Sprouts Farmers Market reports a 6% gain in net sales for Q2

Sprouts Farmers Market Inc. reports a net sales gain of 6% for the quarter ending July 2, compared with a year ago. The chain also noted a 3.2% gain in comparable store sales versus the same quarter a year ago, according to a news release.

"We are encouraged by another solid quarter, as we further establish Sprouts as a go-to healthy specialty food retailer," Sprouts Farmers Market CEO Jack Sinclair said in the release. "We believe we are on track with our long-term growth strategy, with positive traffic, an enhanced supply chain, and continued product innovation."

 The company-reported highlights of the second quarter included:

• Net sales totaled $1.7 billion; a 6% increase from the same period in 2022.
• Comparable store sales growth of 3.2%.
• Diluted earnings per share of 65 cents; adjusted diluted earnings per share of 71 cents, a 25% increase from the same period in 2022.
• Opened six new stores, resulting in 391 stores in 23 states as of July 2, 2023 (including the closure of 10 stores during the quarter, as previously announced).

 Looking ahead for the full fiscal year 2023, the company projects:

• Net sales growth: 5% to 6%.
• Comparable store sales growth: 2% to 3%.
• Unit growth: 30 new stores.

In a discussion of its second-quarter results, the company, founded in 2002, said it offers consumers a unique food specialty retail experience featuring an open layout with fresh produce at the heart of the store.

“We continue to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free,” the company said in its release.

Headquartered in Phoenix with 391 stores in 23 states as of July 2, Sprouts Farms Market calls itself “one of the largest and fastest-growing specialty retailers of fresh, natural and organic food in the United States.”

The company said its long-term growth strategy is focused on:

• Win with target customers — particularly customers identified through research as “health enthusiasts” and “selective shoppers.” “We believe our business can continue to grow by leveraging existing strengths in a unique assortment of better-for-you, quality products and by providing a full omnichannel offering through delivery or pickup via our website or the Sprouts app,” the company said.
• Update format and expand in select markets — “We have opened 26 stores and remodeled one store featuring our new format through July 2, 2023,” the company said. “Our geographic store expansion and new store placement will intersect where our target customers live, in markets with growth potential and supply chain support, which we believe will provide a long runway of at least 10% annual unit growth beginning in 2024.”
• Create an advantaged fresh supply chain — “We believe our network of fresh distribution centers can drive efficiencies across the chain and support growth plans,” the release said. “To further deliver on our fresh commitment and reputation, as well as to increase our local offerings and improve financial results, we aspire to ultimately position fresh distribution centers within a 250-mile radius of stores. With the opening of two fresh distribution centers in 2021 and the relocation of our Southern California distribution center in 2023, we now have more than 85% of our stores within 250 miles of a distribution center.”
• Refine brand and marketing approach — “We believe we are elevating our national brand recognition and positioning by telling our unique brand story rooted in product innovation and differentiation,” the company said. “We are increasing our use of data analytics and insights. We believe this data-driven intelligence will increase customer engagement through personalization efforts with digital and social connections to drive additional sales growth and loyalty.”
• Inspire and engage talent to create a best place to work — “Subsequent to the initial launch of our long-term growth strategy, we have added the focus area of inspiring and engaging our talent through our culture, acquisition and development and total rewards program to attract and retain the talent we believe we need to execute on our strategic goals and transform our company into a premier place to work.”
• Deliver on financial targets and box economics — “With the implementation of our strategy beginning in 2020, we have significantly improved our margin structure above our 2019 baseline,” the company said.