Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (February 2024)
33 slides from Sprouts Farmers Market's investor presentation, Feb 22, 2024
Slide 1: Investor Deck February 2024
INVESTOR DECK February 2024 Exhibit 99.3
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts
Slide 3: Find Your Healthy
FIND YOUR HEALTHY
Slide 4: What Defines Sprouts and What Makes Us Different
WHAT DEFINES SPROUTS And what makes us different Differentiated assortment of innovative, healthy and lifestyle-friendly products Purposeful curation of responsibly and locally sourced products Sprouts Brand: high-quality, attribute-specific private label Farmers market experience open layout with f
Slide 5: Why Invest in Sprouts?
WHY INVEST IN SPROUTS? A Differentiated, Powerful Growth Business Incredible growth opportunity: ~ 35 new stores in 2024, approximately 10% annual unit growth Strong box economics Strong financial returns: low double-digit earnings growth and expansion of ROIC Healthy balance sheet & robust cash flo
Slide 6: Sprouts' Long-Term Strategy
SPROUTS’ LONG-TERM STRATEGY Approximately 10% UNIT GROWTH LOW DOUBLE-DIGIT EARNINGS GROWTH EXPANDING ROIC These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and
Slide 7: Focus on Innovation & Differentiation: ~70% of Products Attribute-Based
SPROUTS’ FOCUS ON INNOVATION & DIFFERENTIATION: ~70% of Products Sold at Sprouts are Attribute-Based >15% Vegan ~30% non-GMO >40% organic ~20% gluten-free >10% non-GMO >15% organic ~15% non-GMO > 50% of Beef sales are grass-fed >20% organic >20% Kosher ~55% gluten-free ~35% organic ~30% vegan ~15% p
Slide 8: Produce: The Heart of the Store; Farmers Market Experience
PRODUCE: THE HEART OF THE STORE; Farmers Market Experience Hybrid produce buying model: centralized and regional teams allow us to be flexible and react to the produce markets quickly Meaningful farmer partnerships: delivers new varietals and favorable pricing to our customers through spot buys Incr
Slide 9: Stores Filled with Curation of Differentiated Better-For-You Products
SPROUTS’ STORES ARE FILLED WITH A CURATION OF DIFFERENTIATED BETTER-FOR-YOU PRODUCTS More than 70% of Products Sold in Sprouts are Attribute Driven: Organic, Paleo, Keto, Plant Based, Non-GMO, Gluten Free, Vegan, Dairy-free, Grass Fed, Raw (Includes all produce)
Slide 10: Sprouts Brand: Differentiated, High Quality, Attribute-Specific
SPROUTS BRAND: DIFFERENTIATED, HIGH QUALITY, ATTRIBUTE-SPECIFIC Sprouts Brand Sales Penetration(1) (1) Sprouts Brand Sales Penetration represents sales of Sprouts Brand products, as a percentage of total company sales.
Slide 11: Sprouts Shopper: Higher Income Consumer Who Craves Health & Wellness
SPROUTS SHOPPER: Higher Income Consumer who Craves Health & Wellness, High Quality, Lifestyle-friendly Products, & Differentiated Assortment Sprouts’ assortment of unique and attribute-based products continues to be a key driver of customer trips $121K Avg. HHI 49% $100K + 46 Avg. Age 69% College/ G
Slide 12: Customer Engagement: Omnichannel Offering
CUSTOMER ENGAGEMENT: OMNICHANNEL OFFERING We let the customer choose how to shop IN-STORE: ONLINE: Ecommerce Penetration (2) Majority of ecommerce customers are omnichannel with higher share of wallet (1) Sprouts NPS study, September 2023 (2) Sprouts Ecommerce Penetration represents ecommerce sales
Slide 13: 2023 Customer Statistics: Opportunity for More Engagement
2023 CUSTOMER STATISTICS: OPPORTUNITY FOR MORE ENGAGEMENT 19% of transactions linked to a Sprouts account in 2023, representing ~26% of our sales 15.2% Ecommerce sales growth in 2023 Upcoming Loyalty Program: market test in 2024 Identifiable customers come more often and spend more
Slide 14: Smaller Box with Higher Returns
SMALLER BOX WITH HIGHER RETURNS New store size decreasing from approximately 30K to 23K square feet Format stays true to our Fresh-focused Farmers Market Heritage Prioritize Categories for Growth Potential Continue to Offer all Categories More Productive Store, cost-effective (lower cost to build, a
Slide 15: High Growth Retailer: Potential for 300+ New Stores
HIGH GROWTH RETAILER Potential for 300+ New Stores in Expansion Markets 2019, 2020, 2021, 2022, 2023 actual unit growth, 2024 outlook, & approximately 10% unit growth thereafter Expansion Markets Existing DCs Future DCs Existing Markets Unit growth (1)
Slide 16: Advantaged Fresh Supply Chain
ADVANTAGED FRESH SUPPLY CHAIN Distribution Centers (DCs) within 250 Miles of the Majority of Stores Optimizing our Supply Chain: Expanded capabilities Leveraging system and data improvements to enable “computer-assisted ordering” (CAO) and create a more disciplined inventory management process Creat
Slide 17: Investing in Our Team Members
INVESTING IN OUR TEAM MEMBERS >20% of team members promoted in 2023 Approximately 3,000 jobs created in 2023 More than 800,000 training hours completed in 2023 $19.68 Average pay rate for store team members(1) (1) As of December 31, 2023; for hourly store team members only
Slide 18: 2022 Environment, Social & Governance Highlights
2022 ENVIRONMENT, SOCIAL & GOVERNANCE HIGHLIGHTS At the core of our identity is a genuine commitment to environmental sustainability. We are taking steps to reduce our carbon footprint and our natural resource intake while providing our customers with local, organic, and other sustainable food choic
Slide 19: 2022 Sustainable & Responsible Sourcing
2022 SUSTAINABLE & RESPONSIBLE SOURCING Millions of customers choose Sprouts because they can find products that are grown and produced in ways that are healthier for the planet and people. Our stores are stocked with a wide variety of organically grown, non-GMO, and plant-based options that lower t
Slide 20: 2022 Social
2022 SOCIAL Providing safe and healthy food is at the core of our commitment to health and well-being. We collaborate with our team members, supply chain partners, community organizations, and industry experts to promote food safety, support workers’ rights, source responsibly, and develop a diverse
Slide 21: 2022 Governance
2022 GOVERNANCE We pride ourselves on operating with integrity, accountability, and transparency. Our ESG goals and initiatives are integrated throughout our business strategy, and strong oversight by our executive leadership team and Board of Directors ensures that the long-term interests of our st
Slide 22: Long-Term Strategic Financial Targets
LONG-TERM STRATEGIC FINANCIAL TARGETS(1) Low Double-Digit Earnings Growth and Expansion of ROIC Cost to Build Reduced & Attractive New Store Economics ~10% unit growth(2) Low single digit comps Stable EBIT Margins off a Higher Base These are targets and not projections; they are subject to significa
Slide 23: Low-Single-Digit Comps Targets, with Stable EBIT Margins
LOW-SINGLE-DIGIT COMPS TARGETS, WITH STABLE EBIT MARGINS(1) These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assumptions
Slide 24: New Stores' Strong Performance: Four-Wall Box Target Economics
NEW STORES’ STRONG PERFORMANCE: FOUR-WALL BOX TARGET ECONOMICS (1) EBITDA MARGINS (2) Break even year 1 Grows to a blended ~8% EBITDA Margins over the next 4 years These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencie
Slide 25: Stronger Foundation: Strategic Initiatives Beginning to Take Hold
STRONGER FOUNDATION: STRATEGIC INITIATIVES BEGINNING TO TAKE HOLD See the Appendix to this presentation for a reconciliation of adjusted diluted EPS to diluted EPS
Slide 26: Structurally Improved and Maintaining the Margin Profile
STRUCTURALLY IMPROVED AND MAINTAINING THE MARGIN PROFILE (1) 2023 gross margin is presented on an adjusted basis. See the Appendix to this presentation for a reconciliation of gross margin to adjusted gross margin (2) See the Appendix to this presentation for a reconciliation of EBIT to adjusted EBI
Slide 27: Improving ROIC: In-Line with Strategic Goals
IMPROVING ROIC: IN-LINE WITH STRATEGIC GOALS ROIC (1) ROIC is a non-GAAP measure defined as net operating profit after taxes divided by average invested capital. See the Appendix to this presentation for a reconciliation of ROIC to net income 2020 is presented on a 53-week basis (2)
Slide 28: Strong Balance Sheet, Robust Cash Flows
STRONG BALANCE SHEET, ROBUST CASH FLOWS: Delivering Shareholder Value through Ongoing Share Repurchase Program (1) (2) ($ in mm) Capital expenditures are net of landlord reimbursement Excluding excise tax
Slide 29: Find Your Healthy in Our Assortment of Fresh, Healthy Foods
FIND YOUR HEALTHY IN OUR ASSORTMENT OF FRESH, HEALTHY FOODS Sprouts delivers a unique farmers market experience: bringing together passionate, knowledgeable team members, and the best assortment of high-quality food that is both good for us and good for the world.
Slide 30: Appendix
APPENDIX
Slide 31: Executive Management Team with Leading Grocery & Retail Experience
EXECUTIVE MANAGEMENT TEAM WITH LEADING GROCERY & RETAIL EXPERIENCE Jack Sinclair Chief Executive Officer since 2019 Curtis Valentine Chief Financial Officer since 2024 (joined SFM in 2015) Scott Neal Chief Merchandising Officer since 2022 (joined SFM in 2020) Dustin Hamilton Chief Stores Officer sin
Slide 32: Appendix: Non-GAAP Measure Reconciliation
APPENDIX The following table shows a reconciliation of adjusted gross profit to gross profit, adjusted gross margin to gross margin, EBIT and adjusted EBIT to net income, adjusted EBIT margin to EBIT margin, as well as a reconciliation of net income and diluted earnings per share to adjusted net inc
Slide 33: Appendix: Reconciliation of ROIC to Net Income
APPENDIX The following table shows a reconciliation of ROIC to net income for the Company’s 2019, 2020, 2021, 2022 and 2023 fiscal years
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