Deflation cools Sprouts sales in 2Q, profits up

Persistent price deflation triggered sales and comp gains that came in below expected ranges for Sprouts Farmers Market in the second quarter, while profits increased, the retailer said Thursday.

Sales of $1 billion, a 14% increase, and comps of 4.1% came in below consensus analyst estimates of $1.1 billion and 4.5%, respectively.

The Phoenix-based retailer had previously forecast 4.5% to 5.5% comp growth for the year, but adjusted that figure Thursday to a range of 3% to 4%, citing ongoing price deflation. Sprouts however said tonnage and store traffic both increased during the period, leading to a net earnings increase of 19% and earnings-per-share of 25 cents, a penny above analyst estimates.

Amin Maredia

"Sprouts’ healthy living for less business continues to resonate with customers as we grow coast to coast,” Amin Maredia, CEO, said in a statement. “Despite the deflationary environment, our team continues to produce solid comparable store sales growth through improved traffic of 3.5% and increased tonnage. We remain laser-focused on our strategic priorities to drive performance today while continuing to invest in team members, technology and infrastructure for sustainable long-term growth.”