Sprouts Farmers Market 2015 Annual Report Download - page 25

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xtranslate market trends into appropriate, saleable product and service offerings in our stores
before our competitors; and
xdevelop and maintain vendor relationships that provide us access to the newest merchandise
on reasonable terms.
Consumer preferences often change rapidly and without warning, moving from one trend to another
among many product or retail concepts. Our performance is impacted by trends regarding healthy
lifestyles, dietary preferences, natural and organic products, and vitamins and supplements. Consumer
preferences towards vitamins, supplements or natural and organic food products might shift as a result of,
among other things, economic conditions, food safety perceptions, scientific research or findings
regarding the benefits or efficacy of such products, national media attention and the cost of these
products. Our store offerings currently include natural and organic products and dietary supplements. A
change in consumer preferences away from our offerings would have a material adverse effect on our
business. Additionally, negative publicity over the safety, efficacy or benefits of any such items may
adversely affect demand for our products, and could result in lower customer traffic, sales and results of
operations.
If we are unable to anticipate and satisfy consumer preferences in the regions where we operate,
our sales may decrease, which could have a material adverse effect on our business, financial condition
and results of operations.
Our newly opened stores may negatively impact our financial results in the short-term, and may
not achieve sales and operating levels consistent with our more mature stores on a timely basis
or at all.
We have actively pursued new store growth and plan to continue doing so in the future. We cannot
assure you that our new store openings will be successful or reach the sales and profitability levels of our
existing stores. New store openings may negatively impact our financial results in the short-term due to
the effect of store opening costs and lower sales and contribution to overall profitability during the initial
period following opening. New stores build their sales volume and their customer base over time and, as
a result, generally have lower margins and higher operating expenses, as a percentage of net sales, than
our more mature stores. New stores may not achieve sustained sales and operating levels consistent with
our more mature store base on a timely basis or at all. This may have an adverse effect on our financial
condition and operating results.
In addition, we may not be able to successfully integrate new stores into our existing store base and
those new stores may not be as profitable as our existing stores. Further, we have experienced in the
past, and expect to experience in the future, some sales volume transfer from our existing stores to our
new stores as some of our existing customers switch to new, closer locations. If our new stores are less
profitable than our existing stores, or if we experience sales volume transfer from our existing stores, our
financial condition and operating results may be adversely affected.
We may be unable to maintain or improve our operating margins, which could adversely affect our
financial condition and ability to grow.
If we are unable to successfully manage the potential difficulties associated with store growth, we may
not be able to capture the efficiencies of scale that we expect from expansion. If we are not able to continue to
capture efficiencies of scale, improve our systems, continue our cost discipline, and maintain appropriate store
labor levels and disciplined product selection, our operating margins may stagnate or decline. In addition,
competition and pricing pressures from competitors may also adversely impact our operating margins. Both
efficiencies from scale and competition could have a material adverse effect on our business, financial
condition and results of operations and adversely affect the price of our common stock.