Sprouts Farmers Market 2013 Annual Report Download - page 50

Table of Contents
You should read the following discussion and analysis of our financial condition and results of operations together with
“Selected Financial Data,” “—Unaudited Supplemental Fiscal 2011 Pro Forma Information” and the consolidated financial
statements and related notes that are included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-
looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk
Factors” or in other parts of this Annual Report on Form 10-K. Please also see the section entitled “Special Note Regarding
Forward-Looking Statements.”
Business Overview
Sprouts Farmers Market is a high-growth, differentiated, specialty retailer of natural and organic food focusing on health and
wellness at great value. We offer a complete shopping experience that includes fresh produce, bulk foods, vitamins and
supplements, grocery, meat and seafood, bakery, dairy, frozen foods, body care and natural household items catering to
consumers’ growing interest in eating and living healthier. Since our founding in 2002, we have grown rapidly, significantly
increasing our sales, store count and profitability. With fiscal 2013 net sales of $2.4 billion and 167 stores in eight states as of
December 29, 2013, we are one of the largest specialty retailers of natural and organic food in the United States. As of
February 27, 2013, we have grown to 170 stores in nine states (including our first store in Kansas). According to research
conducted for us by Buxton Company, a customer analytics research firm, we have significant growth opportunities in existing and
new markets across the United States with the potential for approximately 1,200 locations operating under our current format.
The cornerstones of our business are fresh, natural and organic products at compelling prices (which we refer to as “Healthy
Living for Less”), an attractive and differentiated shopping experience, and knowledgeable team members who we believe provide
best-in-class customer service and product education.
Our History
In 2002, we opened the first Sprouts Farmers Market store in Chandler, Arizona. In 2010, we had 54 stores and reached over
$620 million in net sales and approximately 3,700 team members. In April 2011, we partnered with the Apollo Funds, and added 43
stores by merging with Henry’s and its Sun Harvest-brand stores. Our merger with Henry’s brought us to 103 total stores located in
Arizona, California, Colorado and Texas as of the end of 2011. In May 2012, we added another 37 stores through our acquisition of
Sunflower and extended our footprint into New Mexico, Nevada, Oklahoma and Utah. On August 1, 2013, our common stock began
trading on the NASDAQ Global Select Market and on August 6, 2013, we closed our IPO.
Outlook
We are pursuing a number of strategies designed to continue our growth, including expansion of our store base, driving
comparable store sales growth, enhancing our operating margins and growing the Sprouts brand. We intend to continue expanding
our store base by pursuing new store openings in our existing markets, expanding into adjacent markets and penetrating new
markets. Although we plan
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Item 7.
Management
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s Discussion and Analysis of Financial Condition and Results of Operations