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Strong Comps, Above-Average Productivity Drive Sprouts’ Top Line

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Feb. 26 2018, Updated 12:35 p.m. ET

SFM delivers 43rd consecutive quarter of comps growth

As discussed in the previous article, Sprouts Farmers Markets posted a strong 4Q17, with its sales growing more than 16% to $1.1 billion. Growth in its top line was driven by a 4.6% jump in its sales comps (as per management’s expectations) and robust new-store productivity that stood in the low 80s.

4Q17 was the 43rd consecutive quarter of positive sales comps for the company. SFM witnessed record holiday season sales during the quarter. Comps benefited 25 basis points from the favorable impact of the New Year’s holiday shift.

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“Sales were strong across the store and across all regions during the fourth quarter. Customers’ interest in quality and healthier holiday options continue to grow, which led to another very successful holiday season with record sales,” said Amin Maredia, the CEO of Sprouts Farmers Market, during the earnings call.

Sprouts opened three new stores during the fourth quarter, ending 2017 with a total store count of 285 stores.

What drove SFM’s sales in 2017

SFM’s full sales expanded 15.3% to $4.7 billion. This growth was anchored by a 2.9% rise in same-store sales and historically above-average new-store productivity. Traffic remained steady throughout the year, though it accelerated at the end of the fourth quarter due to the positive calendar-shift impact discussed above.

The company’s private label brands, which account for ~12% of its total revenue, rose 30% YoY. Another key sales driver was the company’s enhanced Deli offerings, which are now present in its 130 stores.

SFM continues to outpace competitors with its industry-leading growth figures. The 15% annual sales growth achieved by the organic retailer compares to Kroger’s (KR) 4.6% trailing-12-month sales growth and SuperValu’s 2.7% retail sales fall (retail accounts for only 25% of the company’s business).

Investors looking to invest in SFM through ETFs can choose to invest in the SPDR S&P Retail ETF (XRT). SFM has a weight of ~1.2% in XRT.

Read the next section to learn about SFM’s 4Q17 margins and profitability.

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