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Sprouts Farmers (SFM) Thrives on Product Innovation, Expansion

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Sprouts Farmers Market, Inc. (SFM - Free Report) has positioned itself as one of the prominent players in the grocery industry, thanks to a persistent focus on product innovation, supply-chain enhancement, store expansion and better customer engagement. The company has been strengthening omnichannel solutions and expanding private-label offerings to deliver innovative solutions and exceptional value.

Customer-Centric Approach

To expand its customer base, Sprouts Farmers has been taking several initiatives focused on product innovation, customer experience and targeted marketing. By leveraging everyday great pricing and technology, the company ensures competitive offerings that resonate well with its target audience.

Recognizing the immense demand for natural and organic products, Sprouts Farmers is expanding its presence in this segment. The company 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. This emphasis on private-label items not only sets Sprouts Farmers apart from competitors but also fosters customer loyalty.

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Seamless Omnichannel Experience

Sprouts Farmers is focused on creating a robust omnichannel experience for customers. The company has been providing hassle-free shopping through the website and the mobile app and creating a supply chain that provides the freshest produce while updating store prototypes.

The company’s 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. With e-commerce sales soaring in the double digits and accounting for 12.2% of total sales in the first quarter of 2023, Sprouts Farmers demonstrates its prowess in adapting to the digital era.

Again, Sprouts Farmers aims to steadily expand its store footprint. By targeting an annual unit growth rate of 10%, the company is poised to increase its market share. With plans to open 30 new stores in 2023, Sprouts Farmers is demonstrating its unwavering commitment to solidify its competitive edge.

Promising Outlook

Sprouts Farmers, being laser-focused, has been redefining strategies and upgrading capabilities to stay ahead of the curve. The company has set optimistic financial projections for the future, reflecting its confidence in its strategic initiatives.

For 2023, Sprouts Farmers expects net sales growth of 5-6% and comparable store sales growth of 2-3%. It foresees full-year adjusted earnings in the band of $2.58-$2.68 per share, up from the $2.39 reported in 2022.

Stock Performance

This Zacks Rank #3 (Hold) stock has outpaced the Zacks Food-Natural Foods Products industry in the past six months. In the said period, shares of the company have increased about 18.4%, while the industry has risen 12%.

Bet Your Bucks on These 3 Hot Stocks

Here we have highlighted three better-ranked stocks, namely Nomad Foods (NOMD - Free Report) , Celsius Holdings (CELH - Free Report) and Walmart (WMT - Free Report) .

Nomad Foods, a frozen food product company, currently sports a Zacks Rank #1 (Strong Buy). NOMD has a trailing four-quarter earnings surprise of 8.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Nomad Foods’ current fiscal-year sales suggests growth of around 8% from the year-ago reported figures.

Celsius Holdings, which offers functional drinks and liquid supplements, currently sports a Zacks Rank #1. CELH delivered an earnings surprise of 81.8% in the last reported quarter.

The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.

Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 5.5%.

The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.

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