Sprouts Farmers Market 2015 Annual Report Download - page 45

37
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
You should read the following discussion and analysis of our financial condition and results of
operations together with 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 operates as a healthy grocery store that offers fresh, natural and organic
food that includes fresh produce, bulk foods, vitamins and supplements, grocery, meat and seafood, deli,
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 217 stores in 13 states as of January 3, 2016, we
are one of the largest specialty retailers of fresh, natural and organic food in the United States. As of
February 24, 2016, we have grown to 224 stores in 13 states.
At Sprouts, we believe healthy living is a journey and every meal is a choice. 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 featuring a broad selection of
innovative healthy products, and knowledgeable team members who we believe provide best-in-class
customer engagement and product education.
Our History
In 2002, we opened the first Sprouts Farmers Market store in Chandler, Arizona. From our founding
in 2002 through January 3, 2016, we continued to open new stores while successfully rebranding 43
Henry’s Farmers Market (referred to as “Henry’s”) and 39 Sunflower Farmers Market (referred to as
“Sunflower”) stores added through acquisitions to the Sprouts banner (referred to as the “Transactions”).
These three businesses all trace their lineage back to Henry’s Farmers Market and were built with similar
store formats and operations including a strong emphasis on value, produce and service in smaller,
convenient locations. The consistency of these formats and operations was an important factor that
allowed us to rapidly and successfully rebrand and integrate each of these businesses under the Sprouts
banner and on a common platform.
Outlook
We are pursuing a number of strategies designed to continue our growth, including expansion of our
store base, continuing positive comparable store sales 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 to expand our store base primarily
through new store openings, we may grow through strategic acquisitions if we identify suitable targets
and are able to negotiate acceptable terms and conditions for acquisition. We intend to achieve 14%
annual new store growth for at least the next five years, including 36 planned new store openings in 2016,
of which seven have opened as February 24, 2016.
We also believe we can continue to improve our comparable store sales growth by enhancing our
core value proposition and distinctive customer-oriented shopping experience, as well as through
expanding and refining our fresh, natural and organic product offerings, our targeted and personalized
marketing efforts and our in-store education. We are committed to growing the Sprouts brand by