Sprouts Farmers Market Ends Amazon Prime Partnership, Cuts Sales Target

Sprouts Farmers Market Ends Amazon Prime Partnership, Cuts Sales Target

PHOENIX, AZ - Sprouts Farmers Market has ended its Prime Now delivery partnership with Amazon.com as of the first of May and cut its full year sales targets, which resulted in the grocer’s stocks falling by almost 12 percent, according to Reuters.

Amin Maredia, Chief Executive Officer, Sprouts Farmers Market“The transition will impact comps for the next several quarters, but we remain very confident about growing our home delivery business as it brings a unique health and value proposition to our customers,” Chief Executive Amin Maredia said on a conference call with investors.

This move follows the company’s January announcement that it began offering home delivery through Instacart, as the news source also reported. That move allowed Sprouts to expand its home delivery beyond the eight cities to which it delivered with Amazon and to add more zip codes, beginning with select regions Phoenix and Tuscon, Arizona.

In addition to this shift on the delivery side, the company also cut its full year sales forecasts, according to a press release from the company.

Some financial results from Q1 2018 include the following:

  • Net sales growth was cut from 11.5-12.5 percent to 10.5-11.5 percent
  • Unit growth remained the same at approximately 30 stores
  • Comparable store sales growth was cut from 2.5-3.5 percent down to 1.5 to 2.5 percent
  • Diluted earnings per share remained the same at $1.22-$1.28
  • Effective tax rate remained the same at 19-20 percent
  • Capital expenditures (net of landlord reimbursements) remained the same at $165M-$170M

Sprouts Farmers Market Storefront

In a separate conference call with investors, Maredia stated, “For the first quarter, sales increased by 14 percent; new store productivity was in the low-80s, above our historical average; and we grew EBITDA by 12 percent, all resulting in solid cash flow generation. Despite tightness in produce supply and slight deflation, we achieved EPS of $0.50, which beat our internal expectations for the quarter, driven by higher gross margin and labor productivity improvements. For the first quarter, sales rose to $1.3 billion with strong performance in new stores, a comp of 2.7 percent, and continued positive traffic. Our private label initiative optimizing our promotions with BI tools and products that are more relevant to our customers are driving comps and adding to the full shopping experience that our customers embrace at Sprouts.”

To follow this and more shift in the rapidly evolving grocery market, keep reading AndNowUKnow.