Sprouts Farmers Market

Sector: Food, drug and mass retailers Country of operation: US Key product categories: Grocery and general merchandise Annual Metrics [caption id="attachment_151896" align="aligncenter" width="700"] Fiscal year 2021 ended January 2, 2022
*Trailing 12 months ended April 3, 2022[/caption]   Summary Founded in 2002 and headquartered in Phoenix, Arizona, Sprouts Farmers Market specializes in fresh, natural and organic products, including produce, meat, seafood, deli, bakery, dairy, beer and wine, as well as health and beauty products. The company markets its products under the Sprouts, Sprouts Farmers Market and Healthy Living for Less brand names. As of April 3, 2022, Sprouts Farmers Market operated 379 stores in 23 US states. Company Analysis Coresight Research insight: Sprouts Farmers Market is one of the largest specialty retailers of fresh, natural and organic food in the US. It has established a strong network of distributors and suppliers, which allows it to stock fresh produce all year round. It sells in-demand organic food products at prices comparable to regular groceries. The company’s stores represent a blend of farmers markets, conventional supermarkets, and smaller specialty markets, which helps differentiate it from other food retailers, while also providing a broader range of healthy offerings for consumers. However, we believe it will be hard for Sprouts to ward off the relentless competitive pressures from conventional grocers and mass merchandisers, These rivals, which can offer a one-stop shopping experience (via locations such as fuel stations and in-house pharmacies), are increasingly encroaching on the health-oriented product landscape. Additionally, Amazon-owned Whole Foods Market remains a direct threat, as the online giant’s procurement strength and distribution efficiency can fuel price cuts that upend Sprout’s value proposition (a produce-oriented store featuring fresh and affordable items).

Tailwinds	Headwinds
On-trend health and value-oriented concept, consistent with consumer demand for healthy, natural and organic products Opportunities to extend its value proposition to new customers in international markets Opportunities to drive private-label penetration and associated gross margin expansion	More limited range of food than that of other supermarkets Competitive pressures from traditional grocers such as Kroger and Albertsons, which are increasing their health-oriented assortment as well as from existing specialty retailers such as Whole Foods Market

  Strategy In 2020, Sprouts Farmers Market outlined the following steps that would help transform the company and drive profitable growth. 1. Win with Target Customers

• Focus attention on the target customers, identified through research as “health enthusiasts” and “experience seekers,” where there is a significant opportunity to gain share.

2. Update Format and Expand in Select Markets

• Deliver a unique smaller store experience with expectations of stronger returns, while maintaining the fresh-focused farmer’s market heritage the brand is known for.
• Expand into new markets with growth potential and supply chain support, which would provide a runway of at least 10% annual unit growth beginning in 2023.

3. Create an Improved Fresh Supply Chain

• Invest in a network of fresh distribution centers to drive efficiencies across the chain and support growth plans. To further deliver on its commitment to and reputation for fresh produce, the company aspires to position fresh distribution centers within a 250-mile radius of stores.

4. Refine Brand and Marketing Approach

• Elevate national brand recognition and positioning by telling the company’s unique brand story, rooted in product innovation and differentiation.

5. Deliver on Financial Targets and Box Economics

• Measure and report on the success of this strategy against a number of long-term financial and operational targets.

Revenue Breakdown (FY21) [caption id="attachment_148939" align="aligncenter" width="480"] Perishables include produce, meat, seafood, deli, bakery, floral, and dairy and dairy alternatives
Non-perishables include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care[/caption]   Company Developments

Date	Development
May 25, 2022	Sprouts Farmers Market announces plans to hire 100 full- and part-time employees for its new store in Moreno Valley, California, which is scheduled to open in July.
February 24, 2022	Sprouts Farmers Market announces the appointment of Nicholas Konat as President and COO of the company, effective March 21, 2022.
February 15, 2022	Sprouts Farmers Market announces the opening of a new, 20,000-square-foot store in Homestead, Florida.
December 3, 2022	Sprouts Farmers Market announces the opening of two new stores in Boynton Beach and West Palm Beach, Florida, with plans to open additional stores across the Florida coast.
November 19, 2021	Sprouts Farmers Market announces the opening of a new store in Smyrna, Georgia, on December 1.
July 13, 2021	Sprouts Farmers Market enters a partnership with health and fitness platform MyFitnessPal to support its users with healthy recipes, articles and sports challenges.
June 4, 2021	Sprouts Farmers Market announces the opening of a new produce distribution center in Orlando, Florida, to support its expansion across the state.

  Management Team

• Jack Sinclair—CEO
• Lawrence “Chip” Molloy—CFO
• Nick Konat—President and COO
• Scott Neal—Chief Merchandising Officer

---

Source: Company reports/S&P Capital IQ