Sprouts Farmers Market gathers momentum
Record fourth quarter results from Sprouts Farmers Market highlight the strength of the company's business model and why it plans to open 30 new stores in 2018 even as other grocers consolidate.
At a time when other food retailers are either filing for bankruptcy (Tops Friendly Markets) or losing money trying to win online (Walmart), Sprouts is attracting shoppers to its stores and driving sales and earnings growth.
“Sprouts has truly evolved into an everyday grocery store loved by shoppers. Sprouts’ position of strength continues to grow, demonstrated by 4.6% comparable store sales growth for the fourth quarter of 2017 and exceptional EPS growth of 22% for the year,” said Amin Maredia, chief executive officer of Sprouts Farmers Market. “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.”
For the fourth quarter ended Dec. 31, Sprouts posted net sales of $1.1 billion, a 16% increase compared to the same period in 2016. Net sales growth was driven by a 4.6% increase in same store sales and strong performance in new stores opened.
Gross profit for the quarter increased 17% to $324 million, resulting in a gross profit margin of 28.4%, an increase of 20 basis points compared to the same period in 2016. This improvement was primarily driven by cycling a heightened promotional environment in the fourth quarter of 2016, in addition to leverage from increased comparable store sales.
Net income for the quarter was $40 million and diluted earnings per share was 29 cents.
Sprouts announced last month that it is expanding its home grocery delivery partnership with Instacart. The move comes at a time when Walmart, Kroger, Amazon and Whole Foods are aggressively moving forward in the grocery delivery space.
For the full fiscal year, net sales at Sprouts were $4.7 billion, a 15% increase from the same period in 2016. Same store sales grew 2.9% and two-year comparable store sales grew 5.6%. Net income was $158 million, a 27% increase from the same period in 2016. Diluted earnings per share were $1.15, a 39% increase from the same period in 2016.
During the fourth quarter, Sprouts opened three new stores, all in California. For fiscal 2017, Sprouts opened 32 new stores. Sprouts now operates nearly 300 stores in 15 states from coast to coast.
The company plans 30 new stores in 2018.