Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (May 2020)
23 slides from Sprouts Farmers Market's investor presentation, May 5, 2020
Slide 1: Sprouts Strategy 2020 and Beyond
Sprouts Strategy 2020 and Beyond Exhibit 99.2 [COMPANY LOGO]
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 (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or its
Slide 3: Strategy
STRATEGY We want to recognize our team members for their continued dedication through the COVID-19 health crisis. By helping millions of customers in our stores each week, they truly are everyday heroes. Their efforts support our long-term vision of building a brand that is good for you, good for yo
Slide 4: Sprouts Strategy
SPROUTS STRATEGY Win with Target Customer Identified through research to have tremendous opportunity Refine Brand and Marketing Approach Elevate national recognition and top of mind awareness Update Format and Expand in Select Markets Smaller stores with higher returns where our core customers live
Slide 5: Target Customer
Target Customers looking for: Healthy and organic options Better for you, quality products Innovative and differentiated products Great store experience Support in living a healthier lifestyle Ample Opportunity to Gain Market Share, as Sprouts Serves Only a Small Portion of these Target Customers To
Slide 6: Consumers Spend $1.2T on Food at Home
Consumers Spend $1.2T on Food at Home 3% Share Increase of the Target Customer would Double Sales Sprouts’ Share Today Tremendous Opportunity to Gain Share in Winning Target Customer Segment [PIE CHART] Sprouts Targets Customers Sprouts Share Today Halo Customers All Other
Slide 7: Meeting Customer Needs with Grocery Delivery and Pickup
Meeting Customer Needs with Grocery Delivery and Pickup Home Delivery in All Major Markets Grocery Pickup Expanding to All Stores
Slide 8: Brand and Marketing
Elevate national brand recognition and top of mind awareness Tell the story around differentiation and innovation Build more capability around digital and social connections Establish a truly differentiated private label Focus more on good value every day and meaningful promotions Brand and Marketin
Slide 9: Meaningful Promotions – Good Value Everyday
Meaningful Promotions – We Will Continue to Bring Good Value Everyday to our Customers Promotional mix down Promotional margins up [COUPON GRAPHIC]
Slide 10: Smaller Box Format with Higher Returns
Deliver a Unique, Friendly Experience with Healthy, Innovative Products in a Smaller Box with Higher Returns Format to Stay True to our Fresh-focused Farmer’s Market Heritage Prioritize Categories For Growth Potential Continue to Offer all Categories 21K-25K Small Market Layout square foot box From…
Slide 11: Smaller Store Benefits
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 12: Expansion Markets and Site Selection
Site selection intersecting: Target customers Growth potential Supply chain Expansion Markets Drive growth in existing markets with support of Distribution Centers California & Texas – More opportunity to fill in where we are strong Build out Mid-Atlantic and Florida 300-400 New Stores in Expansion
Slide 13: Create an Advantaged Fresh Supply Chain
Deliver on Fresh Commitment Distribution Centers (DC) are located within 500 or more miles of the stores 5 DC serving 345 stores (Atlanta serving southern Florida) Multiple deliveries to the stores daily Current Future Aspire DC to be within 250 miles of the majority of stores Additional Florida & C
Slide 14: Strategy – CFO Message
STRATEGY Sprouts’ strong and resilient cash generation will enable our strategy to come to life, support the long-term, profitable growth of the business, and provide meaningful career opportunities for current and future team members - Denise Paulonis, CFO
Slide 15: Low Double-Digit Earnings Growth and Expansion of ROIC
Low Double-Digit Earnings Growth and Expansion of ROIC Financial Targets Cost to Build Reduced & Attractive New Store Economics 10% unit growth or more Low single digit comps Stable to Expanding EBIT Margins
Slide 16: Reduction in Target Cost to Build
Reduction in Sq Ft Reduction in Fixtures ~ 20% reduction in square feet ~ 20% reduction in capital dollars Cash Investment $3.2M blended prototype including CapEx (less TI), IT and other opening costs Other Opening Costs Reduction in inventory & pre-opening expenses Reduction in Target Cost to Build
Slide 17: 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 $3.2M average new store build including CapEx, Inventory and Pre-opening expenses New
Slide 18: Annual Unit Growth Target of 10% or More
Unit growth (1) Annual Unit Growth Target of 10% or More Long Runway of Organic Growth 2019 actual unit growth, 2020 projected unit growth, 2021 and beyond represent a range of potential growth 340 360 2019 2020 2021 2022 2023 2024 2025 [BAR CHART]
Slide 19: Low Single Digit Comps Target
Low Single Digit Comps Target Key Comp Drivers Low Single Digit Comps Brand and marketing Innovative, differentiated products Ecommerce Better new store ramp with smarter promotional approach
Slide 20: Stable to Expanding EBIT Margins
Stable to Expanding EBIT Margins Stable to Expanding EBIT Margins All Stores New Stores Smarter Promotions Improved Buying Supply Chain Optimization Labor Productivity Improving Shrink Headwinds from Labor & Benefit Costs Headwinds from ecommerce Reduction in Cost to Build (Improved DA) Lower Rents
Slide 21: Leveraging Strong Cash Generation
Invest in store unit growth (self funded) Invest in sales initiatives Invest in Brand Return excess cash/pay down debt NET CASH PROVIDED by OPERATIONS ($ in mm) Leveraging Strong Cash Generation [BAR CHART] $240 $254 $310 $294 $355 2015 2016 2017 2018 2019
Slide 22: Capital Expense Driven by New Store Growth
Capital Expense Driven by New Store Growth Capex Spend as % of Sales ($ in mm) [BAR CHART] 4.0% 3.0% 2.8 % ~2.0% ~2.5% to 3.5% 2017 2018 2019 2020 2021 + New Stores Sales Initiatives & Infrastructure Maintenance
Slide 23: Low Double-Digit Earnings Growth and Expansion of ROIC
Low Double-Digit Earnings Growth and Expansion of ROIC Financial Targets Cost to Build Reduced & Attractive New Store Economics 10% unit growth or more Low single digit comps Stable to Expanding EBIT Margins
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