UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

________________________

FORM 8-K

 ________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (date of earliest event reported): July 31, 2014

  ________________________

Natural Grocers by Vitamin Cottage, Inc.

(Exact name of registrant as specified in its charter)

________________________

12612 West Alameda Parkway

Lakewood, Colorado 80228

(Address of principal executive offices) (Zip Code)

(303) 986-4600

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

Item 2.02 Results of Operations and Financial Condition.

On July 31, 2014, Natural Grocers by Vitamin Cottage, Inc. issued a press release announcing results for its third quarter ended June 30, 2014. A copy of the press release is furnished herewith as Exhibit 99.1.

The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Additionally, the information contained in this Item 2.02 or Exhibit 99.1 shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 31, 2014

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Exhibit 99.1

Natural Grocers by Vitamin Cottage Announces Third Quarter and Year to Date Fiscal 2014 Results

Lakewood, Colorado, July 31, 2014. Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) today announced results for its third quarter and year to date fiscal 2014 for the period ended June 30, 2014. The Company also updated its outlook for fiscal year 2014 and provided initial fiscal year 2015 outlook.

In addition to presenting the financial results of Natural Grocers by Vitamin Cottage, Inc. and its subsidiaries (collectively, the Company) for the third quarter and year to date fiscal 2014 and 2013 in conformity with U.S. generally accepted accounting principles (GAAP), the Company has presented EBITDA, which is a non-GAAP financial measure. The reconciliation from GAAP to this non-GAAP financial measure is provided at the end of this earnings release.

Highlights for Third Quarter and Year to Date Fiscal 2014 Compared to Third Quarter and Year to Date Fiscal 2013

“We continue to focus on new store investments including infrastructure to support our growth while controlling expenses and maintaining profitability,” said Kemper Isely, Co-President. “We have clear direction on how we intend to manage expenses and margin going forward while we work on various initiatives to increase sales. We plan to continue our 20% unit growth into fiscal 2015 and intend to open 18 new stores in that period. We are excited about the increasing demand for natural and organic food and believe this supports the growth opportunity we see ahead of us.”

Operating Results — Third Quarter Fiscal Year 2014 Compared to Third Quarter Fiscal Year 2013

During the third quarter of fiscal year 2014, net sales increased $20.9 million, or 18.4% over the same period in fiscal year 2013 to $134.0 million due to an $18.6 million increase in sales from new stores and a $2.3 million, or 2.0%, increase in comparable store sales. Daily average comparable store sales increased 3.1% in the third quarter of fiscal year 2014 compared to the third quarter of fiscal year 2013. The 3.1% increase in the third quarter of fiscal year 2014 was driven by a 1.3% increase in daily average transaction count and a 1.8% increase in average transaction size. Daily average mature store sales increased 1.6% in the third quarter of fiscal year 2014 compared to the third quarter of fiscal year 2013.

Gross profit during the third quarter of fiscal year 2014 increased 18.5% over the same period in fiscal year 2013 to $38.6 million driven by an increase in the number of stores. Gross profit was negatively impacted in third quarter of fiscal year 2014 by one less selling day due to the occurrence of Easter in April of 2014 versus March of 2013. Gross profit reflects earnings after both product and occupancy costs. Gross margin was 28.8% in both the third quarter of fiscal year 2014 and 2013. Gross margin remained flat due to increases in product margin offset by an increase in occupancy costs both as a percentage of sales. The increase in product margin is due to increases in product margin across almost all departments, partially offset by a shift in sales mix towards products with lower margin. Additionally, gross margin benefited from operating efficiencies at the bulk food repackaging and distribution center. Occupancy costs as a percentage of sales increased during the third quarter of fiscal year 2014 compared to the third quarter of last year primarily driven by increased average lease expenses at newer stores ⁽¹⁾.

Store expenses as a percentage of sales increased 50 basis points during the third quarter compared to the comparable period of fiscal year 2013 driven by increases in salary-related expenses, depreciation and advertising expenses, and, to a lesser extent an increase in utilities, all as a percentage of sales. The increase in salary-related expenses was due to those salaries and related expenses required to support the sales growth slightly outpacing the increase in sales.

Administrative expenses as a percentage of sales decreased 20 basis points during the third quarter compared to the comparable period of fiscal year 2013 as a result of the Company’s ability to support additional store investments and sales without proportionate increases in the cost of overhead.

During the third quarter of fiscal year 2014 both store and administrative expenses were favorably impacted by lower incentive compensation and other discretionary benefits expense, reflecting our pay-for-performance philosophy.

Pre-opening and relocation expenses decreased $0.2 million in the third quarter compared to the comparable period of fiscal year 2013 primarily due to the timing of new store openings. During both the third quarter of fiscal year 2014 and 2013 three new stores opened.

Interest expense increased $0.1 million in the third quarter compared to the comparable period of fiscal year 2013, primarily due to interest expense related to capital and financing lease obligations, and to a lesser extent, interest related to borrowings on the revolving credit facility.

Net income increased 16.6% to $3.4 million compared to the comparable period in fiscal year 2013 with diluted earnings per share of $0.15 in the third quarter of fiscal year 2014.

EBITDA increased $1.9 million, or 22.0%, to $10.6 million, or 7.9% of sales, for the third quarter of fiscal year 2014 compared to the comparable period in fiscal year 2013.

Operating Results — Year to Date Fiscal 2014 Compared to Year to Date Fiscal 2013

Year to date fiscal 2014, net sales increased $69.5 million, or 22.0% over the same period in fiscal year 2013 to $385.0 million due to a $49.8 million increase in sales from new stores and a $19.7 million, or 6.3%, increase in comparable store sales. Daily average comparable store sales increased 6.3% year to date fiscal 2014 compared to year to date fiscal 2013. The 6.3% increase year to date fiscal 2014 was driven by a 2.7% increase in daily average transaction count and a 3.5% increase in average transaction size. Daily average mature store sales increased 4.0% year to date fiscal 2014 compared to year to date fiscal 2013.

Gross profit year to date fiscal 2014 increased 22.2% over the same period in fiscal year 2013 to $112.7 million driven by an increase in the number of stores. Gross profit reflects earnings after both product and occupancy costs. Gross margin was 29.3% year to date fiscal 2014 compared to 29.2% year to date fiscal 2013. Gross margin was positively impacted by increases in product margin across almost all departments, partially offset by a shift in sales mix towards products with lower margin. Occupancy costs as a percentage of sales increased year to date fiscal 2014 compared to the year to date last year primarily driven by increased average lease expenses at newer stores ⁽¹⁾.

Store expenses as a percentage of sales remained flat year to date fiscal 2014 compared to the comparable period of fiscal year 2013 driven by a decrease in salary-related expenses offset by an increase in depreciation expense, all as a percentage of sales.

Administrative expenses as a percentage of sales decreased 20 basis points year to date fiscal 2014 compared to the comparable period as a result of the Company’s ability to support additional store investments and sales without proportionate increases in the cost of overhead.

Year to date fiscal 2014 both store and administrative expenses were favorably impacted by lower incentive compensation and other discretionary benefits expense, reflecting our pay-for-performance philosophy.

Pre-opening and relocation expenses increased $0.6 million year to date fiscal 2014 compared to the comparable period primarily due to the increased number of new store openings and the timing of new store openings. Year to date fiscal 2014, 12 new stores opened compared to nine new stores opened year to date fiscal 2013.

Interest expense increased $0.9 million year to date fiscal 2014 compared to the comparable period, primarily due to interest expense related to capital and financing lease obligations.

Net income increased 23.6% to $10.3 million compared to the same period in fiscal year 2013 with diluted earnings per share of $0.46 year to date fiscal 2014.

EBITDA increased $7.0 million, or 28.8%, to $31.2 million, or 8.1% of sales, year to date fiscal 2014 compared to the same period in fiscal year 2013.

Balance Sheet and Cash Flow

As of June 30, 2014, the Company had $6.6 million in cash and cash equivalents and no amounts outstanding on the revolving credit facility.

Year to date fiscal 2014, the Company generated $23.5 million in cash from operations and invested $26.9 million in capital expenditures primarily for new stores.

Growth and Development

During the third quarter of fiscal year 2014, the Company opened three new stores, bringing the total store count as of June 30, 2014 to 84 stores located in 14 states.

The Company plans to open a total of 15 stores in fiscal year 2014 and expects to remodel two existing stores. One of the remodels has been completed and 12 new stores have opened year to date fiscal 2014.

As of this release, the Company has signed leases for the remaining three stores it plans to open in the fourth quarter of fiscal year 2014 and has seven signed leases for stores planned to open after fiscal year 2014 in Arizona, Arkansas, Colorado, Kansas, Nevada and Oklahoma.

Fiscal Year 2014 and Initial Fiscal Year 2015 Outlook

The following table provides information on the Company’s updated fiscal year 2014 outlook:

*No Change from prior outlook.

The following table provides information on the Company’s initial fiscal year 2015 outlook:

“Our fiscal 2015 outlook for EBITDA and net income growth reflects the Company’s goal to grow our store base at 20% and also if performance and financial goals are met, fund incentive compensation and other discretionary benefits above the fiscal 2014 levels,” said Kemper Isely, Co-President. “Over the three years following fiscal 2015 we expect our EBITDA and net income growth to average 20%.”

Earnings Conference Call

The Company will host a conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) to discuss this earnings release. The dial-in number is US: 1-877-870-4263; Canada: 1-855-669-9657 or International: 1-412-317-0790. The conference ID is “Natural Grocers by Vitamin Cottage.” A simultaneous audio webcast will be available at http://Investors.NaturalGrocers.com and archived for a minimum of 30 days.

About Natural Grocers by Vitamin Cottage

Natural Grocers by Vitamin Cottage, Inc. (NYSE: NGVC) is a rapidly expanding specialty retailer of natural and organic groceries and dietary supplements whose products must meet strict quality guidelines. Grocery products may not contain artificial colors, flavors, preservatives, sweeteners, or partially hydrogenated or hydrogenated oils. Natural Grocers’ flexible small-store format allows it to offer affordable prices in a shopper-friendly retail environment. The Company provides extensive, free, science-based nutrition education programs to help customers make informed health and nutrition choices. The Company, founded in 1955, has 84 stores in 14 states as of the date of this earnings release.

Visit www.NaturalGrocers.com for more information and store locations.

Forward-Looking Statements

The following constitutes a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, statements in this release are “forward-looking statements” and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements that are not statements of historical facts are forward-looking statements. Actual results could differ materially from those described in the forward-looking statements because of factors such as our changes in our industry, business strategy, goals and expectations concerning our market position, the economy, future operations, margins, profitability, capital expenditures, liquidity and capital resources, other financial and operating information and other risks detailed in the Company’s Form 10-K for the fiscal year ended September 30, 2013 and our subsequent quarterly reports on Form 10-Q. The information contained herein speaks only as of the date of this release and the Company undertakes no obligation to update forward-looking statements.

For further information regarding risks and uncertainties associated with our business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our SEC filings, including, but not limited to, our Form 10-K for the fiscal year ended September 30, 2013 and our subsequent quarterly reports on Form 10-Q, copies of which may be obtained by contacting investor relations at 303-986-4600 or by visiting our website at http://Investors.NaturalGrocers.com.

NATURAL GROCERS BY VITAMIN COTTAGE, INC.

Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share data)

NATURAL GROCERS BY VITAMIN COTTAGE, INC.

Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except per share data)

NATURAL GROCERS BY VITAMIN COTTAGE, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

NATURAL GROCERS BY VITAMIN COTTAGE, INC.

Non-GAAP Financial Measure
(Unaudited)

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides information regarding EBITDA which is not in accordance with, or an alternative to, GAAP (i.e. non-GAAP measure). The Company defines EBITDA as net income before interest expense, provision for income tax and depreciation and amortization.

The Company believes EBITDA provides additional information about (i) operating performance, because it assists in comparing the operating performance of stores on a consistent basis, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a measure in the Company’s incentive compensation payments.

Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors’ understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation from net income, the Company believes it is enhancing investors’ understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives.

The Company’s competitors may define EBITDA differently, and as a result, the Company’s measure of EBITDA may not be directly comparable to EBITDA of other companies. Items excluded from EBITDA are significant components in understanding and assessing financial performance.

EBITDA is a supplemental measure of operating performance that does not represent and should not be considered in isolation or as an alternative to, or substitute for net income or other financial statement data presented in the consolidated financial statements as indicators of financial performance. EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.

The following table reconciles net income to EBITDA, dollars in thousands:

CONTACT: Ashley MacLeod, Director of Finance and Investor Relations, 303-986-4600, amacleod@vitamincottage.com

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