Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (October 2024)
34 slides from Sprouts Farmers Market's investor presentation, Oct 30, 2024
Slide 1: Investor Deck October 2024
INVESTOR DECK October 2024 Exhibit 99.3
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 that are not statements of historical fact (including, but not limited to, statements to the effect that Sprout
Slide 3: Helping People Live and Eat Better
3 HELPING PEOPLE LIVE AND EAT BETTER
Slide 4: What Defines Sprouts
4 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 la
Slide 5: Why Invest in Sprouts?
5 WHY INVEST IN SPROUTS? A Differentiated, Powerful Growth Business • Incredible growth opportunity: ~ 33 new stores in 2024(1), approximately 10% annual unit growth • Strong box economics • Strong financial returns: low double-digit earnings growth and expansion of ROIC • Healthy balance sheet & ro
Slide 6: Sprouts' Long-Term Strategy
6 SPROUTS’ LONG-TERM STRATEGY APPROXIMATELY 10% UNIT GROWTH LOW DOUBLE-DIGIT EARNINGS GROWTH EXPANDING ROIC 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 Compan
Slide 7: Focus on Innovation & Differentiation
7 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 ~1
Slide 8: Produce: The Heart of the Store
8 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 buy
Slide 9: Curation of Differentiated Better-for-You Products
9 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
10 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
11 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/
Slide 12: Customer Engagement: Omnichannel Offering
12 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, August 2024 (2) Sprouts Ecommerce Penetration represents ecommerce sales
Slide 13: Customer Statistics: Opportunity for More Engagement
13 CUSTOMER STATISTICS: Opportunity for more engagement • 22% of transactions linked to a Sprouts account in Q3 2024, representing 30% of our sales • 36% Ecommerce sales growth in Q3 2024 • Upcoming Loyalty Program: market test currently underway Identifiable customers come more often and spend more
Slide 14: Smaller Box with Higher Returns
14 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
Slide 15: High Growth Retailer
15 HIGH GROWTH RETAILER Potential for 300+ New Stores in Expansion Markets 1. 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
16 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
Slide 17: Impactful Products
17 IMPACTFUL PRODUCTS 180+ Fair Trade products$3.3B in sales of products with a social or environmental attribute 27% of total sales from organic products 22% increase in less carbon intensive plant-based product sales HEALTH & WELLNESS RESPONSIBLE SOURCING SPROUTS BRAND & INNOVATION 19% of total sa
Slide 18: Thriving Planet
18 THRIVING PLANET 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 choices. We are diverting food from
Slide 19: Purposeful People
19 PURPOSEFUL PEOPLE 5,700 safety inspections completed 61,000 safety training hours completed 36% reduction in worker injuries since 2019 LOVE BEING DIFFERENT $21M in bonuses paid to field team members $21M in savings for team members with store discount PAY & BENEFITS 3,000 new jobs created 17,000
Slide 20: Healthy Communities
20 HEALTHY COMMUNITIES $20M awarded to local nonprofit partners in communities Sprouts operates since 2015 3M kids participated in Sprouts Healthy Communities Foundation nutrition education programs FOOD SECURITY SPROUTS HEALTHY COMMUNITIES FOUNDATION 5,500 service hours donated by Sprouts team memb
Slide 21: Responsible Business
21 RESPONSIBLE BUSINESS BOARD COMPOSITION & INDEPENDENCE DATA PRIVACY & CYBERSECURITY Board and committee oversight of ESG matters ETHICAL BUSINESS ESG LEADERSHIP & OVERSIGHT 88% of board members are independent 38% of board members are female or racially/ethnically diverse Risk Committee oversees o
Slide 22: Long-Term Strategic Financial Targets
22 LONG-TERM STRATEGIC FINANCIAL TARGETS(1) Low Double-Digit Earnings Growth and Expansion of ROIC Cost to Build Reduced & Attractive New Store Economics ~10% unit growth(2) Low single digit comps Stable EBIT Margins off a Higher Base 1. These are targets and not projections; they are subject to sig
Slide 23: Low-Single-Digit Comps Targets, with Stable EBIT Margins
23 LOW-SINGLE-DIGIT COMPS TARGETS, WITH STABLE EBIT MARGINS(1) 1. These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assump
Slide 24: New Stores' Strong Performance: Four-Wall Box Target Economics
24 NEW STORES’ STRONG PERFORMANCE: Four-Wall Box Target Economics (1) EBITDA MARGINS • Break even year 1 • Grows to a blended ~8% EBITDA Margins over the next 4 years 1. These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contin
Slide 25: Stronger Foundation: Strategic Initiatives Beginning to Take Hold
25 STRONGER FOUNDATION: Strategic Initiatives Beginning to Take Hold NET CASH PROVIDED BY OPERATIONS NET SALES ($ in mm) 1. See the Appendix to this presentation for a reconciliation of Adjusted Diluted Earnings Per Share to diluted Earnings Per Share ADJUSTED DILUTED EARNINGS PER SHARE (1) ($ in mm
Slide 26: Maintaining a Structurally Improved Margin Profile
26 MAINTAINING A STRUCTURALLY IMPROVED MARGIN PROFILE (1) Q3 23 gross margin is 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 and EBIT margin to adjuste
Slide 27: Improving ROIC
27 IMPROVING ROIC: in-line with strategic goals ROIC (1) 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. 2. 2020 is presented on a 53-week basis (2)
Slide 28: Strong Balance Sheet, Robust Cash Flows
28 STRONG BALANCE SHEET, ROBUST CASH FLOWS Self Fund our Growth and Deliver Shareholder Value through Ongoing Share Repurchase Program 1. Capital expenditures are net of landlord reimbursement 2. Excluding excise tax (1) (2)
Slide 29: Find Your Healthy
29 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 to help people live and eat better.
Slide 30: Appendix
30 APPENDIX
Slide 31: Executive Management Team
31 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
Slide 32: Appendix: Non-GAAP Measure Reconciliation
32 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
Slide 33: Non-GAAP Measure Reconciliation (Quarterly)
33 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) APPENDIX The following table shows a reconciliation of adjusted gross margin to gross margin, EBIT and adjusted EBIT to net income, adjusted EBIT margin to EBIT margi
Slide 34: Appendix: ROIC Reconciliation
34 APPENDIX The following table shows a reconciliation of ROIC to net income for the Company’s 2020, 2021, 2022 and 2023 fiscal years, and Q3 2024 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN MILLIONS) Q3 2024 2023 2022 2021 2020(1) Net Income(2) $ 35
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