A ‘challenging’ grocery environment for Sprouts
Phoenix-based Sprouts Farmers Market says a “challenging” sales environment dented its profit and same store sales in the second quarter.
The company reported that its second quarter results, ending on June 30, produced a net income of $35 million, compared to $42 million from the same period in 2018. According to the company, this decrease was driven by the impact of the adoption of the new lease accounting standard in 2019 and a challenging sales environment. This was partially offset by fewer shares outstanding due to our repurchase program.
Gross profit for the quarter increased 6% to $465 million, resulting in a gross profit margin of 32.8%, a decrease of 35 basis points compared to the same period in 2018. This was primarily driven by product cost inflation not fully reflected in retail pricing and slightly higher distribution and transportation costs.
However, the company’s net sales for the second quarter of 2019 were $1.4 billion, a 7% increase compared to the same period in 2018. The company attributes this to a strong performance in new stores opened and a 0.1% increase in comparable store sales.
“We are grateful to have Jack Sinclair join the Sprouts team as our new chief executive officer and are confident his insightful grocery experience makes him well positioned to strategically advance Sprouts’ unique model and improve its performance as the brand expands its footprint,” said Chip Molloy, interim chief financial officer and board member of Sprouts Farmers Market.
In February, Sprouts reported that its private label sales continue to grow at 25%, almost doubling since 2013, with more than 2,400 SKUs.