SFM’s Top-Line Growth Leads the Industry in 2Q17



A look at SFM’s top-line performance

Sprouts Farmers Market (SFM) delivered top-line growth in excess of 20% during 2014 and 2015. While 2016 was slightly slower, with its top line growing 12.6%, the company’s top-line performance still the best in the industry.

During the first quarter of 2017, the organic retailer’s sales increased 14% YoY to $1.1 billion, driven by sales comp growth of 1.1% and strong new store productivity. This compares to revenue increases of 0.6%, 1.1%, and 4.8% for SuperValu (SVU), Kroger (KR), and Whole Foods Market (WFM), respectively.

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What’s driving SFM’s top line?

Strong private label sales continued to bolster SFM’s top line. The company offers more than 2,100 private label items, which account for 11% of its top line. By the end of 2017, its private label program is expected to cross $500 million in sales.

SFM has entered into a partnership with Amazon Prime Now and offers services through ten stores. It plans to add another ten stores under the service in fiscal 2017.

Looking forward

For fiscal 2017, Sprouts Farmers Market’s (SFM) management expects sales to grow in the 12.5%–13.5% range based on positive same-store sales and 32 new stores.

Wall Street analysts are in line with these expectations, anticipating 13.2% growth in sales. For 2Q17, analysts expect SFM’s top line to expand 12.9% YoY. In comparison, Whole Foods, which will report its results on July 26, is predicted to post top-line growth of 0.6% YoY during the quarter.

Investors looking for exposure to Sprouts Farmers Market through ETFs can consider the SPDR S&P Retail ETF (XRT). SFM comprises ~1% of its portfolio.

You can read about SFM’s same-store sales trend in the next article.


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