Sprouts Farmers Market has released its 4Q and full year 2017 results, and the company showed strong growth in both periods.
“Sprouts has truly evolved into an everyday healthy grocery store loved by our customers. This is evident by the continued momentum we have seen at Sprouts throughout 2017,” said Amin Maredia, CEO, in an earnings call late last week. “Despite an overall deflationary environment and disruptive headlines during the year, our laser focus on our priorities around product innovation, enhancing customer experiences both in and out of store, and investments in our team members drove solid performance in 2017.”
Net sales for the fourth quarter of 2017 were $1.1 billion, a 16 percent increase compared to the same period in 2016. Net sales growth was driven by a 4.6 percent increase in comparable store sales and strong performance in new stores opened.
Net income for the quarter was $40 million. During the fourth quarter, Sprouts says it recorded $18.7 million of income tax benefit related to the Tax Cuts and Jobs Act. Excluding this benefit, net income was $21 million, a 24 percent increase compared to net income for the same period in 2016
Net sales for the fiscal year 2017 were $4.7 billion, a 15 percent increase compared to 2016. Net sales growth was driven by a 2.9 percent increase in comparable store sales and strong performance in new stores opened. Net income for the year was $158 million. Excluding the Tax Cuts and Jobs Act benefits, net income was $140 million, a 12 percent increase compared to net income for 2016
Additionally, Sprouts’ board of directors has authorized the company to repurchase, on a discretionary basis, up to an additional $350 million of its outstanding common stock through December 2019.
Sprouts’ 2018 to be marked by investments
Maredia attributed at least some of Sprouts’ strong year to the company’s investments in its employees and technology.
“Our investments in our team member training and technology are paying dividends, evidenced by sales per hour productivity gains, improvement in operations including in-stock position, improved team member retention at all levels, the highest customer service scores in our company history, and 23 percent of our store team members earning a well-deserved promotion during the year,” he said.
Moving into 2018, Sprouts will continue to invest in its employees, as well as product innovation, customer engagement and experiences, and technology to “drive cost efficiencies and better position us as we scale,” Maredia added.
Among its goals for 2018, Spouts plans to:
- Introduce more private-label items rooted in health, taste and attributes across the store, and expand private-label offerings in its fresh departments under the Sprouts Market Corner Deli, The Butcher Shop at Sprouts, and Sprouts Fish Market brands.
- Expand home delivery through Instacart to all of its major market by year-end and continue to make improvements to its website and mobile app. The company recently completed “Phase 1” of its improved website and app, allowing shoppers to build virtual shopping lists based on current pricing and promotion in their store and scan product barcodes directly to check for mobile coupons.
- Invest an additional $10 million in its employees through wage increases and improved benefits, among other changes.
- Implement fresh item management technology to reduce operating complexity, drive better in-stock, reduce shrink, and integrate its production needs with its labor management system.