Natural Foods Merchandiser
Don't expect a Whole Foods-like move from Sprouts or Natural Grocers

Don't expect a Whole Foods-like move from Sprouts or Natural Grocers

Leaders at Sprouts and Natural Grocers remain resolute that their models are competitive and long-lasting.

Sprouts Farmers Market and Natural Grocers by Vitamin Cottage each touted commitment to their retail strategies May 7, the day after Whole Foods Market announced plans for a new natural foods chain.

Competition is nothing new to Sprouts, said CEO Doug Sanders, who emphasized the value chain’s focus on price and “innovative offerings” as key to 12 years of past success that will carry the business into the future.

Natural Grocers by Vitamin Cottage CEO Kemper Isely said the business needs to be excellent “at what we do” and that it will remain committed to its five founding principles.

Is the existing game plan enough?

Isely says yes. “They should focus on what they do best also, because I think trying to create two things and do them well could be difficult for anybody,” he added.

Don’t expect either retail leader to call out competition as a factor in decelerating sales. Isely noted the state of the overall economy as a drag on Natural Grocers' second-fiscal-quarter sales, even as customer counts and basket sizes have grown. Weather and produce supply issues in the first quarter were the explanation for store comps falling short of guidance at Sprouts.

Highlights for the second quarter and first half fiscal 2015 at Natural Grocers:

  • Net sales increased 21 percent to $157.7 million in the second quarter and increased 21 percent to $303.6 million in the first half of fiscal 2015.
  • Daily average comparable store sales increased 5.6 percent in the second quarter and increased 5.9 percent in the first half of fiscal 2015.
  • Growing transaction count—3.2 percent more—and a 2.2 percent increase in transaction size contributed to sales.
  • Net income increased 35.1 percent to $5.4 million with diluted earnings per share of 24 cents in the second quarter. In the first half, net grew 29.6 percent to $9 million with diluted earnings per share of 40 cents in the first half of fiscal 2015
  • Eight stores opened in the first half of fiscal 2015, compared with nine new stores in the first half of fiscal 2014.

Watch for Natural Grocers to roll out a loyalty program and continue grab-and-go testing.

Sprouts first-quarter highlights:

  • Net sales of $857.5 million; a 19 percent increase from the same period in 2014.
  • Comparable store sales growth of 4.8 percent.
  • Net income of $37.5 million and diluted earnings per share of 24 cents.
  • Adjusted net income of $38.6 million; a 9 percent increase from the same period in 2014.

Watch for Sprouts to roll out increased food bars and introduce 150 organic or non-GMO private label products particularly focused on raw, gluten free and vegan.

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