, and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.
Inflationary or deflationary pressures on the products we sell could impact our net sales and earnings. If the cost of goods changes as a result of inflation or deflation, we may be unable to adjust our retail prices accordingly, which could adversely impact our sales or earnings.
Inflationary or disinflationary pressures on the products we sell could impact our net sales and earnings. If the cost of goods changes as a result of inflation or disinflation, we may be unable to adjust our retail prices accordingly, which could adversely impact our sales or earnings.
We have been able to mitigate this impact to date through our pricing strategies. While levels of inflation moderated during fiscal year 2024, we are unable to predict the long-term impact of inflationary or deflationary trends on consumer behavior and our sales and profitability in the future.
We have been able to mitigate this impact to date through our pricing strategies. While levels of inflation moderated during fiscal years 2024 and 2025, we are unable to predict the long-term impact of inflationary or disinflationary trends on consumer behavior and our sales and profitability in the future.
In addition, the FDA has aggressively enforced its regulations with respect to structure/function claims ( e.g., “calcium builds strong bones”), nutrient content claims ( e.g., “high in antioxidants”) and other claims that impermissibly suggest therapeutic benefits for certain foods or food components.
In addition, the FDA has aggressively enforced its regulations with respect to structure/function claims ( e.g., “calcium builds strong bones”), nutrient content claims ( e.g., “high in antioxidants”) and other claims that impermissibly suggest therapeutic benefits for certain foods or food components, as well as dietary supplements and cosmetics.
As of September 30, 2024, we had primary store concentration in Colorado and Texas, operating 46 stores and 23 stores in those states, respectively. As a result, our business is currently more susceptible to regional conditions than the operations of more geographically diversified competitors, and we are vulnerable to economic downturns in those regions.
As of September 30, 2025, we had primary store concentration in Colorado and Texas, operating 45 stores and 25 stores in those states, respectively. As a result, our business is currently more susceptible to regional conditions than the operations of more geographically diversified competitors, and we are vulnerable to economic downturns in those regions.
In addition, the number of private consumer class actions relating to false or deceptive advertising against cosmetic, food, beverage and nutritional supplement manufacturers has increased in recent years.
In addition, the number of private consumer class actions relating to false or deceptive advertising against cosmetics, food, beverage and dietary supplement manufacturers has increased in recent years.
The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business. One analyst currently covers our stock.
The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business.
The resulting uncertainty has led to consumer confusion, distrust and legal challenges. Plaintiffs have commenced legal actions against a number of food companies that market “natural” products, asserting false, misleading and deceptive advertising and labeling claims, including claims related to genetically modified ingredients.
The resulting uncertainty has led to legal challenges. Class action lawyers have commenced legal actions against a number of consumer product companies that market “natural” products, asserting false, misleading and deceptive advertising and labeling claims, including claims related to genetically modified ingredients.
Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new customers and to provide products that appeal to customers at prices they are willing and able to pay.
We may experience continued volatility with respect to these trends. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new customers and to provide products that appeal to customers at prices they are willing and able to pay.
Risks related to government regulations and policies ● Regulatory requirements imposed on us or our suppliers could change, increasing our costs and a failure to comply could adversely affect our business, results of operations and financial condition; ● Our sale of products containing cannabidiol (CBD) could lead to regulatory action by federal, state and/or local authorities or legal proceedings brought by or on behalf of consumers; ● The activities of our NHCs and our nutrition education services may be impacted by government regulation or an inability to secure adequate liability insurance; ● The products we sell could suffer from real or perceived quality or food safety concerns and may cause unexpected side effects, illness, injury or death that could result in their discontinuance or expose us to lawsuits, any of which could result in unexpected costs and damage to our reputation; and ● Our political advocacy activities may reduce our customer count and sales. 18 Table of Contents Risks related to our indebtedness and liquidity ● Our credit facility could limit our operational flexibility; ● We may be unable to generate sufficient cash flow, which could adversely impact our business and we may need to raise additional capital through debt or equity financing; and ● Our share repurchase program may adversely affect our liquidity and cause fluctuations in our stock price.
Risks related to government regulations and policies ● New or increased tariffs on the foreign-sourced goods that we sell or the foreign-sourced materials incorporated into such goods could have a material adverse effect on our business, financial condition and results of operations. ● Regulatory requirements imposed on us or our suppliers could change, increasing our costs and a failure to comply could adversely affect our business, results of operations and financial condition; ● The activities of our NHCs and our nutrition education services may be impacted by government regulation or an inability to secure adequate liability insurance; ● The products we sell could suffer from real or perceived quality or food safety concerns and may cause unexpected side effects, illness, injury or death that could result in their discontinuance or expose us to lawsuits, any of which could result in unexpected costs and damage to our reputation; and ● Our political advocacy activities may reduce our customer count and sales. 18 Table of Contents Risks related to our indebtedness and liquidity ● Our credit facility could limit our operational flexibility; ● We may be unable to generate sufficient cash flow, which could adversely impact our business and we may need to raise additional capital through debt or equity financing; and ● Our share repurchase program may adversely affect our liquidity and cause fluctuations in our stock price.
Further, class action lawsuits have been filed against certain CBD manufacturers alleging that their products are misbranded, mislabeled and falsely advertised under state consumer protection laws. We sell products containing CBD at certain of our stores.
Further, class action lawsuits have been filed against certain CBD manufacturers alleging that their products are misbranded, mislabeled and falsely advertised under state consumer protection laws.
Accordingly, changes in dietary supplement regulation could also materially adversely affect the cost and availability of the dietary supplement products that we sell. 30 Table of Contents Advertising and Products Claims Risks.
Accordingly, changes in dietary supplement regulation could also materially adversely affect the cost and availability of the dietary supplement products that we sell.
The current labor market has impacted our ability to retain and attract store Crew members and we continue to be challenged by labor shortages broadly impacting the retail industry.
In recent years, the labor market has impacted our ability to retain and attract store Crew members, and in certain markets we continue to be challenged by labor shortages impacting the retail industry.
The UFCW has sought unsuccessfully to organize at certain other of our stores from time to time, and we could face organizing activities at other of our locations in the future.
The United Food and Commercial Workers Union (the UFCW) has previously sought to organize at certain of our stores from time to time, and we could face organizing activities at other of our locations in the future.
Public disclosure of our suppliers’ violations of the National Bioengineered Food Disclosure Standard could result in a loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims. 31 Table of Contents PFAS Statutes and Lawsuits.
Public disclosure of our suppliers’ violations of the National Bioengineered Food Disclosure Standard could result in a loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims. Environmental and Green Claims .
An inability to maintain or increase our operating margins could adversely affect our results of operations. We intend to continue our focus on improving our operating margins by leveraging more efficiencies of scale, additional improved systems, further cost discipline, added focus on appropriate store labor levels and even more disciplined product selection.
We intend to continue our focus on improving our operating margins by leveraging more efficiencies of scale, additional improved systems, further cost discipline, added focus on appropriate store labor levels and even more disciplined product selection.
While the number of our Crew members represented by unions is not significant, the unionization of a significant portion of our workforce could result in work slowdowns, increase our labor costs and reduce the efficiency of our operations at affected locations, adversely affect our flexibility to run our business competitively, and otherwise have a material adverse effect on our business, financial condition and results of operations.
While the number of our Crew members in any single store-specific collective bargaining unit would not be individually significant, the unionization of a significant portion of our workforce could result in work slowdowns, increase our labor costs and reduce the efficiency of our operations at affected locations, adversely affect our flexibility to run our business competitively, and otherwise have a material adverse effect on our business, financial condition and results of operations.
The loss of any member of our senior management team could have a material adverse effect on our ability to operate our business, financial condition and results of operations, unless, and until, we are able to find a qualified replacement.
Our business requires disciplined execution at all levels of our organization. This execution requires an experienced and talented management team. The loss of any member of our senior management team could have a material adverse effect on our ability to operate our business, financial condition and results of operations, unless, and until, we are able to find a qualified replacement.
We, as well as our suppliers, are subject to numerous federal, state and local laws and regulations and our compliance with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, require recalls of certain products, raise regulatory enforcement risks not present in the past or otherwise adversely affect our business, results of operations and financial condition.
There can be no assurance that we would be successful in finding such third-party suppliers that meet our quality guidelines. 30 Table of Contents We, as well as our suppliers, are subject to numerous federal, state and local laws and regulations and our compliance with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, require recalls of certain products, raise regulatory enforcement risks not present in the past or otherwise adversely affect our business, results of operations and financial condition.
Failure to protect our information systems against cyber-attacks or information security breaches, including failure to protect the integrity and security of individually identifiable data of our customers and Crew members, could expose us to litigation, damage our reputation and have a material adverse effect on our business.
Any material interruption in the information technology systems we rely on could have a material adverse effect on our business, operating results and financial condition. 27 Table of Contents Failure to protect our information systems against cyber-attacks or information security breaches, including failure to protect the integrity and security of individually identifiable data of our customers and Crew members, could expose us to litigation, damage our reputation and have a material adverse effect on our business.
If the analyst ceases to cover our Company or fails to publish reports on us regularly, we may lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
If one or more of these analysts cease to cover our Company or fail to publish reports on us regularly, we may lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
From time to time, we have experienced increased shipping costs due to higher fuel and freight prices, and these costs may continue to be volatile. We may not be able to recover these rising costs through increased prices charged to our customers, and any increased prices may exacerbate the risk of customers choosing lower-cost alternatives.
We may not be able to recover these rising costs through increased prices charged to our customers, and any increased prices may exacerbate the risk of customers choosing lower-cost alternatives.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in or perceptions of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation could have a material adverse effect on our business, financial position and results of operations.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in or perceptions of our business, regardless of whether the allegations are valid or whether we are ultimately found liable.
The resulting uncertainty has led to consumer confusion, distrust and a growing number of legal challenges. Plaintiffs have commenced class action litigation against a number of food companies and retailers that market “natural” products, asserting false, misleading and deceptive advertising and labeling claims.
The resulting uncertainty has led to a growing number of legal challenges. Plaintiffs have commenced class action litigation against a number of food companies and retailers that market products as “natural,” “healthy” or with terms that convey a similar meaning, asserting false, misleading and deceptive advertising and labeling.
On November 20, 2024, our Board approved the payment of a quarterly cash dividend of $0.12 per share of common stock to be paid on December 18, 2024 to stockholders of record as of the close of business on December 2, 2024.
On November 19, 2025, our Board approved the payment of a quarterly cash dividend of $0.15 per share of common stock, which was paid on December 10, 2025 to stockholders of record as of the close of business on December 1, 2025.
In addition, we may be required to find new third-party suppliers of our private label products or to find third-party suppliers to source our bulk foods. There can be no assurance that we would be successful in finding such third-party suppliers that meet our quality guidelines.
In addition, we may be required to find new third-party suppliers of our private label products or to find third-party suppliers to source our bulk foods.
Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims could be difficult and costly to overcome and may significantly reduce our brand value.
Adverse publicity about these matters may discourage consumers from buying the products we sell. The cost of defending against any such claims could be significant. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims could be difficult and costly to overcome and may significantly reduce our brand value.
If we were to receive an adverse judgment in such a matter, we could suffer further dilution of our trademarks or service marks and other rights, which could harm our ability to compete as well as our business prospects, financial condition and results of operations. 28 Table of Contents Energy costs are a significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability.
If we were to receive an adverse judgment in such a matter, we could suffer further dilution of our trademarks or service marks and other rights, which could harm our ability to compete as well as our business prospects, financial condition and results of operations.
Moreover, if the analyst who covers our Company downgrades our common stock, or if our operating results do not meet its expectations, our common stock price could decline.
Moreover, if one or more of the analysts who cover our Company downgrade our common stock, or if our operating results do not meet their expectations, our common stock price could decline.
If we are unable to offer competitive wages, it may be more difficult for us to identify, hire and retain qualified personnel or the quality of our workforce could decline, causing customer service to be adversely impacted. 25 Table of Contents Any significant interruption in the operations of our bulk food repackaging facility and distribution center or our supply chain network could disrupt our ability to deliver our merchandise in a timely manner.
If we are unable to offer competitive wages, it may be more difficult for us to identify, hire and retain qualified personnel or the quality of our workforce could decline, causing customer service to be adversely impacted.
In addition, liabilities associated with the risks that are retained by us are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Our results could be materially impacted by claims and other expenses related to such plans if future occurrences and claims differ from these assumptions and historical trends.
In addition, liabilities associated with the risks that are retained by us are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions.
These anti-takeover provisions could substantially impede the ability of our common stockholders to benefit from a change in control and, as a result, could materially adversely affect the market price of our common stock and our stockholders’ ability to realize any potential change-in-control premium. 37 Table of Contents We are a “ controlled company ” within the meaning of the NYSE Listed Company Manual, and, as a result, rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.
These anti-takeover provisions could substantially impede the ability of our common stockholders to benefit from a change in control and, as a result, could materially adversely affect the market price of our common stock and our stockholders’ ability to realize any potential change-in-control premium.
In addition, we may face internally generated competition when we open new stores in markets we already serve. An inability to compete effectively may cause us to lose market share to our competitors and could have a material adverse effect on our business, financial condition and results of operations.
An inability to compete effectively may cause us to lose market share to our competitors and could have a material adverse effect on our business, financial condition and results of operations. An inability to maintain or increase our operating margins could adversely affect our results of operations.
In particular, we believe that the Natural Grocers name is important to our business, as well as to the implementation of our growth strategy.
We believe that our trademarks or service marks, trade dress, copyrights, trade secrets, know-how and similar intellectual property are important to our success. In particular, we believe that the Natural Grocers name is important to our business, as well as to the implementation of our growth strategy.
In the future, our suppliers could decide to distribute such products through other retail distribution channels, allowing more of our competitors to offer these products to our core customers, which could negatively impact our revenue.
In the future, our suppliers could decide to distribute such products through other retail distribution channels, allowing more of our competitors to offer these products to our core customers, which could negatively impact our revenue. 25 Table of Contents Our ability to operate our business effectively could be impaired if we fail to retain or attract key personnel or are unable to attract, train and retain qualified employees.
We repackage and distribute some of the products we sell through our bulk food repackaging facility and distribution center in Golden, Colorado.
Any significant interruption in the operations of our bulk food repackaging facility and distribution center or our supply chain network could disrupt our ability to deliver our merchandise in a timely manner. We repackage and distribute some of the products we sell through our bulk food repackaging facility and distribution center in Golden, Colorado.
In limited circumstances, the FDA and state attorneys general have taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components.
In limited circumstances, the FDA and state attorneys general have taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components. Should we become subject to similar claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded.
This guidance and related enforcement action may adversely impact the availability of certain homeopathic products for sale in our stores. Third-Party Risks. We rely on our suppliers and contract manufacturers to ensure that the products they manufacture and sell to us comply with all applicable regulatory requirements and are made using FDA-mandated good manufacturing practices.
We rely on our suppliers and contract manufacturers to ensure that the products they manufacture and sell to us comply with all applicable regulatory requirements and are made using FDA-mandated good manufacturing practices. In general, we seek certifications of compliance, representations and warranties, indemnification and/or insurance from our suppliers and contract manufacturers, directly or through our distributor.
Effective tax rate changes and results of examinations by taxing authorities could materially impact our results of operations.
As a result, litigation could have a material adverse effect on our business, financial position and results of operations. 29 Table of Contents Effective tax rate changes and results of examinations by taxing authorities could materially impact our results of operations.
We utilize natural gas, water, sewer and electricity in our stores and use gasoline and diesel in trucks that deliver products to our stores. Increases in energy costs, whether driven by increased demand, decreased or disrupted supply or an anticipation of any such events will increase the costs of operating our stores.
Increases in energy costs, whether driven by increased demand, decreased or disrupted supply or an anticipation of any such events will increase the costs of operating our stores. From time to time, we have experienced increased shipping costs due to higher fuel and freight prices, and these costs may continue to be volatile.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur VP of IT has over 25 years of information technology experience, has earned a graduate degree in Cybersecurity and Information Assurance, and maintains relevant industry designations including Certified Information Systems Security Professional and Certified Information Security Manager certifications. Our Board considers cybersecurity risk as a part of its overall risk oversight function.
Biggest changeOur VP of IT has over 26 years of information technology experience, has earned a graduate degree in Cybersecurity and Information Assurance, and maintains relevant industry designations including Certified Information Systems Security Professional and Certified Information Security Manager certifications. 39 Table of Contents Our Board considers cybersecurity risk as a part of its overall risk oversight function.
Our Board receives reports from our VP of IT at least bi-annually, and on an as-needed basis, on cybersecurity risks and actions taken to mitigate those risks. These reports include updates on our cybersecurity risks and the emerging threat environment, and the status of projects designed to enhance our information security systems and programs.
Our Board receives reports from our VP of IT at least bi-annually, and on an as-needed basis, on cybersecurity risks and actions taken to mitigate those risks. These reports include updates on our cybersecurity risks, the emerging threat environment, and the status of projects designed to enhance our information security systems and programs.
Our employees are required to participate in regular cybersecurity awareness trainings upon hiring and on a quarterly basis thereafter. 38 Table of Contents Cybersecurity Governance Our Vice President of Information Technology (our VP of IT) has primary responsibility for monitoring, assessing and managing our material risks from cybersecurity threats.
Our employees are required to participate in regular cybersecurity awareness trainings upon hiring and on a quarterly basis thereafter. Cybersecurity Governance Our Vice President of Information Technology (our VP of IT) has primary responsibility for monitoring, assessing and managing our material risks from cybersecurity threats.
We utilize third party security firms and consultants to test our cybersecurity control environment and to provide certain security measures that we use to protect our information technology environment, including to detect and filter external phishing and malware threats, to provide enhanced endpoint protection and to protect our data through data classification.
We utilizethird party security firms and consultants to test our cybersecurity control environment and to provide certain security measures that we use to protect our information technology environment, including to detect and filter external phishing and malware threats, to provide enhanced endpoint protection and to protect our data through data classification.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOf the current leases for our stores, nine expire in fiscal year 2025, eleven expire in fiscal year 2026, ten expire in fiscal year 2027, twelve expire in fiscal year 2028, nineteen expire in fiscal year 2029 and the remainder expire between fiscal years 2030 and 2062.
Biggest changeOf the current leases for our stores, seven expire in fiscal year 2026, nine expire in fiscal year 2027, 12 expire in fiscal year 2028, 19 expire in fiscal year 2029, 15 expire in fiscal year 2030 and the remainder expire between fiscal years 2031 and 2062.
As of September 30, 2024, we owned buildings in which sixteen of our stores are located. Eleven of those buildings are located on land that is leased pursuant to a ground lease; the remaining five stores are on land owned by the Company. Lease terms typically range between 10 and 25 years, with additional renewal options.
As of September 30, 2025, we owned buildings in which 17 of our stores are located. Eleven of those buildings are located on land that is leased pursuant to a ground lease; the remaining six stores are on land owned by the Company. Lease terms typically range between 10 and 25 years, with additional renewal options.
As of September 30, 2024, we had 169 stores located in 21 states, as shown in the following chart: State Number of Stores Arizona 12 Arkansas 3 Colorado 46 Idaho 6 Iowa 6 Kansas 8 Louisiana 1 Minnesota 1 Missouri 7 Montana 4 Nebraska 3 Nevada 4 New Mexico 6 North Dakota 3 Oklahoma 6 Oregon 14 South Dakota 1 Texas 23 Utah 8 Washington 5 Wyoming 2 Our home office is located in Lakewood, Colorado.
As of September 30, 2025, we had 169 stores located in 21 states, as shown in the following table: State Number of Stores Arizona 11 Arkansas 3 Colorado 45 Idaho 6 Iowa 6 Kansas 8 Louisiana 1 Minnesota 1 Missouri 7 Montana 4 Nebraska 3 Nevada 4 New Mexico 6 North Dakota 3 Oklahoma 6 Oregon 14 South Dakota 1 Texas 25 Utah 8 Washington 5 Wyoming 2 Our home office is located in Lakewood, Colorado.
We expect that we will be able to renegotiate these leases or relocate these stores as necessary. 39 Table of Contents
We expect that we will be able to renegotiate these leases or relocate these stores as necessary.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough we cannot predict with certainty the ultimate resolution of any lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations.
Biggest changeAlthough we cannot predict with certainty the ultimate resolution of any lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations. Item 4. Mine Safety Disclosures.
Added
Not applicable. 40 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy We paid a quarterly cash dividend of $0.10 per share of common stock during each quarter of fiscal years 2024 and 2023. We paid a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.
Biggest changeDividend Policy We paid a quarterly cash dividend of $0.12 and $0.10 per share of common stock during each quarter of fiscal years 2025 and 2024, respectively. We paid a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.
The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. The Company did not repurchase any shares of its common stock during the fourth quarter ended September 30, 2024.
The dollar value of the shares of the Company’s common stock that may yet be repurchased under the share repurchase program is $8.1 million. The Company did not repurchase any shares of its common stock during the fourth quarter ended September 30, 2025.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the symbol “NGVC.” Holders of Record As of December 9, 2024, there were 151 holders of record of our common stock, and the closing price of our common stock was $42.20.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the symbol “NGVC.” Holders of Record As of December 8, 2025, there were 138 holders of record of our common stock, and the closing price of our common stock was $24.80.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear ended September 30, 2024 compared to Year ended September 30, 2023 The following table summarizes our results of operations and other operating data for the periods presented, dollars in thousands: Year ended September 30, Change in 2024 2023 Dollars Percent Statements of Income Data: Net sales $ 1,241,585 1,140,568 101,017 8.9 % Cost of goods sold and occupancy costs 876,775 813,637 63,138 7.8 Gross profit 364,810 326,931 37,879 11.6 Store expenses 277,396 257,282 20,114 7.8 Administrative expenses 38,715 35,973 2,742 7.6 Pre-opening expenses 1,722 2,007 (285 ) (14.2 ) Operating income 46,977 31,669 15,308 48.3 Interest expense, net (4,176 ) (3,299 ) (877 ) 26.6 Income before income taxes 42,801 28,370 14,431 50.9 Provision for income taxes (8,866 ) (5,127 ) (3,739 ) 72.9 Net income $ 33,935 23,243 10,692 46.0 % 46 Table of Contents Net sales Net sales increased $101.0 million, or 8.9%, to $1,241.6 million for the year ended September 30, 2024 compared to $1,140.6 million for the year ended September 30, 2023, due to a $83.0 million increase in comparable store sales and a $22.6 million increase in new store sales, partially offset by a $4.6 million decrease in net sales related to closed stores.
Biggest changeOther Operating Data (Unaudited): Number of stores at end of period 169 169 165 Store unit count increase period over period — % 2.4 0.6 Change in daily average comparable store sales 7.3 % 7.0 3.6 Number of new stores opened during the period 2 4 3 Number of stores relocated/remodeled during the period 3 4 3 Number of stores closed during the period 2 — 2 Gross square footage at end of period (1) 2,735,774 2,728,203 2,676,607 Selling square footage at end of period (1) 1,776,373 1,780,083 1,745,701 (1) Gross square footage and selling square footage at the end of the period include the square footage for all stores that were open as of the end of the fiscal year presented. 46 Table of Contents Year ended September 30, 2025 compared to Year ended September 30, 2024 The following table summarizes our results of operations and other operating data for the periods presented, dollars in thousands: Year ended September 30, Change in 2025 2024 Dollars Percent Statements of Income Data: Net sales $ 1,330,836 1,241,585 89,251 7.2 % Cost of goods sold and occupancy costs 932,959 876,775 56,184 6.4 Gross profit 397,877 364,810 33,067 9.1 Store expenses 290,491 277,396 13,095 4.7 Administrative expenses 44,353 38,715 5,638 14.6 Pre-opening expenses 1,043 1,722 (679 ) (39.4 ) Operating income 61,990 46,977 15,013 32.0 Interest expense, net (3,063 ) (4,176 ) 1,113 (26.7 ) Income before income taxes 58,927 42,801 16,126 37.7 Provision for income taxes (12,483 ) (8,866 ) (3,617 ) 40.8 Net income $ 46,444 33,935 12,509 36.9 % Net sales Net sales increased $89.3 million, or 7.2%, to $1,330.8 million for the year ended September 30, 2025 compared to $1,241.6 million for the year ended September 30, 2024, due to an $86.1 million increase in comparable store sales and a $12.7 million increase in new store sales, partially offset by a $9.6 million decrease in net sales related to closed stores.
Administrative expenses Administrative expenses consist of home office-related expenses, such as salary and benefits, share-based compensation, office supplies, hardware and software expenses, depreciation and amortization expense, occupancy costs (including rent, common area maintenance, real estate taxes and utilities), professional services expenses, expenses associated with our Board, expenses related to compliance with the requirements of regulations applicable to publicly traded companies, and other general and administrative expenses.
Administrative expenses Administrative expenses consist of home office-related expenses, such as salary and benefits, share-based compensation, office supplies, hardware and software expenses, depreciation and amortization expense, occupancy costs (including rent, common area maintenance, real estate taxes and utilities), software services expenses, professional services expenses, expenses associated with our Board, expenses related to compliance with the requirements of regulations applicable to publicly traded companies, and other general and administrative expenses.
Goodwill and Indefinite-Lived Intangible Assets We assess our goodwill and indefinite-lived intangible assets, primarily consisting of trademarks, for possible impairment on an annual basis during our fourth fiscal quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.
Goodwill and Indefinite-Lived Intangible Assets We assess our goodwill and indefinite-lived intangible assets, primarily consisting of trademarks, for possible impairment on an annual basis during our fourth fiscal quarter, and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.
Our performance is also impacted by trends regarding natural and organic products, dietary supplements and at-home meal preparation. Consumer preferences towards dietary supplements or natural and organic food products might shift as a result of, among other things, economic conditions, food safety perceptions, changing consumer choices and the cost of these products.
Our performance is also impacted by trends regarding natural and organic products, dietary supplements and at-home meal preparation. Consumer preferences towards dietary supplements or natural and organic food products might shift as a result of, among other things, economic conditions, perceptions of food safety and standards, changing consumer choices and the cost of these products.
Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate on May 31, 2026. We did not repurchase any shares of our common stock during the year ended September 30, 2024.
Our Board subsequently extended the share repurchase program – most recently in May 2024 – and the current program will terminate on May 31, 2026. We did not repurchase any shares of our common stock during the year ended September 30, 2025.
As of September 30, 2024, the Company has recorded no impairment charges related to goodwill and indefinite-lived intangible assets. 52 Table of Contents Impairment of Long-Lived Assets and Store Closing Costs We assess our long-lived assets, principally property and equipment, lease assets, and intangible and other assets subject to amortization, primarily internal-use software and implementation costs for software hosting arrangements, respectively, for possible impairment at least annually, or whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
As of September 30, 2025, the Company has recorded no impairment charges related to goodwill and indefinite-lived intangible assets. 52 Table of Contents Impairment of Long-Lived Assets and Store Closing Costs We assess our long-lived assets, principally property and equipment, lease assets, and intangible and other assets subject to amortization, primarily internal-use software and implementation costs for software hosting arrangements, respectively, for possible impairment at least annually, and whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
As of September 30, 2024, we operated 169 stores in 21 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.
As of September 30, 2025, we operated 169 stores in 21 states, including Colorado, Arizona, Arkansas, Idaho, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming. We also operate a bulk food repackaging facility and distribution center in Golden, Colorado.
Additionally, store expenses include any gain or loss recorded on the disposal of fixed assets and lease terminations, primarily related to store relocations, as well as store closing costs. Store expenses also include long-lived asset impairment charges. The majority of store expenses consists of labor-related expenses, which we closely manage and which trend closely with sales.
Additionally, store expenses include any gain or loss recorded on the disposal of fixed assets and lease terminations, primarily related to store relocations, as well as store closing costs. Store expenses also include long-lived asset impairment charges. The majority of store expenses consist of labor-related expenses, which we closely manage and which trend closely with sales.
Rent expense is generally incurred from three to six months prior to a store’s opening date for store leases classified as operating. For store leases classified as finance leases, we recognize pre-opening interest and depreciation expense. Other pre-opening expenses are generally incurred in the four to seven months prior to the store opening.
Rent expense is generally incurred from three to six months prior to a store’s opening date for store leases classified as operating. For store leases classified as finance leases, we recognize pre-opening depreciation expense. Other pre-opening expenses are generally incurred in the four to seven months prior to the store opening.
Some of the limitations are: ● EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; ● EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; ● EBITDA and Adjusted EBITDA do not reflect any depreciation or interest expense for leases classified as finance leases; ● EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt; ● Adjusted EBITDA does not reflect share-based compensation, impairment charges, and store closing costs; ● EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and ● although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
Some of the limitations are: ● EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; ● EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; ● EBITDA and Adjusted EBITDA do not reflect any depreciation or interest expense for leases classified as finance leases; ● EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt; ● Adjusted EBITDA does not reflect share-based compensation, impairment of long-lived assets, store closing costs and amortization of SaaS implementation costs; ● EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
We offer a variety of natural and organic groceries and dietary supplements that meet our strict quality guidelines. The sizes of our stores range from approximately 7,000 to 16,000 selling square feet.
We offer a variety of natural and organic groceries and dietary supplements that meet our strict quality guidelines. The sizes of our stores range from approximately 7,000 to 17,000 selling square feet.
The estimated incremental borrowing rate is based on the borrowing rate for a secured loan with a term similar to the expected term of the lease. 53 Table of Contents Significant accounting judgment and assumptions are required in determining the accounting for leases, including: ● fair market value of the leased asset, which is generally estimated based on project costs or comparable market data.
The estimated incremental borrowing rate is based on the borrowing rate for a secured loan with a term similar to the expected term of the lease. Significant accounting judgment and assumptions are required in determining the accounting for leases, including: ● fair market value of the leased asset, which is generally estimated based on project costs or comparable market data.
Interest expense, net Interest expense consists of the interest associated with finance lease obligations and our Credit Facility, net of capitalized interest. Income tax expense Income taxes are accounted for in accordance with the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740 “Income Taxes”.
Interest expense, net Interest expense consists of the interest associated with finance lease obligations and our Credit Facility, net of capitalized interest. 45 Table of Contents Income tax expense Income taxes are accounted for in accordance with the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 740 “Income Taxes”.
The minimum lease term is used as a factor in determining whether the lease is accounted for as an operating lease or a finance lease and in determining the period over which to depreciate the finance lease asset; and ● incremental borrowing rate which is estimated based on treasury rates for debt with maturities comparable to the minimum lease term and our credit spread and other premiums.
The minimum lease term is used as a factor in determining whether the lease is accounted for as an operating lease or a finance lease and in determining the period over which to depreciate the finance lease asset; and 53 Table of Contents ● incremental borrowing rate which is estimated based on treasury rates for debt with maturities comparable to the minimum lease term and our credit spread and other premiums.
Store occupancy costs include operating lease expense, common area maintenance and real estate taxes. Depreciation expense included in cost of goods sold relates to depreciation of assets directly used at our bulk food repackaging facility.
Store occupancy costs include rent, common area maintenance and real estate taxes. Depreciation expense included in cost of goods sold relates to depreciation of assets directly used at our bulk food repackaging facility.
The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five years ended September 30, 2024, we increased our store count at a compound annual growth rate of 2.0%.
The growth in the organic and natural foods industry and growing consumer interest in health and nutrition have enabled us to continue to open new stores and enter new markets. During the five fiscal years ended September 30, 2025, we increased our store count at a compound annual growth rate of 1.2%.
The grocery industry and our sales are affected by general economic conditions, including, but not limited to, consumer spending, levels of disposable consumer income, consumer debt, interest rates, inflation or deflation, periods of recession and growth, the price of commodities, the political environment and consumer confidence.
The grocery industry and our sales are affected by general economic conditions, including, but not limited to, consumer spending, levels of disposable consumer income, consumer debt, interest rates, inflation or disinflation, periods of recession and growth, the price of commodities, tariffs and trade restrictions, the political environment and consumer confidence.
We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company’s actual operating performance, including certain items such as impairment charges, store closing costs, share-based compensation and non-recurring items.
We define Adjusted EBITDA as EBITDA as adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the Company’s actual operating performance, including certain items such as impairment charges, store closing costs, share-based compensation, amortization of software hosting arrangement (SaaS) implementation costs and non-recurring items.
As of September 30, 2024, cash and cash equivalents was $8.9 million, and there was $72.8 million available for borrowing under our Credit Facility, net of undrawn, issued and outstanding letters of credit of $2.2 million. 42 Table of Contents Industry Trends and Economics We have identified the following recent trends and factors that have impacted and may continue to impact our results of operations and financial condition: ● Impact of broader economic trends and political environment.
As of September 30, 2025, cash and cash equivalents was $17.1 million, and there was $70.1 million available for borrowing under our Credit Facility, net of undrawn, issued and outstanding letters of credit of $2.4 million. 42 Table of Contents Industry Trends and Economics We have identified the following recent trends and factors that have impacted and may continue to impact our results of operations and financial condition: ● Impact of broader economic trends and political environment.
Actual amounts may differ from these estimates. We base our estimates on historical experience and on various other assumptions and factors that we believe to be reasonable under the circumstances. We evaluate our accounting policies and resulting estimates on an ongoing basis to make adjustments we consider appropriate under the facts and circumstances.
We base our estimates on historical experience and on various other assumptions and factors that we believe to be reasonable under the circumstances. We evaluate our accounting policies and resulting estimates on an ongoing basis to make adjustments we consider appropriate under the facts and circumstances.
Daily average comparable store sales increased 7.0% for the year ended September 30, 2024 compared to an increase of 3.6% for the year ended September 30, 2023. The daily average comparable store sales increase in fiscal year 2024 resulted from a 3.8% increase in daily average transaction count and a 3.1% increase in daily average transaction size.
Daily average comparable store sales increased 7.3% for the year ended September 30, 2025 compared to an increase of 7.0% for the year ended September 30, 2024. The daily average comparable store sales increase in fiscal year 2025 resulted from a 4.6% increase in daily average transaction count and a 2.6% increase in daily average transaction size.
Year ended September 30, 2023 compared to Year ended September 30, 2022 A comparative discussion of operating, investing and financing activities for the years ended September 30, 2023 and September 30, 2022 is set out in our Annual Report on Form 10-K for the year ended September 30, 2023 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” 50 Table of Contents Credit Facility The revolving commitment amount under the Credit Facility is $72.5 million, including a $5.0 million sub-limit for standby letters of credit.
Year ended September 30, 2024 compared to Year ended September 30, 2023 A comparative discussion of operating, investing and financing activities for the years ended September 30, 2024 and September 30, 2023 is set out in our Annual Report on Form 10-K for the year ended September 30, 2024 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.” Credit Facility The aggregate revolving commitment amount under the Credit Facility, as of the date of this report, is $70.0 million, including a $5.0 million sub-limit for standby letters of credit.
Income tax expense also includes excess tax benefits and deficiencies related to the vesting of restricted stock units. 45 Table of Contents Results of Operations The following table presents key components of our results of operations expressed as a percentage of net sales for the periods presented: Year ended September 30, 2024 2023 2022 Statements of Income Data:* Net sales 100.0 % 100.0 100.0 Cost of goods sold and occupancy costs 70.6 71.3 72.0 Gross profit 29.4 28.7 28.0 Store expenses 22.3 22.6 22.2 Administrative expenses 3.1 3.2 2.9 Pre-opening expenses 0.1 0.2 0.1 Operating income 3.8 2.8 2.8 Interest expense, net (0.3 ) (0.3 ) (0.2 ) Income before income taxes 3.4 2.5 2.5 Provision for income taxes (0.7 ) (0.4 ) (0.6 ) Net income 2.7 % 2.0 2.0 *Figures may not sum due to rounding.
Results of Operations The following table presents key components of our results of operations expressed as a percentage of net sales for the periods presented: Year ended September 30, 2025 2024 2023 Statements of Income Data: * Net sales 100.0 % 100.0 100.0 Cost of goods sold and occupancy costs 70.1 70.6 71.3 Gross profit 29.9 29.4 28.7 Store expenses 21.8 22.3 22.6 Administrative expenses 3.3 3.1 3.2 Pre-opening expenses 0.1 0.1 0.2 Operating income 4.7 3.8 2.8 Interest expense, net (0.2 ) (0.3 ) (0.3 ) Income before income taxes 4.4 3.4 2.5 Provision for income taxes (0.9 ) (0.7 ) (0.4 ) Net income 3.5 % 2.7 2.0 __________________________ * Figures may not sum due to rounding.
Store expenses included long-lived asset impairment charges of $2.2 million and $1.3 million for fiscal years 2024 and 2023, respectively. Administrative expenses Administrative expenses increased $2.7 million, or 7.6%, to $38.7 million for the year ended September 30, 2024 compared to $36.0 million for the year ended September 30, 2023.
Store expenses included long-lived asset impairment charges of $0.1 million and $2.2 million for fiscal years 2025 and 2024, respectively. Administrative expenses Administrative expenses increased $5.6 million, or 14.6%, to $44.4 million for the year ended September 30, 2025 compared to $38.7 million for the year ended September 30, 2024.
We plan to spend approximately $36.0 million to $44.0 million on capital expenditures during fiscal year 2025 primarily in connection with expected new store openings and store relocations/remodels.
We plan to spend approximately $50.0 million to $55.0 million on capital expenditures during fiscal year 2026 primarily in connection with expected new store openings and store relocations/remodels.
The timing and the number of shares repurchased, if any, will be dictated by our capital needs and stock market conditions. We paid quarterly cash dividends of $0.10 per share of common stock in each quarter of fiscal year 2024 and a special cash dividend of $1.00 per share of common stock in the first quarter of fiscal year 2024.
The timing and the number of shares repurchased, if any, will be dictated by our capital needs and stock market conditions. We paid a quarterly cash dividend of $0.12 per share of common stock in each quarter of fiscal year 2025.
As of September 30, 2024, we had $8.9 million in cash and cash equivalents and $72.8 million available for borrowing under our Credit Facility. In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of the Company’s common stock.
As of September 30, 2025, we had $17.1 million in cash and cash equivalents and $70.1 million available for borrowing under our Credit Facility. 49 Table of Contents In May 2016, our Board authorized a two-year share repurchase program pursuant to which the Company may repurchase up to $10.0 million in shares of the Company’s common stock.
Occupancy costs as a percentage of net sales typically decrease as new stores mature and sales increase. Lease payments for leases classified as finance lease obligations are not recorded in cost of goods sold and occupancy costs.
Occupancy costs as a percentage of net sales typically decrease as new stores mature and sales increase. Lease payments for leases classified as finance lease obligations are not recorded in cost of goods sold and occupancy costs. Rather, these lease payments are recognized as a reduction of the related obligations and as interest expense.
The following is a summary of our operating, investing and financing activities for the periods presented, dollars in thousands: Year ended September 30, 2024 2023 Net cash provided by operating activities $ 73,760 64,606 Net cash used in investing activities (38,600 ) (37,950 ) Net cash used in financing activities (44,631 ) (20,353 ) Net (decrease) increase in cash and cash equivalents (9,471 ) 6,303 Cash and cash equivalents, beginning of year 18,342 12,039 Cash and cash equivalents, end of year $ 8,871 18,342 Year ended September 30, 2024 compared to Year ended September 30, 2023 Operating Activities Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, impairment of long-lived assets and store closures, share-based compensation, and changes in deferred taxes, and the effect of changes in operating assets and liabilities.
The following is a summary of our operating, investing and financing activities for the periods presented, dollars in thousands: Year ended September 30, 2025 2024 Net cash provided by operating activities $ 55,304 73,760 Net cash used in investing activities (30,971 ) (38,600 ) Net cash used in financing activities (16,088 ) (44,631 ) Net increase (decrease) in cash and cash equivalents 8,245 (9,471 ) Cash and cash equivalents, beginning of year 8,871 18,342 Cash and cash equivalents, end of year $ 17,116 8,871 Year ended September 30, 2025 compared to Year ended September 30, 2024 Operating Activities Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, impairment of long-lived assets and store closures, share-based compensation and changes in deferred taxes, and the effect of changes in operating assets and liabilities.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $77.9 million for the year ended September 30, 2024, an increase of $17.3 million, or 28.6%, compared to EBITDA of $60.6 million for the year ended September 30, 2023. EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America (GAAP).
Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $93.8 million for the year ended September 30, 2025, an increase of $15.9 million, or 20.4%, compared to EBITDA of $77.9 million for the year ended September 30, 2024. EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States of America (GAAP).
Year ended September 30, 2023 compared to Year ended September 30, 2022 A comparative discussion of EBITDA and Adjusted EBITDA for the years ended September 30, 2023 and September 30, 2022 is set out in our Annual Report on Form 10-K for the year ended September 30, 2023 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP financial measures – EBITDA and Adjusted EBITDA.” Management believes some investors’ understanding of our performance is enhanced by including EBITDA and Adjusted EBITDA, which are non-GAAP financial measures.
Adjusted EBITDA as a percentage of net sales was 7.4% and 6.7% for the years ended September 30, 2025 and 2024, respectively. 48 Table of Contents Year ended September 30, 2024 compared to Year ended September 30, 2023 A comparative discussion of EBITDA and Adjusted EBITDA for the years ended September 30, 2024 and September 30, 2023 is set out in our Annual Report on Form 10-K for the year ended September 30, 2024 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP financial measures – EBITDA and Adjusted EBITDA.” Management believes some investors’ understanding of our performance is enhanced by including EBITDA and Adjusted EBITDA, which are non-GAAP financial measures.
Refer to the “Non-GAAP Financial Measures” section in this MD&A for a definition of EBITDA and a reconciliation of net income to EBITDA. ● Adjusted EBITDA. Adjusted EBITDA was $83.3 million for the year ended September 30, 2024, an increase of $19.9 million, or 31.4%, compared to Adjusted EBITDA of $63.4 million for the year ended September 30, 2023.
Refer to the “Non-GAAP Financial Measures” section in this MD&A for a definition of EBITDA and a reconciliation of net income to EBITDA. ● Adjusted EBITDA. Adjusted EBITDA was $97.9 million for the year ended September 30, 2025, an increase of $14.6 million, or 17.5%, compared to Adjusted EBITDA of $83.3 million for the year ended September 30, 2024.
A change in consumer preferences away from our offerings, including those resulting from higher retail prices for our products due to inflation, or reductions or changes in our offerings, could have a material adverse effect on our business.
A change in consumer preferences away from our offerings, including those resulting from higher retail prices for our products due to inflation or tariffs, or reductions or changes in our offerings, could have a material adverse effect on our business. 43 Table of Contents ● Fiscal year 2025 distribution disruption .
Performance Highlights Key highlights of our performance are discussed briefly below and in further detail throughout this MD&A. Key financial metrics, including, but not limited to, daily average comparable store sales, are defined in the section “Key Financial Metrics in Our Business,” presented later in this MD&A. ● Net sales.
Key financial metrics, including, but not limited to, daily average comparable store sales, are defined in the section “Key Financial Metrics in Our Business,” presented later in this MD&A. ● Net sales.
EBITDA as a percentage of net sales was 6.3% and 5.3% for the years ended September 30, 2024 and 2023, respectively. Adjusted EBITDA increased 31.4% to $83.3 million for the year ended September 30, 2024 compared to $63.4 million for the year ended September 30, 2023.
EBITDA as a percentage of net sales was 7.0% and 6.3% for the years ended September 30, 2025 and 2024, respectively. Adjusted EBITDA increased 17.5% to $97.9 million for the year ended September 30, 2025 compared to $83.3 million for the year ended September 30, 2024.
This increase was primarily the result of an increase in property and equipment of $1.0 million, partially offset by a decrease in other intangibles of $0.4 million during the year ended September 30, 2024 compared to the year ended September 30, 2023, and was attributed to the timing of new store openings, relocations/remodels, and software projects under development.
This decrease was primarily the result of decreases in acquisitions of property and equipment of $6.3 million and other intangibles of $1.0 million during the year ended September 30, 2025 compared to the year ended September 30, 2024, and was attributed to the timing of new store openings, relocations/remodels, and software projects under development.
The increase in store expenses was primarily driven by higher compensation expenses, depreciation expenses and long-lived asset impairment charges. Store expenses as a percentage of net sales were 22.3% and 22.6% for the years ended September 30, 2024 and 2023, respectively. The decrease in store expenses as a percentage of net sales primarily reflects expense leverage.
Store expenses as a percentage of net sales were 21.8% and 22.3% for the years ended September 30, 2025 and 2024, respectively. The decrease in store expenses as a percentage of net sales was driven by expense leverage and lower long-lived asset impairment charges.
Daily average comparable store sales for the year ended September 30, 2024 increased 7.0% from the year ended September 30, 2023. ● Net income. Net income was $33.9 million for the year ended September 30, 2024, an increase of $10.7 million, or 46.0%, compared to net income of $23.2 million for the year ended September 30, 2023. ● EBITDA.
Daily average comparable store sales for the year ended September 30, 2025 increased 7.3% from the year ended September 30, 2024. ● Net income. Net income was $46.4 million for the year ended September 30, 2025, an increase of $12.5 million, or 36.9%, compared to net income of $33.9 million for the year ended September 30, 2024. ● EBITDA.
Investing Activities Net cash used in investing activities increased $0.7 million, or 1.7%, to $38.6 million for the year ended September 30, 2024 compared to $38.0 million for the year ended September 30, 2023.
Investing Activities Net cash used in investing activities decreased $7.6 million, or 19.8%, to $31.0 million for the year ended September 30, 2025 compared to $38.6 million for the year ended September 30, 2024.
Net income Net income was $33.9 million, or $1.47 diluted earnings per share, for the year ended September 30, 2024 compared to $23.2 million, or $1.02 diluted earnings per share, for the year ended September 30, 2023. 47 Table of Contents Year ended September 30, 2023 compared to Year ended September 30, 2022 A comparative discussion of our results of operations and other operating data for the years ended September 30, 2023 and September 30, 2022 is set out in our Annual Report on Form 10-K for the year ended September 30, 2023 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Year ended September 30, 2023 compared to Year ended September 30, 2022.” Non-GAAP financial measures EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP.
Year ended September 30, 2024 compared to Year ended September 30, 2023 A comparative discussion of our results of operations and other operating data for the years ended September 30, 2024 and September 30, 2023 is set out in our Annual Report on Form 10-K for the year ended September 30, 2024 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Year ended September 30, 2024 compared to Year ended September 30, 2023.” Non-GAAP financial measures EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP.
Net sales were $1,241.6 million for the year ended September 30, 2024, an increase of $101.0 million, or 8.9%, compared to net sales of $1,140.6 million for the year ended September 30, 2023. ● Daily average comparable store sales.
Net sales were $1,330.8 million for the year ended September 30, 2025, an increase of $89.3 million, or 7.2%, compared to net sales of $1,241.6 million for the year ended September 30, 2024. ● Daily average comparable store sales.
(the operating company), is the borrower under the Credit Facility, and its obligations under the Credit Facility are guaranteed by us (the holding company) and Vitamin Cottage Two Ltd. Liability Company (VC2). The Credit Facility is secured by a lien on substantially all of the Company’s assets.
Our wholly owned subsidiary, Vitamin Cottage Natural Food Markets, Inc. (the operating company), is the borrower under the Credit Facility, and its obligations under the Credit Facility are guaranteed by us, the holding company. The Credit Facility is secured by a lien on substantially all of the Company’s assets.
As of September 30, 2024 and 2023, we had undrawn, issued and outstanding letters of credit of $2.2 million and $1.5 million, respectively, which were reserved against the amount available for borrowing under the Credit Facility. We had $72.8 million and $48.5 million available for borrowing under the Credit Facility as of September 30, 2024 and 2023, respectively.
We had no revolving loan amounts outstanding under the Credit Facility as of September 30, 2025 and 2024. As of September 30, 2025 and 2024, we had undrawn, issued and outstanding letters of credit of $2.4 million and $2.2 million, respectively, which were reserved against the amount available for borrowing under the Credit Facility.
By providing these non-GAAP financial measures, together with a reconciliation from net income, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. 48 Table of Contents Our competitors may define EBITDA and Adjusted EBITDA differently, and as a result, our measures of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA of other companies.
By providing these non-GAAP financial measures, together with a reconciliation from net income, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
The increase in gross margin during the year ended September 30, 2024 was primarily driven by store occupancy cost leverage and higher product margin attributed to effective pricing and promotions. Store expenses Store expenses increased $20.1 million, or 7.8%, to $277.4 million for the year ended September 30, 2024 compared to $257.3 million for the year ended September 30, 2023.
Gross margin increased to 29.9% for the year ended September 30, 2025 compared to 29.4% for the year ended September 30, 2024. The increase in gross margin during the year ended September 30, 2025 was driven by higher product margin primarily attributed to effective promotions, and store occupancy cost leverage.
Cost of goods sold and occupancy costs Our cost of goods sold and occupancy costs include the cost of inventory sold during the period (net of discounts and allowances), shipping and handling costs, distribution and supply chain costs (including the costs of our bulk food repackaging facility), buying costs, shrink expense, third-party delivery fees and store occupancy costs.
We use this metric to track the trends in average dollars spent in our stores per customer transaction. 44 Table of Contents Cost of goods sold and occupancy costs Our cost of goods sold and occupancy costs include the cost of inventory sold during the period (net of discounts and allowances), shipping and handling costs, distribution and supply chain costs (including the costs of our bulk food repackaging facility), buying costs, shrink expense, third-party delivery fees and store occupancy costs.
Share Repurchases Certain information about the Company's share repurchases is set forth under the heading "Share Repurchases" in Note 14, Stockholders ’ Equity , of the Notes to Consolidated Financial Statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.
Share Repurchases Certain information about the Company's share repurchases is set forth under the heading "Share Repurchases" in Note 14, Stockholders ’ Equity , of the Notes to Consolidated Financial Statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. 51 Table of Contents Recent Accounting Pronouncements For a description of new applicable accounting pronouncements, including those recently adopted, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.
The increase in cash provided by operating activities was due to an increase in cash provided by net income as adjusted for non-cash items, partially offset by a decrease in cash provided by operating assets and liabilities.
The decrease in cash provided by operating activities was due to a decrease in cash provided by operating assets and liabilities, primarily attributable to the timing of accounts payable payments and merchandise inventory purchases, and higher capitalized SaaS implementation costs, partially offset by an increase in cash provided by net income as adjusted for non-cash items.
The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands: Year ended September 30, 2024 2023 Net income $ 33,935 23,243 Interest expense, net 4,176 3,299 Provision for income taxes 8,866 5,127 Depreciation and amortization 30,930 28,906 EBITDA 77,907 60,575 Impairment of long-lived assets and store closing costs 2,547 1,464 Share-based compensation 2,829 1,360 Adjusted EBITDA $ 83,283 63,399 Year ended September 30, 2024 compared to Year ended September 30, 2023 EBITDA increased 28.6% to $77.9 million for the year ended September 30, 2024 compared to $60.6 million for the year ended September 30, 2023.
The following table reconciles net income to EBITDA and Adjusted EBITDA, dollars in thousands: Year ended September 30, 2025 2024 Net income $ 46,444 33,935 Interest expense, net 3,063 4,176 Provision for income taxes 12,483 8,866 Depreciation and amortization 31,814 30,930 EBITDA 93,804 77,907 Impairment of long-lived assets and store closing costs 118 2,547 Share-based compensation 3,960 2,829 Amortization of SaaS implementation costs 7 — Adjusted EBITDA $ 97,889 83,283 Year ended September 30, 2025 compared to Year ended September 30, 2024 EBITDA increased 20.4% to $93.8 million for the year ended September 30, 2025 compared to $77.9 million for the year ended September 30, 2024.
The increase in administrative expenses was driven by higher compensation expenses. Administrative expenses as a percentage of net sales were 3.1% and 3.2% for the years ended September 30, 2024 and 2023, respectively. Pre-opening expenses Pre-opening expenses were $1.7 million for the year ended September 30, 2024 compared to $2.0 million for the year ended September 30, 2023.
The increase in administrative expenses was driven by higher compensation expenses, including costs related to our Chief Financial Officer transition, and technology expenses. Administrative expenses as a percentage of net sales were 3.3% and 3.1% for the years ended September 30, 2025 and 2024, respectively.
Liquidity and Capital Resources Our ongoing primary sources of liquidity are cash generated from operations, current balances of cash and cash equivalents and borrowings under our Credit Facility. Our primary uses of cash are for purchases of inventory, operating expenses, capital expenditures predominantly in connection with opening, relocating and remodeling stores, debt service, cash dividends, share repurchases and corporate taxes.
Our primary uses of cash are for purchases of merchandise inventory, operating expenses, SaaS implementation costs, capital expenditures predominantly in connection with opening, relocating and remodeling stores, property acquisitions, debt service, cash dividends, share repurchases and corporate taxes.
Rather, these lease payments are recognized as a reduction of the related obligations and as interest expense. 44 Table of Contents Gross profit and gross margin Gross profit is equal to our net sales less our cost of goods sold and occupancy costs. Gross margin is gross profit as a percentage of net sales.
Gross profit and gross margin Gross profit is equal to our net sales less our cost of goods sold and occupancy costs. Gross margin is gross profit as a percentage of net sales.
As of September 30, 2024 and 2023, the Company was in compliance with all covenants under the Credit Facility.
We had $70.1 million and $72.8 million available for borrowing under the Credit Facility as of September 30, 2025 and 2024, respectively. As of September 30, 2025 and 2024, the Company was in compliance with all covenants under the Credit Facility.
Acquisition of property and equipment not yet paid decreased $2.3 million to $3.7 million in fiscal year 2024 compared to $6.0 million in fiscal year 2023 primarily due to the timing of payments related to new store openings and relocations/remodels.
Acquisition of property and equipment not yet paid decreased $1.3 million to $2.4 million in fiscal year 2025 compared to $3.7 million in fiscal year 2024 primarily due to the timing of payments related to new store openings and relocations/remodels. 50 Table of Contents Financing Activities Net cash used in financing activities consists primarily of borrowings and repayments under our Credit Facility and dividends paid to stockholders.
Interest expense, net Interest expense, net of capitalized interest, was $4.2 million for the year ended September 30, 2024 compared to $3.3 million for the year ended September 30, 2023. Income taxes Income tax expense increased $3.7 million to $8.9 million for the year ended September 30, 2024 compared to $5.1 million for the year ended September 30, 2023.
Pre-opening expenses Pre-opening expenses were $1.0 million for the year ended September 30, 2025 compared to $1.7 million for the year ended September 30, 2024. 47 Table of Contents Interest expense, net Interest expense, net of capitalized interest, was $3.1 million for the year ended September 30, 2025 compared to $4.2 million for the year ended September 30, 2024.
Cash provided by operating activities increased $9.2 million, or 14.2%, to $73.8 million for the year ended September 30, 2024 compared to $64.6 million for the year ended September 30, 2023.
Cash provided by operating activities decreased $18.5 million, or 25.0%, to $55.3 million for the year ended September 30, 2025 compared to $73.8 million for the year ended September 30, 2024.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Income tax expense also includes excess tax benefits and deficiencies related to the vesting of restricted stock units.
We have invested in increased wages for our store Crew members and may be required to do so in the future. As a result of current global supply chain issues, we have on occasion experienced shortages and delays in the delivery of certain products to our stores.
Over the past several years, a number of macroeconomic and global trends have impacted our business. As a result of supply chain issues, we have on occasion experienced shortages and delays in the delivery of certain products to our stores.
Financing Activities Net cash used in financing activities consists primarily of borrowings and repayments under our Credit Facility and dividends paid to stockholders. Net cash used in financing activities was $44.6 million for the year ended September 30, 2024 compared to $20.4 million for the year ended September 30, 2023.
Net cash used in financing activities was $16.1 million for the year ended September 30, 2025 compared to $44.6 million for the year ended September 30, 2024. During fiscal year 2024, we paid a special cash dividend to stockholders of $22.7 million.
Gross profit reflects earnings after product and store occupancy costs. Gross margin increased to 29.4% for the year ended September 30, 2024 compared to 28.7% for the year ended September 30, 2023.
Comparable store average transaction size was $48.62 for the year ended September 30, 2025. Gross profit Gross profit increased $33.1 million, or 9.1%, to $397.9 million for the year ended September 30, 2025 compared to $364.8 million for the year ended September 30, 2024. Gross profit reflects earnings after product and store occupancy costs.
While levels of inflation moderated during fiscal year 2024, we are unable to predict the impact of inflationary or deflationary trends on consumer behavior and our sales and profitability in the future. ● Opportunities in the growing natural and organic grocery and dietary supplements industry.
While levels of inflation moderated during the past two fiscal years, we are unable to predict the impact of inflationary or disinflationary trends on consumer behavior and our sales and profitability in the future. In addition, the United States recently has imposed, or has proposed, tariffs on a broad range of foreign-sourced products and materials.
Items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance.
Our competitors may define EBITDA and Adjusted EBITDA differently, and as a result, our measures of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA of other companies. Items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance.
Recent Accounting Pronouncements For a description of new applicable accounting pronouncements, including those recently adopted, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. 51 Table of Contents Critical Accounting Policies The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities.
Critical Accounting Policies The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. Actual amounts may differ from these estimates.
In fiscal year 2024, we opened four new stores and relocated/remodeled four existing stores. We plan to open four to six new stores and relocate/remodel two to four stores in fiscal year 2025. Between October 1, 2024 and the date of this Form 10-K, we relocated/remodeled two existing stores and closed two stores.
In fiscal year 2025, we opened two new stores, relocated/remodeled three existing stores and closed two stores. We plan to open six to eight new stores and relocate/remodel two to three existing stores in fiscal year 2026. We intend to continue to target an annual new store unit growth rate of 4% to 5% for the foreseeable future.
On November 20, 2024, our Board approved the payment of a quarterly cash dividend of $0.12 per share of common stock, which will be paid on December 18, 2024 to stockholders of record as of the close of business on December 2, 2024. 49 Table of Contents We plan to continue to open new stores and relocate/remodel existing stores in the future, which may require us to borrow additional amounts under the Credit Facility from time to time.
We plan to continue to open new stores and relocate/remodel existing stores in the future, which may require us to borrow additional amounts under the Credit Facility from time to time.
The Company’s effective income tax rate was 20.7% and 18.1% for the years ended September 30, 2024 and 2023, respectively. The increase in the effective income tax rate was primarily attributable to lower food donation deductions recorded during fiscal year 2024.
Income taxes Income tax expense increased $3.6 million to $12.5 million for the year ended September 30, 2025 compared to $8.9 million for the year ended September 30, 2024. The Company’s effective income tax rate was 21.2% and 20.7% for the years ended September 30, 2025 and 2024, respectively.
Additionally, negative publicity regarding the safety of dietary supplements, product recalls or new or stricter regulatory standards may adversely affect demand for the products we sell and could result in lower consumer traffic, sales and results of operations. 43 Table of Contents Outlook We believe there are several key factors that have contributed to our success and will enable us to increase our comparable store sales and continue to profitably expand.
During the fourth quarter of fiscal year 2025, our operations normalized, and we do not expect the disruption to directly impact our operations or financial performance in the future. Outlook We believe there are several key factors that have contributed to our success and will enable us to increase our comparable store sales and continue to profitably expand.
Removed
Over the past several years, a number of macroeconomic and global trends have impacted our business. The labor market has impacted our ability to retain and attract store Crew members and in certain markets we continue to be challenged by labor shortages broadly impacting the retail industry.
Added
Between October 1, 2025 and the date of this Form 10-K, we did not open any new stores or relocate/remodel any existing stores and closed one store. Performance Highlights Key highlights of our performance are discussed briefly below and in further detail throughout this MD&A.
Removed
In the aggregate, management estimates that the Company experienced annualized cost inflation of approximately 2% in fiscal year 2024 and approximately 1% in the fourth quarter of fiscal year 2024.
Added
There can be no assurance that the tariffs imposed or proposed will not have a material impact on our business, financial condition and results of operations.
Removed
We use this metric to track the trends in average dollars spent in our stores per customer transaction.
Added
The imposition of additional tariffs and trade restrictions, or a prolonged trade conflict between the United States and its trade partners, could result in adverse and uncertain economic conditions and adversely impact demand for our products. ● Opportunities in the growing natural and organic grocery and dietary supplements industry.
Removed
Other Operating Data (Unaudited): Number of stores at end of period 169 165 164 Store unit count increase period over period 2.4 % 0.6 1.2 Change in daily average comparable store sales 7.0 % 3.6 2.6 Number of new stores opened during the period 4 3 3 Number of stores relocated/remodeled during the period 4 3 2 Number of stores closed during the period — 2 1 Gross square footage at end of period (1) 2,728,203 2,676,607 2,688,589 Selling square footage at end of period (1) 1,780,083 1,745,701 1,742,623 (1) Gross square footage and selling square footage at the end of the period include the square footage for all stores that were open as of the end of the fiscal year presented.
Added
In June 2025, our primary distributor, UNFI, experienced a cybersecurity incident that temporarily impacted UNFI’s ability to fulfill orders and distribute products to our stores, resulting in product shortages in June and July 2025. In the weeks following the incident, we collaborated with UNFI to minimize disruptions and restore normalized levels of product distribution to our stores.
Removed
Comparable store average transaction size was $47.31 for the year ended September 30, 2024. The increase in net sales during the year ended September 30, 2024 was driven by increases in transaction counts, retail prices, items per transaction and new store sales.
Added
Store expenses Store expenses increased $13.1 million, or 4.7%, to $290.5 million for the year ended September 30, 2025 compared to $277.4 million for the year ended September 30, 2024. The increase in store expenses was primarily driven by higher compensation expenses partially offset by lower long-lived asset impairment charges.
Removed
Sales growth was driven by enhanced customer engagement with our {N}power rewards program, compelling offers, marketing initiatives including market-specific campaigns, and the increased sales of Natural Grocers brand products. Gross profit Gross profit increased $37.9 million, or 11.6%, to $364.8 million for the year ended September 30, 2024 compared to $326.9 million for the year ended September 30, 2023.
Added
Net income Net income was $46.4 million, or $2.00 diluted earnings per share, for the year ended September 30, 2025 compared to $33.9 million, or $1.47 diluted earnings per share, for the year ended September 30, 2024.
Removed
Adjusted EBITDA as a percentage of net sales was 6.7% and 5.6% for the years ended September 30, 2024 and 2023, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed1 unchanged
Biggest changeBased upon a sensitivity analysis at September 30, 2024, a hypothetical 100 basis point change in interest rates would change our annual interest expense by $0.3 million for the year ended September 30, 2024. 54 Table of Contents
Biggest changeBased upon a sensitivity analysis at September 30, 2025, a hypothetical 100 basis point change in interest rates would change our annual interest expense by $0.2 million for the year ended September 30, 2025. 54 Table of Contents
As of September 30, 2024, no amounts were outstanding under our Credit Facility. Our Credit Facility carries floating interest rates that are tied to the Term SOFR rate, and therefore, our statements of income and our cash flows are exposed to changes in interest rates.
As of September 30, 2025, no amounts were outstanding under our Credit Facility. Our Credit Facility carries floating interest rates that are tied to the Term SOFR rate, and therefore, our statements of income and our cash flows are exposed to changes in interest rates.

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