Sprouts Farmers Market is focusing on expanding its private-label assortment and also running tests to expand its foodservice offerings, company executives told investors during a conference call Wednesday.
The company also issued financial guidance for fiscal 2015 during the call, projecting net sales growth of 20% to 22% — above its long-term target of 15%, it noted — with unit growth of 14% and comparable-store sales of 6% to 7%.
Analysts said that guidance may be on the conservative side, given the strong results in fiscal 2014 that included increases of 65% in adjusted net income, 22% in sales and 9.9% in comparable-store sales.
Doug Sandesr
Doug Sanders
Doug Sanders, president and CEO of the Phoenix-based chain, said the company anticipates getting close to 1,800 private-label SKUs by the end of the year, up about 20% from the 1,500 it already offers. Sprouts increased its private-label assortment last year by 16%, “with sales and comps that were well above the company average for the entire year,” he noted.
COO James L. Nielsen said in-store delis have provided “a great tailwind” over the last couple of years, prompting Sprouts to test various new elements at some locations, including salad bars, carving stations, breakfast bars and a full-service center-of-the-plate offering, “and the customer response has been fantastic.”
According to Sanders, “We’re going to test features, see what works, go back and make adjustments along the way, but we feel expanded foodservice offerings in our delis is an opportunity for us.”
Nielsen also said Sprouts is looking at redeveloping its home-meal replacement program by enhancing ingredients and packaging.
In other comments during the call:

• Nielsen said availability of some produce items has been affected by the strike at the port in Los Angeles, particularly grapes, blueberries and asparagus. But with a tentative agreement there, that issue will subside, he said, particularly as more supplies move into the Northern Hemisphere for the spring.
• Asked about online delivery options, Sanders said Sprouts is taking a wait-and-see approach, opting to look at what other retailers do, “and we’re getting close to figuring out what strategy we’re going to take.”
Amin N. Maredia, CFO and treasurer, said the company hasn’t found a model “that successfully delivers on the value commitment to our customers and that also addresses what they tell us is their desire to choose their own products, particularly in the perishables departments.
“However, we’re looking very closely at a couple of programs, and to the extent we can get one of those programs to work for us, we would probably look to pilot it in one or two markets and see how customers respond.”