• A smaller, stricter **Whole Foods Market**.
• **Sprouts Farmers Market**, but with a deeper focus on supplements and natural health education.

• Organic & Natural Groceries: A comprehensive selection of certified organic and natural food products, including produce, meats, dairy, and pantry staples.
• Dietary Supplements & Natural Body Care: Various vitamins, minerals, herbal remedies, and personal care products free from artificial ingredients.
• Nutritional Education & Health Coaching: In-store educational seminars, cooking classes, and free one-on-one health coaching sessions with certified Nutritional Health Coaches (Service).

Natural Grocers by Vitamin Cottage (symbol: NGVC) is a specialty retailer of natural and organic groceries, dietary supplements, and body care products. As such, the company sells primarily to **individuals** (Business-to-Consumer or B2C).

The up to three categories of customers that Natural Grocers serves are:

1. Health-Conscious Individuals and Families

   This category includes consumers who prioritize organic, natural, and non-GMO foods for overall well-being, often seeking products free from artificial colors, flavors, sweeteners, and preservatives. They are generally proactive about their health and seek out high-quality, minimally processed foods for themselves and their families.

2. Customers with Specific Dietary Needs or Preferences

   This group comprises individuals looking for specialized dietary options such as gluten-free, dairy-free, vegan, vegetarian, paleo, keto, or other specific dietary protocols. Natural Grocers provides a wide assortment of products catering to these particular needs, making it a go-to destination for those managing allergies, intolerances, or lifestyle diets.

3. Supplement and Natural Body Care Users

   These customers are interested in enhancing their health through dietary supplements, including vitamins, minerals, herbal remedies, and other nutritional aids. They also seek natural and organic personal care and beauty products, preferring items free from harsh chemicals and artificial ingredients, often valuing the expertise and selection available at Natural Grocers in these categories.

Kemper Isely Co-President and Chairman of the Board

Kemper Isely has served as Co-President and Director of Natural Grocers by Vitamin Cottage, Inc. since 1998, and as Chairman of the Board. He joined the company in 1977 and has held numerous positions including Store Manager, Warehouse Manager, Director of Marketing, Director of Purchasing, Director of Operations, and Director of Finance. Kemper Isely is the son of the founders, Margaret and Philip Isely, who established Vitamin Cottage in 1955. In 1997, he and his siblings acquired their parents' stake in the company.

Richard Hallé Chief Financial Officer

Richard Hallé was appointed Chief Financial Officer of Natural Grocers by Vitamin Cottage, Inc., effective January 1, 2025. Prior to this role, he served as a member of Natural Grocers' board of directors and audit committee since 2012. His past experience includes serving as a Managing Director of Alvarez and Marsal Private Equity Performance Improvement Group from March 2023 to October 2024. From 2011 to 2021, Mr. Hallé was the Chief Financial Officer of Vivial Inc., and previously served as Chief Financial Officer and Secretary of DTN Holding Company, Inc. from 2003 to 2008.

Zephyr Isely Co-President and Director

Zephyr Isely has been a Co-President and Director of Natural Grocers by Vitamin Cottage, Inc. since 1998. He joined the company as an employee in 1969 and has served in various capacities, including Store Manager, Director of Receiving, Warehouse Manager, Director of Operations, Director of Purchasing, Director of Accounting, Manager of Payroll and Compensation, and Director of Information Systems. He is a son of the company's founders.

Heather Isely Executive Vice President, Corporate Secretary & Director

Heather Isely has served as an Executive Vice President, Corporate Secretary, and Director of Natural Grocers by Vitamin Cottage, Inc. since 1998. She joined the company in 1989 and has held roles such as Produce Coordinator, Store Manager, Manager of Quality Control, Director of Nutrition Education, Manager of Operations, Manager of Compensation, Manager of Training, and Director of Human Resources. Ms. Isely is a co-owner and daughter of the company's founders.

Elizabeth Isely Executive Vice President and Director

Elizabeth Isely has been an Executive Vice President and Director at Natural Grocers by Vitamin Cottage, Inc. since 1998. She is noted as a former daughter-in-law of the company's founders.

The key risks to Natural Grocers by Vitamin Cottage (NGVC) business operations include:

1. Supply Chain Concentration and Disruptions: Natural Grocers heavily relies on a single primary distributor, United Natural Foods (UNFI), for a significant portion of its inventory. A cybersecurity incident at UNFI in June 2025 notably impacted Natural Grocers' net sales and diluted earnings per share (EPS) for the third quarter of fiscal year 2025, underscoring a significant supply chain concentration risk. Broader supply chain disruptions due to factors such as adverse weather, natural disasters, or climate change also pose a risk.
2. Intense Competition and Shifting Consumer Preferences: The natural and organic grocery market is highly competitive. Natural Grocers faces ongoing pressure from rivals like Sprouts Farmers Market and Whole Foods, which continue to expand their presence. Additionally, larger, conventional grocery chains have increasingly integrated natural and organic products into their offerings, diminishing Natural Grocers' unique market position. The company also faces the risk of not effectively anticipating or adapting to evolving consumer trends and demands for natural foods and related products.
3. Macroeconomic Pressures: Natural Grocers is sensitive to macroeconomic factors such as inflation and fluctuations in consumer spending. Rising costs for organic goods, logistics, and labor can compress profit margins if not effectively managed. A general slowdown in consumer spending or economic downturns could also negatively impact discretionary purchases of wellness products, affecting the company's sales and profitability.

Two clear emerging threats for Natural Grocers by Vitamin Cottage (NGVC) are:

1. Accelerated Shift to Online Grocery and Delivery as a Primary Shopping Channel: Major retailers, including Amazon (Whole Foods Market), Walmart, Target, and large conventional grocery chains (e.g., Kroger, Albertsons), are making substantial investments in expanding their online ordering, curbside pickup, and home delivery capabilities. These platforms increasingly offer a vast selection of natural and organic products, often leveraging greater scale for competitive pricing and faster delivery. While Natural Grocers has third-party delivery partnerships, the intensified competition in convenience and logistics from these larger, integrated players poses a significant threat. As more consumers shift their routine grocery purchases online, it could divert a substantial portion of sales away from NGVC's physical stores, impacting foot traffic and overall market share, akin to how Uber disrupted traditional taxi services by offering superior convenience and technology.

2. Erosion of Differentiation Due to Mainstreaming of Natural and Organic Product Standards and Private Label Competition: The market for natural and organic products, once a niche primarily served by specialty retailers like Natural Grocers, has become mainstream. Conventional grocery chains and mass merchandisers are not only stocking a wider array of natural and organic brands but are also increasingly developing their own private label organic brands. These private labels often meet stringent quality and ingredient standards comparable to, or even perceived as equal to, those upheld by Natural Grocers, but are frequently offered at more competitive price points. This trend diminishes Natural Grocers' unique selling proposition based on product integrity and quality, making it harder to justify premium pricing and retain customers who can find similar quality options with greater convenience or lower cost elsewhere. This erosion of a core differentiator challenges NGVC's business model in a way similar to how Netflix eroded Blockbuster's value proposition by making entertainment access more convenient and diverse.

The addressable markets for Natural Grocers by Vitamin Cottage's main products and services in the U.S. are substantial.

The primary product categories for Natural Grocers by Vitamin Cottage (NGVC) include natural and organic food, dietary supplements, and natural body care products. The company operates its stores primarily in the United States.

• Natural and Organic Food: The U.S. organic food market was valued at approximately USD 89.0 billion in 2024 and is projected to reach about USD 166.0 billion by 2033, demonstrating a compound annual growth rate (CAGR) of 7.20% from 2025 to 2033. Other estimates place the 2024 market size at around US$ 65.55 billion, growing to US$ 159.04 billion by 2033 with a CAGR of 10.35%.
• Dietary Supplements: The U.S. dietary supplements market was estimated to be between USD 56.97 billion and USD 71.60 billion in 2024. Projections indicate this market could reach between USD 95.44 billion and USD 162.40 billion by 2033, with CAGRs ranging from 5.61% to 9.47% from 2025. Separately, the U.S. nutritional supplements market, a broader category, was valued at USD 112.6 billion in 2024 and is anticipated to grow at a CAGR of 4.9% from 2025 to 2030.
• Natural Body Care Products: The U.S. organic personal care market size was approximately USD 7.58 billion in 2024 and is projected to reach around USD 19.39 billion by 2034, with a CAGR of 9.84% from 2025 to 2034. Another report valued the U.S. organic personal care market at USD 3.01 billion in 2024, expected to grow to USD 5.10 billion by 2030 with a CAGR of 9.25%. More specifically for organic skincare, the U.S. market is valued at USD 9.09 billion in 2025 and is projected to reach USD 11.24 billion by 2030.

Natural Grocers by Vitamin Cottage (NGVC) is expected to drive future revenue growth over the next 2-3 years through several key strategies:

1. New Store Development and Expansion: The company plans to accelerate its new store openings, with an outlook of 6 to 8 new stores by the end of fiscal year 2026, and a general plan to open 6 to 8 new stores annually in the future. This expansion is projected to increase the current store count by nearly 5%, potentially leading to double-digit revenue growth in fiscal year 2027.
2. Sustained Comparable Store Sales Growth: Natural Grocers has consistently demonstrated strong comparable store sales growth, with the daily average comparable store sales increasing by 7.4% in Q3 FY2025 and 8.9% in Q2 FY2025. This growth is broad-based across product categories and geographical regions, driven by increases in transaction counts, transaction size, and items per basket, along with modest product cost inflation. The company has raised its fiscal 2025 outlook for daily average comparable store sales growth to a range of 7.25% to 7.75%.
3. Enhanced Customer Engagement through {N}power Rewards Program: The {N}power rewards program is a significant driver of customer loyalty and engagement, with net sales penetration reaching 81% in Q1 FY2025, up from 78% a year prior. This program helps foster a loyal customer base and contributes to overall sales.
4. Expansion of Natural Grocers Brand Products: The company is actively expanding its private label offerings, known as Natural Grocers brand products, which offer premium quality at competitive prices. These branded products accounted for 8.9% of total sales in Q1 FY2025 and 8.6% in Q2 FY2025, a slight increase year-over-year, supported by new product launches. This expansion also provides meaningful margin leverage for the company.
5. Alignment with Consumer Trends in Health and Wellness: Natural Grocers benefits from its business model, which strictly focuses on natural and organic products, aligning with the increasing consumer demand for health, wellness, and sustainability. The company's value proposition of high-quality natural and organic products at "Always Affordable" prices resonates strongly with consumers, differentiating it in the market.

Share Repurchases

• Natural Grocers by Vitamin Cottage, Inc. had annual share buybacks of $181K in 2023.

Capital Expenditures

• In fiscal 2024, the company invested $38.6 million in net capital expenditures, primarily directed towards new, relocated, and remodeled stores.
• For fiscal 2025, Natural Grocers by Vitamin Cottage projects capital expenditures of $36 million to $44 million.
• The primary focus for these capital expenditures in fiscal 2025 is to support growth initiatives, including four to six new store openings and two to four store relocations or remodels.