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Solid Comps, New Store Openings Boost SFM’s 2Q17 Top Line

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SFM beats consensus on top line once again

Sprouts Farmers Market (SFM) reported a 14.7% YoY (year-over-year) increase in sales to $1.2 billion in 2Q17. This was the fourth consecutive top-line beat for the company.

In comparison, supermarket peers SuperValu (SVU), Kroger (KR), and Whole Foods Market (WFM) reported top-line growth of 6.3%, 4.8%, and 0.6%, respectively, in their most recent quarters.

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What drove SFM’s 2Q17 top line?

SFM’s top line growth was driven by a 1.4% jump in sales comps and a strong performance in the new stores. This was the 41st consecutive quarter of positive sales comps for the company.

This performance is particularly impressive when compared to other grocery players. For instance, larger organic competitor Whole Foods Market reported a 1.9% decline in same-store sales in the most recent reported quarter. It was the company’s eighth straight quarter of negative comps.

Kroger (KR) has also seen negative comps for the last two quarters. The supermarket giant succumbed to the competitive pressures and deflationary headwinds after posting 52 quarters of positive sales comps.

“Sprouts’ accelerating comp sales and strong top-line growth during this competitive grocery environment demonstrates the power of our brand,” said Amin Maredia, chief executive officer of Sprouts Farmers Market.

SFM opened 13 new stores during the quarter, taking its store count to 279.

Investors looking for broad-based exposure to SFM through ETFs can choose to invest in the First Trust Consumer Staples AlphaDEX ETF (FXG). SFM comprises ~3.1% of FXG’s portfolio.

Read the next section to learn about SFM’s margins and profitability in 2Q17.

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