Sprouts Farmers Market to Close 11 Stores and Open 30 New Locations in 2023
Sprouts Farmers Market announced in March that it will close 11 larger, underperforming locations as part of their strategy to maintain ongoing expansion and fiscal success. The stores were being considered for closure prior to the COVID-19 pandemic due to poor financial performance, but Sprouts Farmers Market decided to keep them open so customers would continue to have access to a grocery store nearby. The stores are 30% larger (23,000 square feet) than the current smaller footprint Sprouts is favoring for new store locations.
“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 the first quarter, with the remaining 10 shuttering before mid-2023. The natural foods grocer continues to expand with its smaller-store approach. In early March, a new location opened in Stockton, California, followed by one in The Villages, Florida, on March 17th and another in Merced, California, on March 24th. Also on the horizon are new store openings in Lancaster, California, on April 28th and one in Manassas, Virginia, on May 12th. The company has said it intends to open 30 stores in 2023. They opened 16 new markets in 2022, for a total of 386 stores in 23 states. A total of 80 stores are in various stages of development, and 60 of those have already inked lease agreements. A distribution center in southern California also will be relocated and upgraded to a larger facility. Private-label brands expansion, an increase in seasonal merchandise and re-vamped packaging are other goals for Sprouts Farmers Market in 2023. The health-focused grocery retailer is approaching a challenging marketplace in 2023 with confidence and a growth-focused strategy. The Phoenix, Arizona-based grocer announced a strong quarter of positive gains, with fourth-quarter net sales at $1.6 billion, which is a 6% increase over the same quarter in 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. E-commerce sales rose 17% in the fourth quarter, representing 11.4% of total sales for that period. Sprouts attributed some of that growth to teaming up with DoorDash in select cities.
Sinclair reported that Sprouts leadership is pleased and remains focused on giving shoppers what they want. “Last quarter, we conducted a comprehensive research study to understand what is most important to our customers and they consistently told us that they are looking to us to help them take new measures to be healthy,” he said, noting that the feedback led to the January launch of Sprouts’ “Find Your Healthy” program featuring healthy on-the-go food offerings and tips and recipes for healthy living. In the face of the high-inflationary fiscal year, Sprouts private label products also sold well. “Sprouts Brands hit $1 billion in sales last year, a remarkable accomplishment. We plan to accelerate that growth even more in 2023 and you will see new Sprouts brand products,” Sinclair reported. The latest financials included an optimistic outlook for FY23.
“While we recognize the near-term economic environment is difficult to predict, the stability of our recent sales is encouraging,” said Sinclair. “We are optimistic about our ongoing cash generation and our ability to invest in our business for growth.”