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During its second quarter earnings call on Aug. 3, Phoenix-based Sprouts Farmers Market reported positive same store sales, a reaffirmed relationship with Amazon Prime Now delivery – despite the looming Amazon/Whole Foods deal – and shored up defenses against discounters.
The company reported net sales of $1.2 billion for the quarter, a 15% increase from the second quarter of 2016. Same-store sales were up 1.4% year-over year.
The company opened 13 new stores in the second quarter, and five to-date in the third quarter, to bring its total store count to 279, with 56 approved sites and 42 signed leases for future development, said CEO Amin Maredia, during the call.
Several new store openings this year compete with Lidl on the East Coast. Executives said during the call they aren’t too concerned about competition from the discounter, and its counterpart Aldi, which has been opening new stores in the West Coast.
“We’ve all certainly seen the headlines of Lidl and Walmart in certain pockets of the country, and that doesn’t really impact Sprouts,” said CFO Brad Lukow, during the call. “That’s a discounter model that historically has not been our shopper.”
Maredia further addressed Aldi’s expansion in California and a new distribution center in Arizona.
“We’ve not seen them expand materially in the Arizona market,” he said. “With all that said, I think the Aldi shopping experience – the products that they carry, the product, the service, the go-to-market approach of what they sell is quite different from Sprouts.”
But that doesn’t mean Sprouts isn’t watching.
“Jim (Nielsen – president and COO) and I had a chance to visit Lidl stores last week and our overarching theme of discounter business and its impact on Sprouts has been minimal in the past, and we would expect it to be similar based on what we see today and how we see those stores, what they’re selling, how they’re selling and what customers they’re drawing,” Maredia said. “But, obviously, anyone who sells grocery is a competitor and we keep a close tab on how any new openings from even discounters could be impacting our business.”
Sprouts also said it expanded Amazon Prime Now delivery service to Atlanta.
“We will be delivering Sprouts products through the Prime Now service to over 20 locations across many of our major markets by year end,” Maredia said.