Inflation

Earnings Roundup: Sprouts, Ingles Markets, Natural Grocers

Inflation and supply chain troubles posed some challenges for these smaller grocery chains during the quarter.
Sprouts Farmers Markets
Photo: Shutterstock

Sprouts Farmers Market stock surged more than 14% mid-day Thursday, after the natural-and-organic grocer reported strong second-quarter sales and ambitious new store plans.

Phoenix-based Sprouts reported a 5% increase in net sales, to $1.6 billion, for the quarter ended July 3, compared to the same period a year ago. Same-store sales increased 2% during the quarter, the company said. Sprouts’ e-commerce sales grew 15% and now make up 11.1% of the chain’s total sales.

Sprouts has opened eight new stores so far this year, with plans to open a total of 15 to 17 new markets this year.

That is a lower number than the 378-unit grocer would like, CEO Jack Sinclair told analysts late Wednesday, according to a transcript from financial services site Sentieo.

“We’ve had some fairly significant supply chain challenges on little pieces of things that go towards air conditioning, little pieces of things that go towards refrigeration,” Sinclair said. “And the other thing that’s kind of slowed us down in 2022 was the planning and getting the licenses from the various authorities who didn’t have people in the office monitoring it and planning it through.”

For 2023, however, Sprouts said it expects to open at least 30 new stores. The company has 80 to 85 signed leases in its pipeline.

“I think we’re being naturally cautious given where we’re at in the context of what’s happening in supply chain,” he said.

Ingles Markets

It was a solid third quarter for Asheville, N.C.-based Ingles Markets.

The 198-unit grocer said Thursday that its same-store sales, excluding gasoline, rose 5.7% over the previous year for the quarter ended June 25.

Ingles said its net sales totaled $1.46 billion for the period, compared with $1.28 billion a year ago. Gross profit for the quarter was $351.9 million, compared to $337.5 million last year.

But the retailer’s net income fell to $67.8 million, down from $72 million a year ago, a decrease Ingles attributed to rising fuel and food costs, supply chain issues and a competitive labor market.

“We were able to achieve strong results during the quarter, despite significant inflationary pressures,” Ingles Board Chairman Robert P. Ingle II said in a statement.

Natural Grocers by Vitamin Cottage

Natural Grocer by Vitamin Cottage got an inflation-fueled sales boost during its third quarter ended June 30,  the retailer reported Thursday.

Net sales during the period increased 3%, to $266.3 million, over the year before. Same-store sales increased 2.5% during the quarter, made up of a 2.7% increase in average transaction size partially offset by a 0.2% decrease in daily average transaction count.

Net income for the third quarter was $3.9 million, down from $5 million during the same period for 2021.

Natural Grocers’ store margins also fell during the quarter, decreasing to 2.1% from 2.7% a year ago.

The retailer ended the period with 162 stores in 20 states, after opening one new market during the quarter.

The Lakewood, Colo.-based company said it plans to open three to four new stores during the remainder of the year, with two relocations and remodels. It forecasted 2% to 3% same-store sales growth.

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