Sprouts Farmers Market’s president and CEO Doug Sanders credited the company’s focus on offering healthy food at affordable prices for 28 consecutive quarters of positive same-store sales growth as well as record first quarter results that outperformed its targets.
"During the first quarter, Sprouts' net sales increased 26%, generating additional leverage and resulting in a 49% improvement of EBITDA growth. Given our strong business momentum and impressive first quarter results we are increasing our annual guidance, and feel confident in achieving our growth plans," said a confident Sanders.
The company’s net sales in the quarter increased 26% to $722.6 million, driven by a 12.8% increase in same store sales growth and strong performance in new stores opened, including its first new store in the Kansas City market.
Gross profit for the quarter increased 29% to $223.9 million, resulting in a gross profit margin of 31% of sales, or an increase of 70 basis points compared to the same period in 2013. The improvement in gross profit margin was primarily driven by leveraging occupancy, utilities and buying costs. The company also experienced higher merchandise margins in produce from strong product quality and availability, and lower merchandise costs from vendor discounts in certain departments. These increases were offset by promotional activities.
During the quarter, the company opened four new stores: two in California and one each in Kansas and Oklahoma. It also relocated its El Paso, Texas, store. One additional store in Nevada has been opened in the second quarter to date, bringing new store openings in 2014 to five for a total of 172 stores in nine states as of May 7. The company expects to open 23-24 stores for the year.
Looking ahead, the company is raising its per-share adjusted earnings estimate by five cents and now expects 63 cents to 65 cents. It also increased its projection for net sales growth by two percentage points and now expects an increase of between 18% and 20%. The company also raised its same-store-growth estimate by 1.5 percentage point to between 8.5% and 9.5%