Sprouts Farmers (SFM) Widens Spectrum on Operational Efforts
Sprouts Farmers Market, Inc. SFM, a recognized name in the grocery space, has exhibited a decent run on the bourse in the past six months. Due to its operational initiatives — strengthening omnichannel solutions, expanding the customer reach and a focus on private-label offerings — the stock has outpaced the Zacks Food-Natural Foods Products industry. In the said period, shares of this Zacks Rank #3 (Hold) company have rallied about 20%, while the industry has risen 14.1%.
Let’s Delve Deeper
To expand its customer base, Sprouts Farmers has been taking several initiatives focused on product innovation, customer experience and targeted marketing with everyday great pricing and technology. It is steadily expanding its presence in the natural organic space, given the huge demand in the segment. It has been reducing operational complexity, optimizing production, improving the in-stock position and updating to smaller-format stores.
Apart from these, the company is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli and The Butcher Shop at Sprouts. Product innovation continues to drive sales of private-label items.
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Sprouts Farmers is focused on creating a robust omnichannel experience for customers. The company has been providing hassle-free shopping through the Sprouts.com website and the mobile app and creating a supply chain that provides the freshest produce while updating store prototypes.
The company is gradually heading toward its strategic goal of 10% unit growth per year. It currently intends to open at least 30 new stores in 2023, with plans to open 40 plus stores by 2024.
Sprouts Farmers’ partnership with Instacart and DoorDash enables it to enter new marketplaces and strengthen e-commerce growth. It has rolled out the grocery pickup service at all its stores. The home delivery business is also available at the company’s stores. In the third quarter of 2022, e-commerce sales grew 19% and represented approximately 11.1% of the total sales.
Wrapping Up
Sprouts Farmers has been strengthening omnichannel solutions, expanding its customer reach and focusing on private-label offerings to gain market share. Management anticipates growth of 4.5-5% and a comparable store sales increase of roughly 2% for 2022. It projects earnings in the band of $2.32-$2.36 per share, which suggests an increase from the earnings of $2.10 per share reported in 2021.
3 Stocks Looking Red Hot
Here we have highlighted three better-ranked stocks, namely Performance Food Group PFGC, BJ's Wholesale Club BJ and Kroger KR.
Performance Food Group, which markets and distributes food and food-related products in the United States, carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Performance Food Group’s current financial-year sales and EPS suggests growth of 14.5% and 45.8%, respectively, from the corresponding year-ago period’s actuals. PFGC has a trailing four-quarter earnings surprise of 15.2%, on average.
BJ's Wholesale Club, which operates membership warehouse clubs, currently carries a Zacks Rank #2. BJ has an expected EPS growth rate of 9.3% for three to five years.
The Zacks Consensus Estimate for BJ's Wholesale Club’s current financial-year sales and EPS suggests growth of 16.2% and 16.6%, respectively, from the corresponding year-ago period’s levels. BJ has a trailing four-quarter earnings surprise of 18.2%, on average.
Kroger, a renowned grocery retailer, carries a Zacks Rank #2 at present. The company has an expected EPS growth rate of 6.1% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 7.5% and 12.2%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 13.4%, on average.
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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
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