Sprouts has strong third quarter
Sprouts Farmers Market said that its revenue increased 9.5% year over year in the third quarter ended Sept. 27. The food retailer's net sales hit $1.6 billion thanks in part to growing demand during the pandemic.
Sprouts also reported that:
- Comparable store sales increased 4.2% and two-year comparable store sales grew 5.7%
- Net income reached $60 million and adjusted net income of $62 million. That compares to net income and adjusted net income of $26 million from the same period in 2019.
“Sprouts continues to prioritize the wellbeing of our team members and customers through our safe store operations and the wholesome foods we offer,” said Jack Sinclair, CEO of Sprouts Farmers Market. “Our strong financial performance in the third quarter was driven by our curation of healthy offerings, coupled with ongoing strategic changes. With each passing quarter, the progression of our strategy strengthens our conviction in our long-term growth and our ability to provide exceptional returns for years to come."
Gross profit for the quarter increased 23% to $585 million, resulting in a gross profit margin of 37.1%, an increase of 400 basis points compared to the same period in 2019. A number of sustainable strategic changes contributed to this increase, from promotional activities to shrink initiatives, partially accelerated by the COVID-19 landscape, as well as positive leverage from additional sales, the food retailer said.
Selling, general and administrative expenses for the quarter increased $71 million to $475 million, or 30.1% of sales, a deleverage of 200 basis points compared to the same period in 2019. Increased team member bonuses and store operational expenses from COVID-19 were approximately $34 million for the third quarter, driving the deleverage. Additionally, with the food retailer's elevated e-commerce sales, it realized increased e-commerce fees, which were offset by other efficiencies and leveraging fixed costs on higher sales.
During the third quarter of 2020, Sprouts opened six new stores, resulting in a total of 356 stores in 23 states as of Sept. 27.
Phoenix-based Sprouts employs more than 35,000 team members at 340-plus stores in 23 states.