Dive Brief:
- Although Sprouts Farmers Market’s sales continue to grow, its third-quarter results showed the specialty grocer underestimated the impact of softening consumers and their more reserved spending habits, executives said Wednesday during an earnings call.
- Sprouts’ comparable-store sales grew 5.9% year over year. That’s nearly half the rate it grew the previous quarter, and marks the second consecutive quarter this metric has decelerated.
- The specialty grocer is still eyeing growth, however. It increased its new store opening goal and announced that this week marks the completed rollout of its loyalty program.
Dive Insight:
Macro-economic pressure took its toll on Sprouts’ consumers in the third quarter, impacting the back end of the quarter in particular, CFO Curtis Valentine said Wednesday evening.
“As the quarter progressed, our comp sales moderated faster than expected as we came up against challenging year-on-year comparisons as well as signs of a softening consumer,” Sprouts CEO Jack Sinclair said.
Sprouts sees sharp drop in comp sales growth
In July, Sprouts estimated its Q3 comparable store sales growth would fall between 6% and 8%.
Falling short of third-quarter expectations, however, hasn’t altered key growth initiatives for the specialty grocer.
“Given the strong execution of our real estate pipeline and fewer timeline delays, we plan to open 37 new stores in 2025,” Valentine said, up from Sprouts’ original goal of debuting 35 new locations. Sprouts opened nine new stores in Q3, bringing its total store count to 464, he added. So far this year, the company has opened 24 stores.
Sprouts plans to open more stores in 2026 than in 2025, and while executives did not specify exactly how many stores it hopes to open, Sinclair said Sprouts has a “robust new store pipeline” that includes 140 approved locations. Valentine noted that the specialty grocer is on track to reach its goal of 10% unit growth in 2027.
The company’s work to establish its own distribution network also made strides during the quarter. In October, Sprouts completed the transition to self-distribution for fresh meat and seafood at four of its existing distribution centers, according to Sinclair.
“Looking ahead, we anticipate completing this transition by the second quarter of 2026 with the opening of our new Northern California distribution center,” he said.
This week, Sprouts fully launched its loyalty program chainwide, Sinclair said. He added that while it is still early in the program, the grocer is seeing increased shopping frequency and sales per customer in the areas that had rolled out the program earlier.
While Sprouts delivered positive results for the quarter, with net sales up 13% year-over-year to $2.2 billion, the grocer lowered its full-year 2025 outlook from its forecast in Q2. Sprouts said it expects 2025 net sales growth to reach approximately 14% and comparable-store sales growth to increase approximately 7%. In its previous quarterly report, it estimated net sales would grow between 14.5% to 16% and comparable-store sales growth would increase between 7.5% to 9%.
