Four years ago, Sprouts Farmers Market made a pivot regarding its target audience, shifting its focus to health enthusiasts and innovation seekers. That move appears to have paid off, with strong third quarter results which the company attributes to the moves it has made in that sector.
According to CEO Jack Sinclair, the health and wellness segment represented a $200 billion piece of the marketplace. During Tuesday’s third quarter earnings call, Sinclair declared Sprouts as the market leader of that sector.
Much has gone into the strategic shift, the company says, including developing a smaller more profitable store prototype, an expanded omnichannel strategy, and the creation of a more efficient supply chain that promotes freshness.
On Tuesday, Sprouts revealed positive third quarter results that include net sales of $1.7 billion, a 7.6% increase year-over-year.
Ecommerce sales were up 16% in the quarter, while revenue from Sprouts’ private-label brand grew 14%.
Gross profit came in at over $625 million. In Q3 2022, that number was over $583 million. Comparable store sales growth for the third quarter this year showed a growth of 3.9%.
So far in 2023, Sprouts has experienced a 6% increase in sales.
Money continues to be invested back into the network, as the Phoenix-based retailer opened 10 new stores during the latest 13-week period and plans to open a total of 30 locations before the end of the fiscal year. The retailer’s goal is to launch 35 more stores in 2024, with much of the growth happening after the first quarter.
Looking ahead to the fourth quarter, Sprouts expects total sales growth of as much as 7% and comparable sales growth of about 3%.
Sprouts also announced the promotion of Curtis Valentine to chief financial officer. Valentine was serving as the company’s senior vice president of finance, and will succeed Lawrence (“Chip”) Molloy, who previously announced his intention to retire as chief financial officer at the end of 2023.