Focus on Associates Strengthens Sprouts’ Q4, FY 2017

On its most recent earnings call, Sprouts Farmers Market drove home the message that increased focus on its employees has helped contribute to strong performance during both quarter four of fiscal 2017 and the full year, and that it plans to continue investing in its associates.

During Q4, which ended Dec. 31, 2017, the natural grocer saw net sales rise 16 percent from the same period in 2016 to reach $1.1 billion, with comparable-store sales growing 4.6 percent. Net income shot up 133 percent from the same period in 2016, hitting $40 million.

Meanwhile, the full year saw net sales of $4.7 billion, a 15 percent rise from the same period in 2016, with comps rising 2.9 percent. Net income rose 27 percent, reaching $158 million.

The Phoenix-based retailer’s board also authorized the company to repurchase up to an additional $350 million of its outstanding common stock through December 2019.

“Despite an overall deflationary environment and disruptive headlines during the year, our laser focus on our priorities around product innovation, enhancing customer experiences both in and out of store, and investments in our team members drove solid performance in 2017,” said Amin Maredia, Sprouts CEO.

Investments in team-member training and technology have been paying dividends, Maredia said. This is evidenced by sales-per-hour productivity gains, improvement in operations – including in-stock position – improved team-member retention at all levels, and the highest customer-service scores in Sprouts’ history. Moreover, 23 percent of the retailer’s store-level associates earned a “well-deserved” promotion during the year.

Additionally, the company revealed plans to continue focusing on investing in its team members by improving pay and benefits such as health care and maternity leave in 2018. It also will continue investing in training to deliver “a differentiated Sprouts customer experience and create clear pathways” for team members’ career success, critical for store growth, Maredia noted.

“As a company, we have been focused on investing in labor, training, systems and innovation for several years, and we are seeing clear outcomes and benefits. … We will invest an additional $10 million – or approximately one-third of our tax savings – for our team members in 2018,” Maredia explained. “The investments will be strategically aligned to our long-term strategy of health, value, selection and service.”

Along with focusing on employees, Sprouts has revamped grass-roots marketing efforts to grow brand awareness, especially in new markets, which has contributed to stronger performance, Maredia said. Also boosting performance are improved analytics, including better promotional decisions and costs improvements, and continued commitment to sustainability and its zero-waste threshold by 2020, focusing on three major areas: food, field and feed.

In 2017, Sprouts opened 32 new stores – three of them, all in California, during Q4 – and in 2018, it expects to open 30 more. It operated 285 stores in 15 states at the end of the fiscal period.