Sprouts Farmers Market CEO Jack Sinclair Discusses Scaling Back Expansion in 2020
- by Chandler James
PHOENIX, AZ - Yesterday, Sprouts Farmers Market reported results for the third quarter, which ended September 29. In an effort to accelerate growth, the company has announced that it will open 20 scaled-down stores to increase production next year.
“Reflecting on my first 100 days at Sprouts, I am even more privileged to be part of this unique brand and excited about the opportunities that lie ahead,” said Jack Sinclair, Chief Executive Officer. “While we are in the early stages of assessing our strategy for long-term growth and value creation, I am encouraged by the commitment from the team and their dedication to improve the performance of the business.”
The earnings call transcript further detailed the company's new growth strategy.
"The size of our store prototype has only increased slightly over the last few years. The cost to build has increased significantly," said Sinclair. "New stores have been increasingly more complicated and become more expensive to operate and build. Interestingly, our smaller stores tend to be more productive than our larger stores. Our fresh sales distribution works effectively where we have density. Where we don't, it is suboptimal, which creates shrink and cost inefficiency. Going forward, the expansion of our store network and associated logistical support will be more coordinated and concentrated, driving efficiency in distribution and transportation."
He continued, noting that, "We're going to slightly slow growth to approximately 20 store openings in 2020. This selection will include stores that are already in flight and/or in premiere locations. Our expectation in 2021 is that we will return to or exceed our current rates of growth. We have confidence that with the optimal prototype, Sprouts has a long runway of unit growth ahead."
Highlights from the company's financial report included:
- Net sales of $1.4 billion; an 8 percent increase from the same period in 2018
- Comparable store sales growth of 1.5 percent and two-year comparable store sales growth of 3.0 percent
- Net income of $26 million, compared to $38 million from the same period in 2018
- Diluted and adjusted diluted earnings per share of $0.22; compared to diluted earnings per share of $0.29 and adjusted diluted earnings per share of $0.27 in the same period in 2018
- Increased EPS guidance for 2019
To see the company’s official press release, and full details of its quarterly, click here.