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Is Sprouts Farmers' 35-Store Plan Enough to Break Into New Markets?

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Key Takeaways

  • Sprouts plans to open 35 stores in 2025, with focus on existing markets and early steps into new regions.
  • Strong store productivity, 11.7% comp sales, and $285.7M cash support Sprouts' aggressive expansion.
  • Midwest and Northeast entry is key to SFM's broader vision of scaling beyond 1,000 stores nationwide.

Sprouts Farmers Market, Inc. (SFM - Free Report) has entered 2025 with ambitious expansion plans to open at least 35 new stores. While the target seems solid, a closer look reveals that much of the growth focuses on reinforcing existing markets, with early-stage planning underway for new regions like the Midwest and Northeast. This brings up a critical question: Can Sprouts successfully expand into new markets, or will its growth remain concentrated in established locations?

Management’s store execution strategy has been impressive. Sprouts Farmers achieved 11.7% comparable store sales growth in the first quarter and opened three new stores, increasing the total count to 443 across 24 states. The company’s pipeline remains strong, with nearly 120 stores approved and more than 85 leases signed, providing clear visibility into future unit growth. New store productivity and a robust cash position of $285.7 million support aggressive expansion. 

Sprouts Farmers has signaled long-term ambitions to grow beyond 1,000 locations nationwide, with planned expansions into the Midwest and Northeast being a key part of that broader vision. For a company long known for its differentiated health-focused offerings, scaling outside its existing market could be the true litmus test. 

Market entry into densely competitive regions will require more than brand identity — it demands robust supply chain logistics, localized assortments and market-specific loyalty engagement. SFM aims for 10%-unit growth annually as part of its long-term expansion plan.

How GO & NGVC Stack Up Against SFM in Store Expansion

In comparing growth strategies, Grocery Outlet Holding Corp. (GO - Free Report) aims to maximize Return on Invested Capital by refining its expansion strategy. Grocery Outlet plans to open 33-35 new stores in 2025, focusing on high-return markets and clustering locations for better operational synergy. 

In contrast, Natural Grocers by Vitamin Cottage, Inc. (NGVC - Free Report) adopts a steadier approach, planning three to four new store openings in fiscal 2025, along with relocating or remodeling two to four existing stores. Natural Grocers by Vitamin Cottage plans to increase its store openings to six to eight annually in the future, positioning itself for sustainable growth.

SFM’s Price Performance, Valuation and Estimates

Sprouts Farmers stock has been a standout performer, with shares rallying 34.7% year to date, outpacing the industry’s growth of 19.8%. Looking at the performance of SFM’s competitors, shares of Grocery Outlet have declined 12.8%, while Natural Grocers by Vitamin Cottage has risen 14.4% in the same period. 
 

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From a valuation standpoint, SFM's forward 12-month price-to-sales ratio stands at 1.82, higher than the industry’s ratio of 0.27. SFM carries a Value Score of D.
 

Zacks Investment Research
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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. 

 

Zacks Investment Research
Image Source: Zacks Investment Research

Sprouts Farmers Market currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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