Sprouts Still Lapping Pandemic Gains in Q2
Sprouts Farmers Markets is delaying opening some stores this year due to supply chain challenges, as the natural foods grocer also reported flat two-year same-store sales.
During the second quarter ended July 4, Sprouts was still lapping its pandemic gains from 2020, and had net sales of $1.5 billion, a 7% decrease from the same period in 2020 and a 7% increase from the same period in 2019. Same-store sales growth was -10.0% and two-year comparable store sales growth was -0.6%. Net income was $61 million compared to net income of $67 million and adjusted net income of $70 million in the same period in 2020, and compared to net income of $35 million from the same period in 2019.
Diluted earnings per share were 52 cents compared to 57 cents diluted earnings per share and adjusted diluted earnings per share of 59 cents in the same period in 2020.
"I am pleased with our strong profit results in the second quarter, continuing to build on the positive step change in financial performance we made in 2020,” said Jack Sinclair, CEO of Sprouts Farmers Market. "As I look forward to the balance of the year, I am excited about growing our differentiated brand proposition. We continue to lead with our strategic priorities of investing in innovation and our new store format, accelerating our marketing initiatives to deepen our relationship with our target customer, and leveraging an advantaged fresh supply chain, setting the foundation for Sprouts' long-term growth.”
Gross profit for the quarter decreased 10.2% to $550 million, resulting in a gross profit margin of 36.1%, a decrease of 115 basis points compared to the same period in 2020. This decrease was predominantly related to lapping opportunistic produce buys and exceptionally low shrink from elevated demand last year due to the impact from the COVID-19 pandemic. However, the grocer said that efficient promotions, attractive everyday pricing, and differentiated assortment continue to result in margins superior to historic trends, contributing to a 330 basis point increase over second quarter 2019.
During the second quarter Sprouts opened one new store, resulting in a footprint of 363 stores in 23 states as of July 4. Due to continued difficulties in obtaining necessary equipment from third parties because of supply chain delays complicated by the pandemic, approximately seven planned new store-openings in the fourth quarter of 2021 may be delayed until 2022.
Phoenix-based Sprouts, which employs more than 35,000 team members at 360-plus stores in 23 states, is No. 48 on The PG 100, Progressive Grocer's 2021 list of the top food and consumables retailers in North America.
