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Can Sprouts Farmers Sustain Its 11.7% Comp Sales Momentum?

Can Sprouts Farmers Sustain Its 11.7% Comp Sales Momentum?

Globe and Mail01-07-2025
Sprouts Farmers Market, Inc. SFM reported a robust 11.7% comparable store sales growth in the first quarter of 2025. The growth was broad-based across categories and geographies, fueled by increased foot traffic and a 28% surge in e-commerce. SFM's focus on health-driven, specialty products continues to resonate with its core customer base, while its private label offerings, now contributing 24% of total sales, further strengthen the overall performance.
However, sustaining this level of performance through the remainder of the year remains a question. Comparable store sales also got a boost from temporary events, including a conventional grocer strike in Colorado and increased vitamin sales due to the intense cold and flu season. These external factors contributed about 50 basis points to the comp growth.
Nonetheless, Sprouts Farmers remains fundamentally strong. The planned rollout of the loyalty program in the second half of 2025 may provide another catalyst for growth. By enhancing personalization and streamlining the omnichannel experience, the program aims to increase both customer frequency and basket size. Furthermore, investments in supply chain optimization, including self-distribution of fresh meat and seafood, are expected to improve product quality and efficiency.
For the second quarter, management anticipates comparable store sales growth to moderate to a range of 6.5% to 8.5%. The company projects growth between 5.5% and 7.5% for full-year 2025, noting that the upcoming results will be measured against stronger sales from the latter part of 2024. This guidance suggests a normalization from the first-quarter surge, but still indicates healthy comparable sales performance.
How Do DG and TGT Stack Up Against SFM's Sales Surge?
Dollar General Corporation DG reported a 2.4% increase in first-quarter fiscal 2025 same-store sales, driven by a 2.7% rise in the average transaction amount, though partially offset by a 0.3% decline in customer traffic. Dollar General saw growth across all key product categories, including consumables, seasonal, home products and apparel. Dollar General now expects same-store sales to rise between 1.5% and 2.5% compared to its prior forecast of 1.2% to 2.2%.
Target Corporation TGT experienced a 3.8% decline in comparable sales, following a 1.5% increase in the preceding quarter. This drop was attributed to a 5.7% fall in Target's comparable store sales, which was somewhat offset by a 4.7% increase in comparable digital sales. Target highlighted that traffic, or the number of transactions, dropped 2.4%, and the average transaction amount decreased 1.4%.
SFM's Price Performance, Valuation and Estimates
Sprouts Farmers stock has been a standout performer, with shares rallying 29.6% year to date, outpacing the industry 's growth of 14.8%.
From a valuation standpoint, SFM's forward 12-month price-to-sales ratio stands at 1.74, higher than the industry's ratio of 0.26. SFM carries a Value Score of C.
The Zacks Consensus Estimate for Sprouts Farmers' current financial-year sales and earnings per share implies year-over-year growth of 13.7% and 35.5%, respectively.
Sprouts Farmers Market currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Pipelines, policy and uncertainty shape Alberta byelection in Hardisty's oil hub
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Ups and downs Gratitude is on the minds of the Lehnes, and it's obviously a message that has caught on among the small community. On a town sign in the middle of the community, a placard reads: "As summer winds down, let August be a month of gratitude." Over the past few years, officials say they've attracted new residents and businesses. Beringer, the local realtor, says the market was quite soft up until early spring this year. "We've seen about a 30 to 35 per cent increase in house sales, mostly people moving in from Ontario and B.C.," she says. Of course, the status of major projects, such as pipelines and rail infrastructure, significantly impact local business activity, says Wayne Jackson, the town's mayor. Political and economic uncertainty has slowed things down and has led to "one of the most uncertain times" the mayor has seen in his town. "The last few years, I've noticed the projects that are getting done are like … I see people working on what they have. 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