Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (March 2021)
32 slides from Sprouts Farmers Market's investor presentation, Mar 8, 2021
Slide 1: Investor Deck March 2021
INVESTOR DECK March 2021 Exhibit 99.1
Slide 2: Forward-Looking Statements
2 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 (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or i
Slide 3: Sprouts, Where Goodness Grows
SPROUTS, WHERE GOODNESS GROWS
Slide 4: What Defines Sprouts and What Makes Us Different
4 A farmers market experience – open layout of fresh produce at the heart of the store, community feel, treasure hunt for unique products Intentional curation of responsibly and locally sourced products A place with happy, helpful team members The right assortment of healthy alternatives and good-fo
Slide 5: Why Invest in Sprouts? A Powerful Growth Business
5 Targeted 10%+ annual unit growth beyond 2021 and incredible white space Strong and improving unit economics Sustainable robust cash flows Building an advantaged fresh supply chain Unique farmers market experience Innovative & differentiated products with lifestyle friendly ingredients WHY INVEST I
Slide 6: Environmentally and Socially Responsible Company
6 Environmentally and Socially Responsible Company
Slide 7: Sprouts' Long-Term Strategy
7 Sprouts’ Long- Term Strategy 10+% UNIT GROWTH (1) LOW DOUBLE- DIGIT EARNINGS GROWTH EXPANDING ROIC REFINE BRAND AND MARKETING APPROACH WIN WITH TARGET CUSTOMERS UPDATE FORMAT AND EXPAND IN SELELCT MARKETS CREATING ADVANTAGED SUPPLY CHAIN DIGITAL-FIRST MARKETING PROGRAM CONNECTING WITH TARGET CUSTO
Slide 8: We Exist for the Health Enthusiasts and Experience Seekers
8 WE EXIST FOR THE HEALTH ENTHUSIASTS WE EXIST FOR THE EXPERIENCE SEEKERS What brings them together is simple: They’re into their food – like, really into it. Cover a wide range of income Age demographics - Gen Z to Baby Boomers Healthy and organic options, better for you, quality products Innovativ
Slide 9: Opportunity to Gain Share in Winning Target Customer Segments
9 Tremendous Opportunity to Gain Share in Winning Target Customer Segments 9 Consumers Spend $1.2T on Food at Home Sprouts’ Share Today >$200B Market We still have Significant Opportunity to Introduce Target Customers to Sprouts
Slide 10: Customer Affinity Strong and in-line with Best-in-Class Peers
10 Once Acquired, Sprouts’ Customer Affinity is Very Strong and in-line with Best-in-Class Peers Net Promoter Score (NPS) – Among Frequent Shoppers Frequent as defined as in Respondent’s Top 3 Most Visited for Grocery +65 +22 +69 NPS +23 +47 +47 +42 +32 +66 +44 +61 +63 +72 +70 +60 Source: Sprouts NP
Slide 11: Pivoting Our Marketing Strategy to Drive More Profitable Growth
11 Pivoting Our Marketing Strategy to Drive More Profitable Growth with a Broader Reach OUR DIGITAL-FIRST MARKETING PLATFORM IS FOCUSED ON CONNECTING WITH OUR MOST IMPORTANT CUSTOMERS Target Audience: Connect with Health Enthusiasts and Experience Seekers Geo-Targeting: Align media investments with
Slide 12: One of the Best Grocery Omnichannel Growth Stories
12 One of the Best Grocery Omnichannel Growth Stories in 2020 340% YoY Ecommerce Growth Ecommerce Penetration 9.5% Fiscal year 2020 period Customers can now shop how they like – In-Store, Pick-up, or Delivery
Slide 13: Produce Remains the Heart of the Store
13 Produce Remains the Heart of the Store Hybrid produce buying model – centralized and regional teams allow us to be flexible and react to the produce markets quickly Meaningful farmer partnerships which deliver new varietals and favorable pricing to our customers through spot buys New distribution
Slide 14: Curation of Differentiated Good-For-You Products
14 14 Sprouts’ Stores are Filled with a Curation of Differentiated Good-For-You Products 68% of Products Sold in Sprouts are Attribute Driven: Organics, Paleo, Keto, Plant Based, Non-GMO, Gluten Free, Vegan, Dairy-free, Grass Fed, Raw Includes all produce
Slide 15: Unique Experience in a Smaller Box with Higher Returns
15 15 Deliver a Unique, Friendly Experience with Healthy, Innovative Products in a Smaller Box with Higher Returns Format to Stay True to our Fresh-focused Farmers Market Heritage Prioritize Categories For Growth Potential Continue to Offer all Categories 21K-25K Small Market Layout square foot box
Slide 16: Smaller Store Benefits
16 16 Lower Cost to Build Reduce Non-Selling Space Decreased Occupancy Cost Reduce Operating Cost Sales Remain Flat Strong Returns & Ability to Accelerate Growth Smaller Store Benefits
Slide 17: High Growth Retailer – Annual Unit Growth Target of 10% or More
High Growth Retailer – Annual Unit Growth Target of 10% or More Beyond 2021 Unit growth (1) 300 – 400 New Stores in Expansion Markets 2019 & 2020 actual unit growth, 2021 outlook, 2022 and beyond represent a range of potential growth Expansion Markets Existing DCs Future DCs Existing Markets DCs ope
Slide 18: Creating an Advantaged Fresh Supply Chain
18 18 Creating an Advantaged Fresh Supply Chain within 250 Miles of the Majority of Stores 2 New DCs - CO & FL Transportation & Shrink Freshness & Local Produce In 2021… Savings of nearly 3000 Metric Tons of Carbon Dioxide Equivalent
Slide 19: Long-Term Strategic Financial Targets
19 19 Long-Term Strategic Financial Targets Low Double-Digit Earnings Growth and Expansion of ROIC Cost to Build Reduced & Attractive New Store Economics 10+% unit growth or more (1) Low single digit comps (1) Stable to Expanding EBIT Margins (1) Starting in 2022
Slide 20: New Store Four Wall Box Target Economics
20 20 New Store Four Wall Box Target Economics Sales EBITDA Margins 20% to 25% sales growth in 4 years $16M - $18M annual Sales per Box in year 4 Blended 8% EBITDA Margins in year 4 Cash on Cash Return ~40% by year 4, continues to grow in year 5 Cash Investment $3.2M average new store build includin
Slide 21: Low Single Digit Comps Target
21 21 Low Single Digit Comps Target Key Comp Drivers Low Single Digit Comps Brand and marketing Innovative, differentiated products Omnichannel offering Better new store ramp with smarter promotional approach
Slide 22: Stable to Expanding EBIT Margins
22 22 Stable to Expanding EBIT Margins Stable to Expanding EBIT Margins All Stores New Stores Smarter Promotions Improved Buying Supply Chain Optimization Labor Productivity Improving Shrink Headwinds from Labor & Benefit Costs Headwinds from ecommerce Reduction in Cost to Build (Improved DA) Lower
Slide 23: Sprouts is on a Stronger Foundation
23 Sprouts is on a Stronger Foundation than Beginning of 2020 23 NET SALES $6.5B +15% YoY NET CASH PROVIDED by OPERATIONS $494M + 39% YOY ADJUSTED DILUTED Earnings Per Share $2.49 + 99% YOY ($ in mm) ($ in mm) (1) See the Appendix to this presentation for a reconciliation of adjusted diluted EPS to
Slide 24: Structurally Changed Gross Margin
24 Structurally Changed Gross Margin Modest Give back from: Buying/cost benefits from abrupt restaurant closures Shrink leverage from faster moving product during COVID Short-term shrink benefit from extreme out-of-stocks early in pandemic Strategic investments In 2021… 2020 GM Improvement
Slide 25: Capital Expense Driven by New Store Growth
25 Capital Expense Driven by New Store Growth Capex Spend as % of Sales Capital Expenditures is net of landlord reimbursement 2022 and beyond are estimates 2.3%
Slide 26: Improving ROIC
26 In-line with Strategic Goals…Improving ROIC 26 ROIC (1) ROIC is a non-GAAP measure that we define 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.
Slide 27: Delight in the Goodness of Fresh, Healthy Foods
27 DELIGHT IN THE GOODNESS OF FRESH, HEALTHY FOODS… Sprouts delivers a unique farmers market experience that brings together passionate, knowledgeable team members and the best assortment of high-quality food that is good for us, and good for the world.
Slide 28: Appendix
28 APPENDIX
Slide 29: Executive Management Team with Leading Grocery & Retail Experience
29 Executive Management Team with Leading Grocery & Retail Experience Jack Sinclair Chief Executive Officer since 2019 Denise Paulonis Chief Financial Officer since 2020 Scott Neal Chief Fresh Merchandising Officer since 2020 Dan Sanders Chief Operations Officer since 2016 Jim Wallace Senior VP, Sto
Slide 30: Non-GAAP Measure Reconciliation
30 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) The following table shows a reconciliation of EBITDA and adjusted EBITDA to net income, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adju
Slide 31: Appendix
31 Appendix Income tax provision includes approximately $12 million (or $0.10 per diluted share) benefit during the fifty-two weeks ended December 30, 2018 and $10 million (or $0.08 per diluted share) in the fifty-two weeks ended December 31, 2017, in excess federal and state tax benefits for share
Slide 32: ROIC Reconciliation to Net Income
32 Appendix The following table shows a reconciliation of ROIC to net income for the Company’s 2017, 2018, 2019 and 2020 fiscal years. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS)
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