Grocery Tracker: Sprouts’ Q4 Up

Last week’s grocery stocks were a mixed bag as Costco hit new highs but others fumbled.

Whole Foods (WFM) saw some additional movement in the past week, continuing its upward trend since the second trading week in February. Market close on Friday (Feb. 24) saw Whole Foods at $31.57, up 1.52 percent from Thursday’s close and the highest value WFM has seen so far in 2017. WFM’s market cap was just over $10 billion.

Ahold Delhaize finished down for the after plateauing off of a Valentine’s high. The past week was largely uneventful for the international food retail group until Friday’s trading, when prices slipped down 0.71 percent from Thursday’s close to €20.22. Ahold Delhaize’s market cap sat at just over €25.9 billion.

Kroger (KR) also finished down for the week. While Tuesday held steady on last week’s rise, mid-week trading was a different story. Wednesday’s open saw prices drop 3 percent between 9 and 11 a.m. KR saw a bit of recovery as the week progressed, with prices at $33.28 and a market cap of $31 billion as of Friday’s close.

Costco, on the other hand, finished up for the week despite downward trends on the majority of trading days. Prices were down a dollar from the start of the week to Thursday’s close, but Friday saw prices rally in morning trading, hitting $177.56 by Friday’s close with a market cap of $77.7 billion. This looks to be the highest value Costco has held in its nearly 35 years of public trading.

Natural and health food supermarket chain Sprouts Farmers Market recently released its Q4 and full-year earnings results for 2016, reporting an overall rise in both net and comparable-store sales even as food deflation continues to bring down produce prices and increased promotional competition across the industry.

Sprouts hit $986 million in net sales for Q4, up 6 percent over the same period in 2015. The supermarket chain reported that comparable sales up 0.7 percent in 2016, driven by a 0.4 percent growth in store traffic.

However, net income for the quarter fell considerably compared same period last year. Sprouts netted just $17 million, down nearly 40 percent from the adjusted net income the company took in for Q4 2015.

“This has been the most challenging deflationary environment we have experienced since 2009 and the longest period of sustained food deflation in decades,” said Sprouts CEO Amin Maredia in the earnings call. “During this time, we will continue to maintain our competitive position by being priced right and focused on customer initiatives to drive traffic to our stores.”

For the full year, Sprouts’ net sales were up 13 percent to $4 billion compared to the year prior, reportedly driven by a 2.7 percent increase in comp sales. Again, net income was down for the organic grocer over 2015. Sprouts raked in some $124 million in 2016, a decrease of 7.5 percent from $129 million in 2015.

Sprouts opened 3 stores in Q4 and 36 locations across 2016. While the company’s fiscal outlook remains cautious, with the company projecting flat to 1 percent comp growth and flat margins for 2017, growth remains on the agenda for Sprouts at least in terms of store footprint and technology investments.

Sprouts plans to open 11 new stores across five U.S. states in the second quarter of 2017. By the end of the year, the company plans some 32 new Sprouts locations across the U.S.

Additionally, Sprouts looks to invest more in deal management and ad planning tech, as well as automated ordering and inventory management. For 2017, Sprouts anticipates capital expenditures will hit somewhere in the realm of $155 million to $165 million.