Phoenix-based Sprouts Farmers Market discussed its fourth quarter earnings, plans for Mid-Atlantic expansion and plans for its approximately $30 million tax reform savings during a call held Feb. 22.
Executives said the company is optimistic about its position in a crowded Mid-Atlantic market, as the company prepares to open more stores there this year.
“I think it’s an exciting market for us,” said Amin Maredia, CEO, during the call. “Any time we see a wide range of a number of conventional operators and they have a range of variability in the operations and experience and reinvestment into the business – or lack of – when we see a wide range of dollars being spent where the stores are not trend-driven, customer-driven, what customers want today, those excite us.”
Maredia said the dense population in the Washington, D.C., Baltimore, Philadelphia and other markets is a great opportunity for Sprouts.
Jim Nielsen, president and chief operating officer, agreed.
“We are a highly differentiated model, and no one in the Mid-Atlantic has seen anything like what we do,” he said. “Nothing has the layout, the assortment, the value proposition that we put together and all anchored around a different level of service, a knowledgeable based of service. So, we’re very optimistic about the Mid-Atlantic and how we’ll perform.”
The company also said it plans to use about one third of the savings from the recently-passed tax reform for “investments” in employees.
“to ensure we remain in a leadership position to attract the right talent, we will further invest in our team members by improving pay and improved benefits such as healthcare and expanding maternity leave,” Maredia said. “We will invest an additional $10 million, or approximately one-third of our tax savings, for our team members in 2018.”
The company also plans to focus on expanding its private labels, particularly in fresh departments, in 2018. Private label sales increased 30% in sales year-over-year, Maredia said, and more than 130 stores now offer enhanced deli and more grab-and-go options.
Sprouts posted 4.6% same store sales in the fourth quarter of 2018, and and a 2.9% increase for the year.