- During Sprouts Farmers Market's Tuesday morning earnings call, the specialty grocer announced it’s scaling back its previously stated goal of opening 40 new stores in 2024 to 35 new stores, Chief Financial Officer Lawrence “Chip” Molloy told investors.
- The change accounts for the fact that nearly 70% of the slated new locations are in the second half of next year, and the company wants to be “cautious” and account for any potential delays in construction during that period, according to CEO Jack Sinclair.
- For its third financial quarter, which ended Oct. 1, Sprouts saw an uptick in comparable-store sales as well as net sales growth compared to the same period last year and is still on track to open 30 new stores in 2023.
Despite the decrease in its 2024 new store goal, Molloy noted that opening 40 new stores is not off the table for Sprouts. Sinclair added that the company currently has 100 signed-off sites and at least 60 executed leases that could lead to Sprouts debuting more than 35 new locations next year.
As for 2023, the grocer still anticipates opening 30 new locations, all of which follow the latest model, which is smaller and more efficient than its legacy stores. During this past quarter, Sprouts opened 10 new stores, bringing its 2023 new store count to 24 locations total so far.
In addition to expanding its market reach with new stores, Sprouts also noted its plans to release a summer pilot of its previously announced loyalty program. The grocer is currently working to bolster the program's personalization technology, according to Sinclair.
Sprouts’ earnings call reflected overall growth for the specialty grocer as comp-store sales grew 3.9%, surpassing last quarter’s growth of 3.2% and marking Sprouts’ best quarterly performance since 2020. Net sales were $1.7 billion, up 7.6% from the same period last year.
Molloy noted that Sprouts private label brand sales grew 14% and represented 20.5% of total sales in Q3, while e-commerce sales increased 16% and represented 12.1% of total sales during the period. Categories that showed “particular strength” and supported Sprouts’ comp sales included meat, dairy and frozen, he said.
The grocer’s adjusted diluted earnings per share during Q3 reached 65 cents, an increase from 61 cents during 2022’s third quarter.
Molloy also gave an update on rising labor costs, which has been a notable battle for the grocer throughout this year as it opens new stores.
“Like most retailers, we expect wage increases to continue to apply pressure for a couple more quarters when compared to the previous year,” Molloy said. “However, we are beginning to see labor markets loosen and wages stabilizing sequentially.”
Looking ahead to the remainder of 2023, Sprouts predicts total sales growth of approximately 6.5% to 7% and comp-sales growth of around 3%.
Sprouts also announced Tuesday that Molloy will retire at the end of this year and that Curtis Valentine, the company’s senior vice president of finance, will replace him on Jan. 1.