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Sprouts Farmers Markets posted a 16 percent net sales increase of $993.2 million during the 2016 first quarter, leading to comparable-store sales growth of 4.8 percent, and a two-year comparable-sales increase of 9.5 percent.
Net sales growth in the 13-week Q1 period ended April 3 was driven by higher comparable-tore sales and solid performance in new stores opened. Sprouts beat its Q1 EPS by 1 cent, but fell short of its revenue goal by $16.7 million.
“Our first-quarter results reflect our customers’ continued strong engagement with the Sprouts brand, and the appeal of our fresh, natural and organic products at affordable prices,” said Amin Maredia, CEO of Phoenix-based Sprouts. “Despite a near-zero inflationary environment, our team delivered another solid quarter of comparable-store sales growth and robust earnings improvement."
During its Q1, the company reported net income of $46.2 million and diluted earnings of 30 cents per share. Net income increased 20 percent from adjusted net income in the same quarter in 2015. Diluted earnings per share increased 20 percent from adjusted diluted earnings per share over the same period last year.
During the first quarter of 2016, Sprouts opened 11 new stores: one each in Missouri, Tennessee and Texas; two each in Colorado and Georgia; and four in California. To date, three additional stores have opened in the second quarter, resulting in a total of 231 stores in 13 states as of today.
Sprouts will also expand into six more states (Arkansas, Louisiana, Alabama, Florida, South Carolina and North Carolina) in the near future.
"We continue to further product innovation, enhance the customer experience, develop our team members, and invest in infrastructure and technology, which position Sprouts for continued growth," added Maredia.
Sprouts reported cash from operations of $97.9 million for Q1 of 2016, and it invested $31.9 million in capital expenditures, net of landlord reimbursement, primarily for new stores. In addition, the company purchased $59.3 million of common stock under its $150 million share repurchase program. It ended Q1 with a $160 million balance on its revolving credit facility, $1.7 million of letters of credit outstanding under the facility, and $145.7 million in cash and cash equivalents.
Sprouts said it has adjusted its 2016 net sales growth, “primarily due to a lower inflationary environment and timing of new store openings, and confirm our other targets, including comparable-store sales growth and diluted earnings per share.”
With more than 220 stores in 13 states, Sprouts bills itself as is a healthy grocery store offering fresh, natural and organic foods at great prices.