Last updated on November 30th, 2017 at 11:46 am
Sprouts Farmers Market Inc. has released its results for the 13-week third quarter ended Oct. 1, reporting significant sales growth.
Net sales for the third quarter of 2017 were $1.2 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.
Gross profit for the quarter increased 19 percent to $346 million, resulting in a gross profit margin of 28.7 percent, an increase of 60 basis points compared to the same period in 2016. This improvement was primarily driven by cycling a heightened promotional environment in the third quarter of 2016, in addition to leverage from increased comparable store sales.
Direct store expense for the quarter increased 15 percent to $250 million, or 20.7 percent of sales, compared to 20.9 percent in the same period in 2016. This leverage is primarily driven by improved comparable store sales, as well as operating efficiencies, partially offset by higher benefit costs, says the retailer.
Selling, general and administrative expenses for the quarter increased 35 percent to $40 million, or 3.3 percent of sales, compared to 2.9 percent in the same period in 2016. This primarily reflects higher bonus expense due to improved performance and other corporate costs versus the prior year.
Net income for the quarter was $31 million, a 32 percent increase compared to net income for the same period in 2016. Diluted earnings per share was $0.23, an increase of $0.07 or 44 percent, as compared to diluted earnings per share of $0.16 for the same period in 2016. This increase was driven by higher sales and margins, fewer shares outstanding due to our repurchase program and a lower effective tax rate.
Fiscal year-to-date financial results
For the 39-week period ended Oct. 1, net sales were $3.5 billion, a 15 percent increase compared to the same period in 2016. Growth was driven by a 2.4 percent increase in comparable store sales and solid performance in new stores opened. Net income was $119 million, an 11 percent increase compared to net income for the same period in 2016. Diluted earnings per share was $0.86, an increase of $0.15 or 21 percent, compared to diluted earnings per share of $0.71 for the same period in 2016.
“Sprouts is pleased to report strong top-line growth and demonstrate our ability to leverage those sales into exceptional earnings growth for the quarter. Sprouts’ hallmark of fresh, healthy, affordable products continues to resonate with our customers and positions us as a leader in the industry,” said Amin Maredia, CEO. “We’ll continue to accelerate strategic priorities that will enhance our business—from product assortment to the digital experience to customer service. These, coupled with our technology investments to drive efficiencies, will provide the flexibility to make future investments where needed to ensure Sprouts is well-positioned for the future.”
Growth and development
During the third quarter of 2017, Sprouts opened eight new stores: one each in Arizona and Florida, and two each in California, Nevada and Tennessee. Three additional stores have been opened in the fourth quarter to date, resulting in a total of 32 new stores opened year-to-date for a total of 285 stores in 15 states as of Nov. 2.
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