Nutritional Growth Solutions is ticking all the right boxes for sustained long-term growth as it records record third quarter revenue as its US retail strategy starts to pay off.

Paediatric nutritional products provider Nutritional Growth Solutions (ASX:NGS) has released a trading update showing it generated record third quarter revenue (unaudited) of US$828,000 ($1.28 million), up 31% on the previous corresponding period (pcp).

The growth in revenue has been underpinned by accelerating US retail sales. NGS has now reported three consecutive quarters of double-digit quarter-over-quarter revenue growth.

The company has been executing on its US retail strategy including:

  • Healthy Heights now on shelves of in 403 Walmart stores across the country
  • Increasing online sales through Walmart.com, Kroger.com, Smiths.com, Ralphs.com and RangeMe.com
  • Agreement to distribute Healthy Heights to The Healthy Edge network of 20 natural food stores across four US states
  • Agreement with the largest natural products wholesale distributor in the US, United Natural Foods Inc (NYSE:UNFI) to distribute its entire 22 product Healthy Heights range.
  • Plans underway for additional retail brand rollout in the US.

Reaching new heights with Walmart deal

Doctors at Israel’s world-renowned Schneider’s Medical Centre have for more than 20 years been undertaking research and developing the NGS product range.

The deal with US’ largest general retailer Walmart could be particularly lucrative for the company.

Walmart is now selling  two SKUs from NGS’ Healthy Heights portfolio – the KidzProtein canisters in chocolate and vanilla in 403 stores. Walmart has now also taken the entire Healthy Heights product portfolio onboard its online (Walmart.com) “fulfilled by Walmart” platform. This means that NGS products are now held in multiple Walmart owned distribution centres and customers are able to benefit from enhanced, speedier delivery and in-store pick up services.

However, NGS expects to continue the rollout into more of Walmart’s brick-and-mortar retail store network, opening a potentially US$20 billion market.

Key indicators trending positively

NGS CEO and managing director, Liron Fendell said supported by a strong distribution network in-store and online, and recently upgraded US manufacturing facility, the company was well placed to deliver on potential for its unique products.

“It is particularly pleasing to see our online channels taking off quickly, with a large proportion of those sales being through subscribers and leading to repeat sales, providing a more stable revenue stream,” she said.

“Initial orders for in-store stock at Walmart are also expected to start being replenished as sales increase through this bricks and mortar channel.”

Fendell said all key indicators were trending positively as the business scales. She said NGS had worked hard to get its Healthy Heights products on shelf in a complementary range of retail outlets such as Walmart that caters to mass consumers, as well as specialist providers like the Healthy Edge network which includes brands like Akins, Chamberlain’s and Earth Origins Market.

She said the deals were supported through distribution centres and wholesale arrangements.

“This approach has provided us with a base that attracts other retailers, and we expect to increase our on-shelf presence with more retail brands across the US in the near future,” she said.

This article was developed in collaboration with Nutritional Growth Solutions, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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