Sprouts Farmers Market 2013 Annual Report Download - page 37

Table of Contents
Our lease obligations may require us to continue paying rent for store locations that we no longer operate.
We are subject to risks associated with our current and future store, distribution center and administrative office real estate
leases. We generally cannot cancel our leases, so if we decide to close or relocate a location, we may nonetheless be committed to
perform our obligations under the applicable lease, including paying the base rent for the remaining lease term. In addition, as our
leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or any terms at all, which could
materially adversely affect our business, results of operations or financial condition.
The loss of key management could negatively affect our business.
We are dependent upon a number of key management and other team members. If we were to lose the services of a
significant number of key team members within a short period of time, this could have a material adverse effect on our operations
as we may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could
be viewed in a negative light by investors and analysts, which may cause our stock price to decline. We do not maintain key person
insurance on any team member.
If we are unable to attract, train and retain team members, we may not be able to grow or successfully operate our
business.
The food retail industry is labor intensive. Our continued success is dependent upon our ability to attract and retain qualified
team members who understand and appreciate our culture and are able to represent our brand effectively and establish credibility
with our business partners and consumers. We face intense competition for qualified team members, many of whom are subject to
offers from competing employers. Our ability to meet our labor needs, while controlling wage and labor-related costs, is subject to
numerous external factors, including the availability of a sufficient number of qualified persons in the work force in the markets in
which we are located, unemployment levels within those markets, unionization of the available work force, prevailing wage rates,
changing demographics, health and other insurance costs and changes in employment legislation. In the event of increasing wage
rates, if we fail to increase our wages competitively, the quality of our workforce could decline, causing our customer service to
suffer, while increasing our wages could cause our earnings to decrease. If we are unable to hire and retain team members capable
of meeting our business needs and expectations, our business and brand image may be impaired. Any failure to meet our staffing
needs or any material increase in turnover rates of our team members or team member wages may adversely affect our business,
results of operations or financial condition.
Higher wage and benefit costs could adversely affect our business.
Changes in federal and state minimum wage laws and other laws relating to employee benefits, including the Patient
Protection and Affordable Care Act, could cause us to incur additional wage and benefit costs. Increased labor costs would
increase our expenses and have an adverse impact on our profitability.
Union attempts to organize our team members could negatively affect our business.
None of our team members are currently subject to a collective bargaining agreement. As we continue to grow and enter
different regions, unions may attempt to organize all or part of our team member base at certain stores or within certain regions.
Responding to such organization attempts may distract management and team members and may have a negative financial impact
on individual stores, or on our business as a whole.
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