Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (November 2015)
27 slides from Sprouts Farmers Market's investor presentation, Nov 18, 2015
Slide 1: Investor Deck November 2015
INVESTOR DECK NOVEMBER 2015 Exhibit 99.1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein (including, but not limited to, statements to the effect that Sprouts Farmers Mar
Slide 3: Overview of Sprouts
AERS MARKET — ) ES die = OVERVIEW OF SPROUTS
Slide 4: Sprouts is Well Positioned to Meet the Needs of Today's Health Conscious Consumers
Sprouts is Well Positioned to Meet the Needs of Today’s Health Conscious Consumers Healthy grocery store that offers fresh, natural and organic foods at affordable prices Broad consumer appeal One of the largest and fastest growing natural and organic retailers Industry leading results Significant w
Slide 5: Significant Growth Continues in the Natural & Organic Channel
Significant Growth Continues in the Natural & Organic Channel Significant Market1 $620B U.S. Supermarket Sales SFM Current Market Share: 0.5% / $3B Natural & Organic: 14% / $89 bn Other, incl. Conventional Grocery: ~86% / ~$531 bn Our Potential Opportunity ¹ Source: Progressive Grocer 81st Annual Re
Slide 6: Sprouts is Changing the Way People Perceive and Shop for Fresh, Natural and Organic
Sprouts is Changing the Way People Perceive And Shop for Fresh, Natural and Organic Foods HEALTH • Sprouts has evolved from a specialty food store into a healthy grocery store • Continue to benefit from consumers’ growing interest in eating healthier SELECTION • Full-line healthy grocery store with
Slide 7: Top Consumer Food Trends
Top Consumer Food Trends Fresh Foods – Healthier and Tastier Focus on Ingredients and Sourcing – Minimally Processed, Certifications, Responsibly Sourced Convenience for Foodies – Driving Demand for a Greater Choice of Fresh Foods Snacking – 50% of eating occasions/80% taking place at home Private L
Slide 8: A Healthy Grocery Store that Flips the Conventional Model
Sprouts - A Healthy Grocery Store that Flips the Conventional Model Value-leader in fresh produce (drives traffic) Produce surrounded by a complete grocery offering Differentiated assortment of high-quality, healthy foods High standard private label Fresh, natural & organic offering Don’t sell most
Slide 9: Reaching a Broad Base of Consumers Through Traditional and Digital Mediums
Reaching a Broad Base of Consumers Through Both Traditional and Digital Mediums Middle income and higher Medium to above average education Boomers, Gen-X, and rising Millennial demographic Diverse ethnic backgrounds Value conscious Broad Customer Demographics ¹ Represents actual promotions at each s
Slide 10: Sprouts' Consumers are at Different Stages of Adoption
Sprouts’ Consumers are at Different Stages of Adoption DIET FOLLOWERS HEALTH ENTHUSIAST HEALTH CURIOUS CONVENIENCE- FOCUSED Do not follow a strict or specific diet, but health/wellness is important to them and a primary consideration when grocery shopping Does not live the healthiest lifestyle, but
Slide 11: Sprouts Grows its Consumers' Average Basket Size and Gross Margin Over Time
Sprouts Grows its Consumers’ Average Basket Size and its Stores’ Gross Margin Over Time Consumers Start with High Quality Produce TRAFFIC TRIAL TRANSITION Then Shop an Increasing Number of Departments Over Time Make Sprouts Their Primary Grocery Store TRUST
Slide 12: Sprouts' Main Competitor is the Traditional Grocery Store
Sprouts’ Main Competitor is the Traditional Grocery Store Sprouts Origin of Consumer (1) Traditional Grocery Club Mass Specialty Other More than 50% of Sprouts’ consumers are coming from traditional grocers Our average consumer’s monthly spending will increase nearly 3x from their initial experiment
Slide 13: 1200 Potential Store Count and 15+ Years of New Store Growth
1200 potential store count (1) and estimated 15+ Years of New Store Growth Successful in “natural/lifestyle” markets and more “traditional” markets Balanced unit growth with 70% coming from existing markets 14% unit growth for the long-term ¹ Based on an assumed new store growth rate of 14% per year
Slide 14: Sprouts Succeeds Among Growing Competitive Markets
Sprouts Succeeds Among Growing Competitive Markets Case Study of a Sprouts Phoenix Location 1 Not indicative of every store location. Over this time period sales growth was 151% Whole Foods opened 2002 Wal-Mart opened Trader Joe’s opened Frys Marketplace re-opened Costco opened Target added P-Fresh
Slide 15: Sprouts is Growing Responsibly
Sprouts is Growing Responsibly Responsible retailing for Sprouts is comprised of four main focus areas: RESPONSIBLE OPERATIONS • RESPONSIBLE BUILDING RESPONSIBLE NEIGHBOR • RESPONSIBLE SOURCING RESPONSIBLE OPERATIONS • Food Rescue Program – Donated approximately 8.4 million lbs. of food in 2014 • Ca
Slide 16: Business & Financial Performance
BUSINESS & FINANCIAL PERFOMANCE
Slide 17: Powerful Growth Business – Results Driven
Powerful Growth Business – Results Driven 34 consecutive quarters of positive comp growth 14% new store unit growth, strong new store productivity Cumulative pro-forma EBITDA growth (organic growth) of more than 150% over the past three years Deleveraged capital structure 9%+ Natural and Organic Sec
Slide 18: Balanced Sales Growth Across Comparable Store Sales and New Store Openings
Balanced Sales Growth Across Comparable Store Sales Growth and New Store Openings Pro Forma Comparable Store Sales Growth2 Pro Forma Net Sales1 ¹ Pro forma net sales reflect the net sales of our predecessor entity, Henry’s and Sunflower as if the Transactions had been consummated on the first day of
Slide 19: Consistent Strong Sales Growth Continues
Consistent Strong Sales Growth Continues Net Sales Note: Pro forma financial information on this slide gives effect to the Henry’s Transaction and the Sunflower Transaction for all periods presented. YoY Growth: 19% ‘12 – ‘14 CAGR 22% ($ in mm)
Slide 20: Two-Year Stacked Comps Remain Strong
Two-Year Stacked Comps Remain Strong 1. “Comparable store sales growth” refers to the percentage change in our comparable store sales as compared to the prior comparable period. Comparable Store Sales Growth1 Q3 Comps positively impacted by: Inflation normalizing to a near zero inflationary environm
Slide 21: A History of Strong Earnings Performance
A History of Strong Earnings Performance ($ in mm) Adj. EBITDA¹ Adj. Net Income² Note: Financial information on this slide for fiscal 2012 gives pro forma effect to the Sunflower Transaction as if it had been consummated on the first day of fiscal 2012. ¹ See the Appendix to this presentation for a
Slide 22: Compelling Unit Economics
Compelling Unit Economics ¹ Includes store build-out (net of contributions from landlords), inventory (net of payables) and cash pre-opening expenses. Target New Store Economics Store Size Average 28k – 30k square feet Net Cash Investment¹ $2.8 million First Year Sales ~$10 to $12 million Initial Sa
Slide 23: Updated Mid-Term Financial Targets
Updated Mid-Term Financial Targets Net Sales Growth ~15% plus Comparable Store Sales Growth Mid –single digits Unit Growth 14% Adjusted EBITDA Growth 12% to 16% Adjusted diluted earnings per share 14% to 18% Note: These targets are forward-looking statements, are subject to significant business, eco
Slide 24: Why Sprouts is a Compelling Investment
Why Sprouts is a Compelling Investment Authentic Fresh, Natural and Organic Food Offering at Great Value Fast Growing Segment of the U.S. Supermarket Industry with Strong Macro Tailwinds Significant New Store Growth Opportunity Supported by Broad Demographic Appeal Resilient Business Model with Comp
Slide 25: Appendix: Supplemental Materials
APPENDIX: SUPPLEMENTAL MATERIALS
Slide 26: Appendix: Reconciliation of Adjusted Net Income and Adjusted EBITDA
Appendix The following table shows a reconciliation of adjusted net income and adjusted EBITDA to net income and adjusted earnings per share to net income per share for the thirteen and thirty-nine weeks ended September 27, 2015 and September 28,2014 (a)Store closure and exit costs represents reserv
Slide 27: We Believe Healthy Living is a Journey and Every Meal is a Choice
WE BELIEVE HEALTHY LIVING IS A JOURNEY AND EVERY MEAL IS A CHOICE. WE LOVE TO INSPIRE, EDUCATE AND EMPOWER EVERY PERSON TO EAT HEALTHIER AND LIVE A BETTER LIE. ar % a . Nova : . c we 2. ) >
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