Sprouts Hires Another Big Grocery Gun
Sprouts Farmers Market has hired another big grocery gun to fill a major executive role in the company.
The grocer has hired Walmart's J. Scott Neal to be the company's new chief fresh merchandising officer, effective June 15. Neal will report directly to Sprouts CEO Jack Sinclair and oversee Sprouts’ fresh merchandise offerings.
“We’re thrilled to welcome Scott to the Sprouts team,” Sinclair said. “Scott joins us at the perfect time to leverage his deep experience in fresh merchandising and sourcing as we begin to implement our long-term growth strategy by creating an advantaged fresh supply chain to bring better-for-you options and innovative products to support our customers’ healthy lifestyles.”
Neal brings more than 25 years of retail experience to Sprouts, focused largely on fresh food merchandising. For the past eight years, he has been SVP and general merchandise manager for the fresh food division of Walmart U.S., where he oversaw quality control and merchandising of produce, meat and seafood. Neal worked at Walmart for 24 years, holding such roles as as VP – divisional merchandising manager of the meat division of Walmart U.S. from 2009 to 2011, VP – divisional merchandising manager of the commercial bread and bakery divisions from 2007 to 2009, and VP of international merchandising from 2000 to 2007. Neal has also served as a member of the board of directors of Feeding America since 2016. He earned a bachelor of arts degree in economics from Brigham Young University.
“I am excited to join Sprouts at this pivotal time in its growth trajectory,” Neal said. “It is more important than ever that our customers have access to fresh, healthy food to feed their families, and I look forward to joining Jack and the Sprouts leadership team to advance the company’s long-term vision of building a brand that is good for you, good for your family and good for the planet.”
Neal is the second major C suite move for Sprouts in less than two months.
In April Sprouts named Gilliam Phipps its senior vice president, chief marketing officer, to oversee all marketing, advertising, customer engagement and private label items. Phipps was most recently VP of branding, marketing and Our Brands at The Kroger Co. He also spent 11 years at H-E-B, directing its Own Brand portfolio, before joining Kroger in 2012. Prior to his retail positions, Phipps led new product development and category management for Hormel Foods.
In May Sprouts Farmers Market Inc. reported a 16% year-over-year gain in net sales for its first quarter of 2020, along with 10.6% boost in comparable-stores sales.
Much of that growth comes from increased consumer demand during the COVID-19 pandemic, the food retailer said. “Demand increased dramatically during the latter part of the quarter,” Sprouts noted for the quarter ended March 29, during which total net sales hit $1.6 billion. “As a result, net sales were positively impacted by an estimated $146 million and comparable-store sales by an estimated 9.6%.” For the entire quarter, Sprouts reported net income of $92 million, up about 64% percent year over year.
“I am inspired by our hard-working and profoundly dedicated 32,000 team members who have served under the most difficult of circumstances to ensure our customers have healthy food to feed their families,” Sinclair said. “During the first quarter, the COVID-19 crisis led to a significant increase in sales as consumers bought more food to consume at home. As we navigate these ever-changing circumstances, we remain steadfast and decisive, prioritizing team member and customer safety and remaining in stock on fresh, healthy food for our communities, all the while not losing sight of our transformational strategy that will set us up for long-term success.”
During the first quarter, the grocer, like so many others, increased pay for its workers and absorbed associated charges as Sprouts and other food retailers continued operations deemed essential by authorities. That helps to explain the 16% year-over-year increase in sales, general and administrative expenses for the chain, to $426 million.
That expense category “included a pre-tax special item charge of $1.2 million for professional fees related to our ongoing strategic initiatives,” Sprouts said. “Leverage from increased sales related to the COVID-19 pandemic was largely offset by increased bonuses paid to team members as they serve the communities during this crisis [and] incremental e-commerce fees as more customers adopt digital solutions, as well as continued pressure from higher health care, labor and occupancy costs.”
Such costs will continue into the second quarter of 2020 and affect margins, the food retailer added.
“The COVID-19 crisis has created a lack of visibility for the remainder of 2020, with many unknowns,” said Denise Paulonis, Sprouts' CFO. “While April sales trended higher than average, we are making significant investments in pay, benefits and safety measures, as the health of our team members and customers is our No. 1 priority. We remain uncertain as to when consumer behavior will return to normal or what may emerge as the ‘new normal.’ This environment is making it difficult to predict specific outcomes.”
Phoenix-based Sprouts employs more than 30,000 associates and operates 340 stores in 23 states. The company is No. 22 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States. Bentonville, Arkansas-based Walmart is No.1 on the list.