Sprouts Announces National Expansion

Phoenix, AZ—Sprouts Farmers Market announced that nine new stores are scheduled to open in the second quarter of 2019, with plans to open approximately 30 stores before the end of this year. Plans include four stores that will feature an enhanced layout designed to optimize customer engagement.

The company explained that stores in Florida (Jacksonville and Oviedo) and California (Los Angeles and San Luis Obispo) will highlight department destinations and promote customer engagement. The center-store focus on produce that was debuted in five locations last year will be a feature, along with marquee signage and display cases at The Butcher Shop and Fish Market to emphasize employee knowledge and personal service. Sprouts also announced that The Market Corner Deli in these enhanced stores will have a detached, rectangular island to optimize customer service and convenience. Made-to-order sandwiches, a salad bar, prepared foods, sushi made in-store and fresh juice will be among the offerings.

The newest store additions will bring Sprouts, which currently operates more than 300 stores in 19 states, into three new markets: Louisiana, New Jersey and Virginia.

Days after this announcement was made, it was reported on Nasdaq.com that Sprouts was the “Bear of the Day.” Zacks Equity Research (ZER) reported that nine stock analysts had lowered their earnings estimates for Sprouts from $1.41 per share to $1.32; accordingly, ZER issued a “Strong Sell” notification. Days later, Sprouts had been upgraded to a hold rating.

Jay Jacobowitz, president and founder of Retail Insights, broke it down: “When a company adjusts its earnings guidance, in any direction, analysts must take the new information into account.” For Sprouts, he added, “The competition in the grocery industry, whether natural, conventional, or combined, is intense. Sprouts is maintaining a fairly aggressive growth strategy, with 30 planned new store openings in 2019. Yet in order to maintain year-over-year growth in existing stores, and to do well when one of their new stores opens, profit margins have been squeezed. Just like every other grocer in the industry.”