Sprouts Farmers Market Ramping Delivery as Earnings Grow

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Phoenix, AZ – Sprouts Farmers Market saw comparable store sales grow 4.6% and topped analysts’ earnings expectations for the fourth quarter.

In its earnings report, the natural foods grocer announced net sales of $1 billion, a 16% increase from the same period in 2016. Comparable store sales growth was 4.6%, and two-year comparable store sales growth of 5.3%. Its net income of $40 million represented a 133% increase from the same period in 2016.

The company also announced it would repurchase, on a discretionary basis, up to an additional $350 million of its outstanding common stock through December 2019.

“Sprouts’ position of strength continues to grow, demonstrated by 4.6% comparable store sales growth for the fourth quarter of 2017 and exceptional EPS (earnings per share) growth of 22% for the year,” said Sprouts CEO Amin Maredia. “This is an exciting time for Sprouts, as we continue to capitalize on our differentiations of health and value while expanding on our opportunities in product innovation, in-store and digital customer experiences, team member development and technology initiatives to drive operational efficiencies.”

When asked by analysts about its partnership with Amazon Prime, Maredia wouldn’t address that relationship, but said the company was focused on continuing to expand in new markets with Instacart, given high customer satisfaction.  “We’ve opened up a handful of markets — including Phoenix and parts of California, Texas and Colorado. Our goal is to have home delivery in all of our major markets by year-end.”

WholeFoods Magazine reported last month that Sprouts was expanding its home grocery delivery partnership with Instacart. The ramp-up comes at a time when Walmart, Kroger, Amazon.com and Amazon’s Whole Foods are assertively moving forward in the grocery delivery space.

Maredia said he doesn’t think the fresh home delivery business is moving at the speed many describe, but the company is preparing to capture that market once it gets up to speed.

Instead, he said, the company’s primary growth over the last three years has come from the non-perishables side of the business although fresh offerings from its private label Corner Deli brand, Fish Market at Sprouts and Butcher Shops at Sprouts are doing well.

“They are really starting to resonate with customers in terms of authority and quality, and we’re starting to see good acceleration. And we’re pretty excited about the merchandising and the operational consistency in those areas, so we’re continuing to see good movement there and we’ll keep investing and go deeper there which are, as we all know, part of consumer trends today — wanting more fresh food,” Maredia said.

Today’s customer also wants convenience, and Sprouts’ new digital web platform launch and mobile app addressed that, he said: “We need to bring health knowledge to our customers, make it convenient and easy to shop before they get to the store and then once they’re in the store.”

“We are seeing people spend more time on the site. We have very curious customers and so this was critical as we built this out in terms of enhanced content, not only around product attributes, but how it’s sourced,” added Sprouts president and COO James Nielsen.

 

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