Big does not fit Sprouts Farmers Market current, and somewhat new, approach, so 11 stores will be closing by the end of the second quarter.
The locations have been on the chopping block since before the COVID-19 pandemic due to poor financials, but Sprouts Framers Market made the decision to keep them open so consumers would have a local grocer nearby. The stores are 30% larger (23,000 square feet) than the company’s current store prototype.
“Back in early 2020, we considered closing some underperforming locations as we shifted our store growth strategy to a smaller, more productive prototype,” said Sprouts Markets Chief Financial Officer Chip Molloy.
One store will close during first quarter, with the remaining 10 shuttering before mid-2023.
Sprouts Farmers Market continues to expand with its smaller approach. There are plans of opening about 30 stores over the next few months, and all will have the smaller footprint. A total of 80 stores are in the development stages, and 60 of those already have signed lease agreements. A southern California distribution center also will be relocated to a larger facility.
“We would have acted sooner on [closing] these stores had it not been for the pandemic,” Sprouts Market CEO Jack Sinclair said. “We didn’t think it was appropriate to shut grocery stores in the middle of the pandemic in terms of giving access to healthy foods.”
Private-label brands, an increase in seasonal programs and redesigned packaging are other goals for Sprouts Farmers Market in 2023.
Sprouts Farmers Market is handling a challenging marketplace in 2023 with continued confidence. The Phoenix, Ariz.-based grocer announced another quarter of positive gains, with fourth-quarter net sales coming in at $1.6 billion, which is a 6% increase vs. fourth quarter 2021.
“We are pleased with our strong fourth-quarter results, closing out the year with double-digit earnings per share growth,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. “These solid trends reflect the resiliency of healthy, natural and organic food, and give us confidence in our future business.”
For all of FY 2022, Sprouts Farmers Market’s net sales amounted to $6.4 billion, which is a 5% increase compared to FY 2021. Comparable store sales, which rose 2.9% in the fourth quarter, were up 2.2% for the year.
“While we recognize the near-term economic environment is difficult to predict, the stability of our recent sales in encouraging,” said Sinclair. “We are optimistic about our ongoing cash generation and our ability to invest in our business for growth.”