Sprouts Farmers Market (SFM) 31 Oct 232023 Q3 Earnings call transcript

Thank you for standing by, and welcome to Sprouts Farmers Market Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.And now, I'd like to introduce your host for today's program, Susannah Livingston, Vice President of Investor Relations and Treasurer. Please go ahead.

Thank you, and good morning, everyone.

We are pleased you are joining Sprouts on our third quarter 2023 earnings call. third can Officer; Vice this Chief with President and earnings announcing call investors.sprouts.com.During regarding the Investor Executive website Curtis management Officer; me Chief the our including release beyond. statements may make expectations accessed Relations and Senior results, Valentine, be through of XXXX of our Sinclair, Chip this section Financial Molloy, quarterly and our today.The webcast statements, for Jack slides of XXXX call, quarter Finance, at certain are forward-looking statements These cause the statements earnings our statements.For from in that in commentary measures. involve several today at remarks to to risks release.Our forward-looking non-GAAP filings forward-looking factors risk and those the references results uncertainties could SEC end more the refer the our materially of to please include discussed information, differ and described on our in the hand to tables Jack. comparable the figures.With our to it that, GAAP see earnings let me non-GAAP to measures release Please over reconcile

morning, to and Susannah, Sprouts announce I'm Market. for quarter good Farmers Thanks, solid another everyone. pleased

could differentiation. our marketplace the store and market focused by in and while the our and set and strategy. we also defining their United chain smaller, segments then evolving space. per expanded in critical billion customers including be on $XXX and marketing our desires.During We profitable members' years shifted toward team developing we assortment strategy and more growth excellence products drove growth supply brand shifted that our an States, discounts weekly a XX,XXX our teamwork, cross-functional started differentiated our growth unprofitable portfolio.We health of target to we enthusiasts commitment store operational providing Sprouts fulfill segments, adjusted believe them our freshness. accelerating X X% we quarter.X prototype innovation customers, sales and customer and We on earnings out to a approach our by leader X.X%, those X% needs of innovation comparable seekers. total to store from of We the with provides more of constituted sales third focused embracing initiatives, serving share and Our strong in omni-channel ago, growth, a that more several highlighting efficient journey, that reach experiences with bias differentiated our messages Those

to and wealth closer work Additionally, plenty financial beginning processes to I'd they moment, doing We're our want and the of so, look and operations, a Valentine, systems to on will over and still of for it opportunities remainder the provide performance.However, utilizing capture performance I our a Vice with possesses business. our X, current to of Curtis who our We quarter fruits President third in investments the to as retail Financial we Chip, to better outlook turn on like at over the focused store talent us. take year.Before has congratulate who been our done improve aspects implementing those across be the is our see improving developing labor there driving are a front to In focused of all of January remain Chief of on Officer experience. for years of X over new XXXX. Sprouts Senior will Finance, Curtis organization. and

and I on acknowledge says I've importantly over call. wish executive last and our seamless I'll over for support congratulate and leadership last and Chip Curtis, Chip his at Our and I retirement upcoming he his transition.I Board strategy, career's positive best.With to turn contributions Sprouts. and been his as a friendship members respect to the team all years. am partnership Board we of the all for Directors, it XX new grateful XXth in want his leadership what ushered greatly you as member a that, we to more earnings Sprouts team our since of are is and anticipate his

Jack. Thank appreciate you, kind I the words.

For during the through in per representing same period was of the we XX.X% quarter the retails and sequential our were comparable of total XXXX. the while the by grew increase in as $XXX sales, increases driven of proxy third quarter.Our of as quarter, we addition for unit decreases period opened units transactions in e-commerce in total the growth X% million stores stores. from $X.X store sales progressed new lessened This billion, expected, and every online, sales or basket Comp X.X% were up and average positive new sales and traffic XX% or XX stores. quarter,

Sprouts innovative products labels, grow quarter's receive core of first X sales reviews. by resonates previously X and better supported traditional of recognition performance in Brand XXX continue in-stocks, From grocery especially with Brand acquired the the rave our on XX. closed we've XX Brand prototype, better-for-you, category opened Sprouts only quarter sales the is to and quarters high-quality all XX.X% of value licensed the perspective, comp with as Sprouts year, with new stores. this category as to Brand at of friendly.The products. our found grew also XX% we continue and customers perishable ended private we stores, positive dairy frozen.The nonperishables and For and our and meat, a sales, was strength attribute We Sprouts positioned grocery, represented both in Unlike as total produced Sprouts. stores new particular

unheard clean, which space.Turning creamer Vanilla on this Creamer which X are margin. For quarter organic only is example, past media Sprouts gross social the to all for in containing the went Brand considered of viral ingredients, of

was XX.X%. The gross margin quarter third

special expected to of of and the points decrease last margins in XX margin and items, Slightly Texas.SG&A expanded gross offset for $XXX XX.X%, a approximately million. quarter impact basis adjusted recently merchandise compared pressure the new was our Excluding favorable year. from California totaled warehouses by

for million, of impact in representing of approximately driven same by continue This increase XX store investments predominantly wage SG&A the when some XXXX. previous our increases to was apply adjusted to sampling new compared and expected to totaled deleverage store wage period quarters deleverage $XX retailers, openings, of an in Excluding basis pressure $XXX a special points to compared we the items, most couple million, the year. program.Like more increases labor expect

were million Net for $XX share income earnings interest earnings labor diluted amortization, sales and and beginning However, see sequentially. while was wages the were to markets Store for including million stabilizing quarter, other $X depreciation $X we for loosen $XX approximately and $XX $X.XX. expense million million are closures cost totaled the per million. quarter.Our was while and taxes interest quarter, the the and depreciation costs before was of excluding

were an remain adjusted impact $XX flow and taxes increase was strong. the $XX X% items, before balance compared diluted and same quarter per earnings $X.XX, income adjusted special the Excluding net interest earnings Adjusted year.Our were of million share to of in sheet and the cash million. prior

generation landlord quarter, third expenditures $XXX us the to continue reimbursements. spent our cash our million in in During of net allowed capital invest to We of million $XX business.

letters cash and outstanding $XXX also of XXX,XXX our on credit. revolver cash down and million our paid $XX revolver $XXX $XX with shares.We million repurchasing our third We returned bank quarter million outstanding to of the equivalents, in $XX owners ended of and million our $XXX million million by

per growth our interest X.X% behaviors year, environment.For in we adjusted X%, of approximately sales the repurchase $X.XX $XXX and of evaluate between and reimbursements continue adjusted more between taxes all million of earnings the $X.XX current continue track prototype. the growth and $XXX comp to share expenditures million of for additional of we to full expectations do spending remainder $XXX assuming million. earnings expected we next total we expect of repurchases. to sales on our approximately the share customer before cost-effective Capital economic year, X%, That to opportunistically.We As and monitor which net in new open this XX shares and million said, are between expect to are $XXX stores be landlord is to no smaller, year, and

also congratulate X% fourth the $X.XX Curtis. sales turning we to approximately per between Curtis comp over would adjusted like company back time a worked share allowing to my to I've of very I years. role For thank will to serve me in for turn to earnings he confident well at I I'm $X.XX.Before and Jack, teammates, retailers and quarter, and the it it Directors for Jack. for small long Board a this Jack me and our play and multiple many XX,XXX too with let year's shareholders Sprouts of want Jack? that, expect journey.With

Thanks, Chip.

operational we on prototype. the this on stores; are opened past delighted forward. and open signal in year.We the paying alignment few XX. built up our of are solid our strategy XX, growth team and our off. together, by we over years XXXX, growth The marketing, our new initiatives, front. chain to is merchandising, results XXXX, steadily growing propelling the efforts year, particularly progress unit Our have traffic supply I'm the cost-effective more In in the And making track we're all throughout XX management

strong remains back with to the and approved continues of XX% half.Our improve. XX executed stores, to expected stores XX chain nearly with in XXXX, XXX approximately the pipeline leases opening evolve in Our close supply and

improving California largest freshness Southern and operational market. new DC now our Our fully to already is

Arizona, the DC, continue help better our and their sales increased with in expand to partner East]. margins the to Texas the teams new DC Together stores, optimizing more and closing and network enhanced added forecasts.We rooms ripening with have added our Georgia Florida in avocados Our scale with year the systems, ensuring leading [ in-stocks for DC and this in our bananas. processes California Northeast. and new a freshness We're of

which continue from other focus apart differentiation, food and on We sets retailers. to us innovation

classics noted, third we gluten-free each beverages new items.Sprouts like like maple cookies, expands back As snacks, new Brand bringing launched grew seasonal quarter yearly, Chip making Pumpkin and relevant assortment us seasonal more holiday. adding in items our brand Spiced our as the mini meals, and Cider XX% Apple Sprouts

like of retailers unique to of to beef, tortilla making our expand one over categories frozen our to drive our and dairy-free sales.We customers are chili, desserts, sampling gems we like rediscover we beef of chips. Additionally, lime continue up the rolled have in the other frozen revitalized XX% of release fastest-growing items and with these grass-fed

well, we growing fanfare, center our to trend. new vendors this highlight taking As of as dry highlighted more July innovation advantage great popular becoming products.We is mocktails for and

challenge rising merchants in are to Our online. of life and bringing the to store these the products

to even helped desires.Our think more differently unique and us have mindset themes our inside single-digits back-to-school, stronger shop customer earlier analyze year. and These and come when reflect shopping as to they which Sprouts. events align management the New behind teams high are data trends customers' planning they capabilities seasons and up like understand and category key was habits this organization

Marketing driving story. XXXX. and in e-mails dramatic has traffic.Digital unique quarter total how and heavily marketing our the hand-in-hand have and from in our campaign, been merchandising our video improved ] As been with products of social, has customers' into online sales, progressed, changes leaning brick-and-mortar ties telling searches these Sprouts resulted into remained address increase discerning X% over a in solid [indiscernible] at which our [ needs.E-commerce XX% our

XX% the an nearly Our shop awareness more scores customers a year. customer have valuable a since growth in frequency online customers existing research have a of is using the beginning delivery of And initiatives as than These spending seen customers. XX%.Our our also omni-channel new in from more our as bricks-and-mortar online shows XX% increases starts resulted e-commerce, and lift customer customer in-store. their also

in highest almost wages, and store XXXX, experience company's stores increased training retention for customers.We customer bonuses, mentioned, resulting aided the are ordering encouraged store our stores objectives. team are in the in also sampling to by further initial of midst results. at our resulting are invested but developing in-stocks and members loyalty in of the delivering of the early our million were a days history. the and customers. store to are the $XXX Chip systems plan improved digital In-store We the added in of are in In-stock, service our start planning.As our we've year, form improving, goals service and and our improved teams initiatives, the operational our our in enhanced Since engage

sentiment Our desire added muscle release the results are we the and them better, helps a taking working program to through products.This a and become our we Sprouts. demonstrate a told leader as carry initiatives differentiation our customers own space. natural strongly started natural all that in organic asked They and next questions. more grow, of resonate to organic want opportunities us ago. a When summer precisely combined Sprouts, strategic our differentiated said, program to data initial have our we shop research to they recently personalization but driving our continue the for from build I'd pilot wanted with turn are while why and years when that, explore. is lot and beginning knowledge. structure to Operator? them expect improved levitate like innovation we with our year.In we we a and this hold, we customers.With efforts it for X Overall, journey still over to customers around meantime, at what We're We

from [Operator Instructions] And question line Ken first from of the comes our Goldman JPMorgan.

we thoughts get early This curious basic to Still doing years about you'd fourth modeling on detail how is almost obviously. about could But path into be quite And in the helpful. that you X know for but your gross little Just expand item quarter it's in line I little have if well, XXXX, didn't it see just on which curious we a more year-on-year. should the any a the margin? how talk would quarter? or about, first ahead think think

really we around We're quite gross flat. the that margin manage confident [ can ]

said This the there, There's quarter of it as That in was down centers, our our merch we California. call Texas, in on hanging deleverage both and margins expansion the really but -- there. little was distribution drag Texas a a are XX from bps.

In up were steady ] they traffic and some is fact, and up. [

our good Difficulty] laser-focused are next merchants that, we and be et and we So, cetera, think between about flat that mix feel year. pricing, will [Technical really

competitors unusual be doing produce? anything a quick terms right of gain How in within anything just seeing is way environment you not And discounting, rational? customers might in the to a follow-up. competitive now that Are

haven't irrational know. Ken, and you We is produce seen far, anything a category volatile so as always

space. of Difficulty] change times. And at so category things produce from we've certainly investments not [Technical parts different the any different go up and in anybody significant down in seen the But

line Leah And our Jordan next the Sachs. question from of Goldman comes from

was track expansion. a since I And just the come surprise to under around wanted it flat bit your promotions store costs did thinking did the curious I gross the and from to warehouse how about just But to ask guide? we follow-up what pressure margin. to I understand that? growth the ability little a your your should leverage when And support warehouse when then start expansion plan? guess, biggest

Yes.

other the minimis, a there, to Any margins merchants so, a I So The the a or try in surprise shrink solid. through a manage manage flat, continue to feel stay minus could probably higher, couple continue to I really it mean, look shrink D&T And to higher surprise, will nothing was did they be ] suspect confident. be of than flat. to scary. and We a to solid.As We're drag we're quarters, any QX. be as expected. couple we are little pretty that. it that. was to we'll pretty we down de XX% low then flat. is through growth can The for to I way business working relates that, have merch general. guide And But we a little hard manage feeling that really going It it. really year, we than basis plus points. that be into [ said, to around plus flattish look similar we might next close might to maybe good at QX was to XX% are

our us of And to dividend centers both customer our of long-term in down. we're very terms to distribution cost -- in of getting freshness confident run driving the the costs and the terms is investment going in long in capabilities pay the

on quarter-to-date And then just my trends. follow-up is

as could guide your there, deceleration? you just some implies If color any provide

Yes.

a So we're about X% comp. to guiding

we're solid and that good. in mean, around I towards X comp, keep feel X% month really and And so, we'll there. we working feel

comes Oppenheimer. And our next of from question from line the Parikh Rupesh

first stores. new So on

least as was how we at expectations. above calculate look So new at productivity, store it we our

calculation new versus is? then So internal store what productivity specific performing expectations? are curious how stores your new And your

off. a given can there's you're and because new the [Technical Difficulty] we at timing timing when So, looking the of it -- of they numbers productivity, -- don't throw store if open, quarter any

track us, stores our store lower that that flat stores per We're value through outlined our store model.So here relatively that is that. but guidance just if we shareholder looking XX at on pro don't see think and to the and -- to the continuing feel of volumes. square our to would relates be I probably And new sit stay we're long-term sales look through fact minutes new our look that of despite a apologize, store would we're new growth at the We value considering So we're spreadsheet working we've and putting -- pro be go any we're how lot accelerating deliver towards in trying with of to our productivity, the ground.And we as to we how of you relative are a I here foot on our formas formas. that on new go they're doing in we're average, performance those average to it that store to -- us. our

So walk it. offline maybe we can through

years at derisked smaller feeling and the confident definitely encouraged we where set and think, few at. with pretty right ago at. to the is going we're where pretty program way we're the across I'm off new markets, we're this country the moving we're really and opening Yes, a this, to mean, in about than XX across different there's spend in the talking -- stores minutes I and certainly the downs with our ups Rupesh. performance. our established more across I'm store pleased more less I established markets. the country, moment, forward, Chip And I stores, But

one And follow-up then just question. maybe

was an comp, there almost quarter. deleverage on X% So this

comp look to you terms as of insight year of deliver what expenses? leverage need you to next may into any type in Just

as you deleverage Yes. just half pressures to guide the we working deleverage. remember, wage which going -- acceleration have some slightly the new implies combined XX of stores year, the quarters we to to plus, need some is probably take state little is wage of pressures going through that back Well, been for we've our have with couple to through to all for high single-digit higher timing a more. that bubble was create working did think The share a it's a wage growth next to through I bit going these But we're and get and going at earnings once of hard this from XX steady to buyback.So pressures. to deliver XX get then it. with But getting just of a comp

our And from from next question Fargo. line comes of Wells the Kelly Edward

wanted then at continued Anthony gross just you on margins. bit. softness in agree of just do on bps implies getting can the two, I little dig compression looks and XX It's margin to I puts like takes across I'm midpoint. and driving guidance that what's And in SG&A? XX with Ed you like for QX one, more guess, on and different assumption that? something dig a guys it just the a little EBIT to here. It margin the in

we some new that Yes. Well, back a we're similar to growth And [ really wage bubble maybe side then will down increases back on flattish is ]. as half going on through. quarter, here deleverage again, this we've again be just What's coming delivered a loaded deleverage the probably there be had was as The on some year. gross some that store working all through, to SG&A got we'll implied causing be and -- hair half to we've SG&A. that

should reads mid-single-digit are 'XX? early And for how in I contemplating inflation. that And inflation guess, then just terms you on be thinking QX? in of about we range any then still

Yes.

expected average half that we the had on said it back call that last whole digits, inflation, for to As an be mid-single half. the to for relates the and low to we was

expected driven stabilizing same and we So is stabilizing is as the down that's and basket prices are at it, expected per the time, it.But been is coming that as rate as down compare, well. year-over-year. inflation coming year-over-year we units That a

feel [ early X% to it's we call So some into what positive a a is, of bit getting normalization. traffic, environment.And that and increases for we're and -- and very But feel it's the as the to We've hard year expecting traffic, at will I in this ] teams we're where -- perspective, our about QX we and as that from driving dilutive have go AUR and units bit to the we'll little it's a year-over-year closer the comp basket. it a little a you of flows the the in for expectations, a through closer us, point, budget idea in got are more don't will a would start getting get normalcy next be AUR less to to we still get place ball. get bit like little little working of stages crystal bit of units really a

encourages And into going both in assortment putting traffic us, that of bricks the we've Anthony, next that And trends. gives been differentiation. and We're about kind business. our has got it confidence thing year the traffic strong traffic e-com pretty us in together seeing the mortar, that is strong

years. the encouraging been really that slowdown about encouraged context the which XXXX down. has is to going that sense has last going is line our slowing the of outlined, been of see business in the ] bang going in So, into we've on.We're But trend of and And Chip forward. I context inflation level the the traffic sustain not should in then XXXX, top that seen unit couple the that we're think marketplace [

question next of our comes the line from Mark from Carden And UBS.

Mark. actually on [indiscernible] for is This

pressures options recent UTTs down seen consistent be it last affordable Just overall, more to change have are quarter, trade light label? it ] what relative consumer you in in some on quarter the patterns of quarter? Or respect of with Any to facing? is to consumers behavior [ more the whether the in the through pretty private

the out that QX -- ago, was the significant seeing inflation -- slowing spending unit as the think little this I as point minute money very trends is predicted, in food, is we're much pandemic Customers and level drove inflation our assortment.I really the on flattening to outlined down we've not the than change we are -- think trend encouraged Chip by of people don't did which we little bit. any across inflation think different and seen a a a I as still little We're beyond much. QX towards bit.

of driven think be encouraged of our not immunity, conversation, by attribute-based of paleo towards certain and are thing. places the attribute-based said gluten-free. our and -- by and [ more been the of as there ] seeing by in we've may trends and that understanding that we and kind plant-based, people target that by are kind in customer our line some in it some and that keto trends in it be and portfolio, much cuts other trends think about macro traffic I that's merged pandemic We're is I type that's more in But those customers whether be in down being last as whether And trending spaces, strong products, bit terms coming, about a across large, places. has as what else.There we're been and we're think and trade meat grass-fed, driven our around seeing. what with are issues QX of the products, seeing those kind in real I been little anything --

some expenses event your can can gains curious market also, protecting the leverage was of I would slow if to if And margins? comp or the year, comp share you you please manage next pull next you that slow prioritize year? in remind secondly, And us

about we market way is context the First margin and of the all, share business. our not think of

that's we ourselves and Our share the -- customer target marketplace. target of with We're the remember wallet billion ourselves ] with the focus.And that $X.X and like have, concerned of that market market that's growing we which natural really with we've entire only concern customer, over we got the customer target $XXX And feel share something we're trillion pay [ encouraged the the that the had that a on that is of years, and in run share market last organic. attention the trends -- we space. that good share the few moment something at by to and

challenges which checkouts that things our bad centers in of the get we've number business the in in going There's invested So of so to target to the solution increasingly we we we when our some looking you talk margin being years. that relevant see that stores. and to in forward a pricing some all the or think investment service is the them.And some customers products a much the store, about about solution after our be customer we've stores, do to investments SG&A can that way opportunities don't a scores -- we're in in do market it's we the share, couple in that. stores, distribution going And that cover of [Technical really promotional deliver next and that are in getting as Difficulty] to can high. do to maybe get good is we some replenishment handling in-store,– in we're IT.So, The forward. and clearly right dynamic and we're on a looking terms such of don't that this our giving thing.And going to efficiencies got into actually want terms driving what see terms there's in.So, and we're them scores systems handling face our make in registers terms sure to wage drive that we environment target they the customer in of customer after efficiency this of forward, going of have to as sales. look invest terms pressures, our of we've we some going to not be And in mean some business got efficient after opportunities in can better. talk more -- margin I customer to and get how We we'll over about in growth our top target some line that better

And our the ISI. Mike from next of line Evercore question comes Montani from

Just well. understand wanted it's ] into the [ early, And to ask about CY fourth into then SG&A dollar 'XX but as quarter. growth I

they're though wanted about company about So, And lever? follow-up. if total more suggest or little growth I at we increases think then to does a thinking towards even a stores, we ask comps X% that level? should SG&A had in the XX%, I store to bit then just double-digit and be smaller X.X% to accelerating that,

Yes.

relates this remaining dollar growth pure look of growth it -- will in SG&A similar the dollar the QX QX. As in the year, to to growth

the Some predominantly side house. wages is of and the then the new of that it's again, -- stores

said, organization next to we're an As the our again, year, for that hard beginning we're shareholders into works relates tell.That really just we're and shareholder it create deliver to year. process next budget certainly, to It's -- value. to value the early too

to -- every to continue places We're Jack rock next pressures, as next said, for we'll results we wage year. that knowing will find So, deliver going so corner we can and through under efficiencies, be as meaningful have well. we're some year looking

And can as then inflation just this for X.X% quarter, as in that, terms how number? share was well you the of in the contribution to what the of traffic comp there year-over-year much was

in half And low similar we QX, to coming solid traffic. And mid-single-digit it's traffic, give don't end that we said, but what it's as but that we of the down. said had the the inflation year. expected on we end has specifics high to had through through positive the of back been Well, of we the on inflation come at QX,

And line Scott of from our Capital. RX the from question Mushkin next comes

retirement I'm plans forward. big miss to going but got you've sure Chip, I'm you, going for

So congratulations.

it's volumes guys of you certain comes competition industry, the look data overall than our down. is you bit at up just industry, that, way trending budgeting in the are least inflation guess very the little are not markets, showing as a a result And regional. as if really at ramping So because I is different

So if these as 'XX, different what much than will guys make continue? you look industry, look I the you guess at trends

Yes.

that we I developing. sell think, evolve, very of of lot. lot Scott, and a produce the to just everybody way the people. lot evolving what make of amount sell bulk. to we're the this we've huge other business, our talked don't think a industry.Those kind vitamins relative sell same in We We grocery space a specific else and in very as mix We've supplements. about rest are different. happens very dynamics a the things got this that's different a We assortment of of the We as and

or and do within find continue the is entire to trend -- sampling, And sales in that business in terms doubling personal our what continue an to happens the and at own we're and and a grow the store we we here We directly business can to exciting, thing down business. organic against bit opportunity and sector. in customers, can on our ability the natural in we sure the to mix down or And We look that -- in business if front sucked of that about -- opportunity we customers it Phoenix. and of mean front the whether shareholders kind I and of dynamic on on -- and I and in having hasn't matter, of sound the really doubling do comp of grow that with the it that customer into The rest our sounds customers of about doesn't because the aspirations it we So, we get conversation.Our we've Scott. do team sales environment what don't of grocery know that feel of compare can very us of the is some across that have, a us, in the context assortment grow for regions differentiation, digital way target our is ability to it service in service helps, target really where the we target priority of moment, have. comp industry, battle doing, and pricing we promotional our in creating this delivering side right that on is our goes a difficult share on deliver and very the little dismissive.But the customer more we that's that's in not, doubling of target the but the customers. -- down of grocery the of changing customers. ultimately, which our customers the own I got that that's by against that make of store goes we're an our communicating at environment wallet less our against assortment, get where terms being in target focus share more the got target to way.But we and inside some good If and a space.But it's do quality and that kind

little bit. would I on a follow

Sure.

longer us sit Years the away just to would in. as we're that price highly a remind no We now, step and follow-on sensitive customers. is it's that that asked bit, we volumes. of we're -- not to ago little -- promotion not we're losing them all And model Scott, lightly. so here I

focused improving. stabilized, extra And like the traffic and have like things a on people place. sampling basket.Our things solid so volumes thing the to in-stocks really good that get said, put Jack we're Our really in are to

about. when new in and centers become take off, innovation that or Sprouts. if they stores adding they line Our into the are excited then And at items are take they're people off getting to only start they

think doing the of a ecosystem that towards I with things we're So, them. working working are lot that we're

the single-digit And so, what I But you for your still economic little said is on had guess it follow-up forward question. of website deck at thunder where you model the comps my kind low a and expect. going looking

this me you more grab and will X% say And of share. stage wouldn't or base X% stores, the idea X%? be just that the and store is more through we grab part Let's for going why in comp, at could industry single-digits? setting not share that look be seems talk that then to you as the specialty growth it like X%, higher the number than of It low

point to ago. given Scott, be there's I than of really fundamentally And today that's more do a believe than we're going was today. future reasonable certainly there's X there enthusiasts what doing. is years there the in view health more

line the So, what with trying do. in we're to is trend

that's importantly, kind the terms be underlying a think be appropriate exactly and appropriate front of in of our in where a building that and in I that it's the prudent.And I comfortable we're business different to that fundamental where disagree think place. that going your that that we're more in very aspirational algorithm in of it's at very be model number investors, we us a than in underestimate business don't I being think -- the forward. I and that's of with a We moment. put aspiration to have our terms we manage would different don't putting would the our point to allows business number of under think that algorithm to as we're that place.But like manage I to opposed the numbers our as front we're we fundamentally around right with

Robbie comes Bank question our America. next line the And of of from from Ohmes

Jack, My wanted to XX I year, stores guys off you year. just XX year? XX next for been you working and clarify, next first be that might I next question, saying for have table I thought for towards think the said stores Is you

we the our is could and opening Not than as are have we expectation we really. of stores, at stores the more XX. Where look

the -- number pretty end year. year, there, just provide if don't And slippage in the tail back in we to middle the of any half have we loaded. there's several have slippage We want the a out it's so of

So right XX. really of now, we feel confident

in the [ more ] pipeline. we're QX slippage. just It's of kind managing have if there's We

make our locations. construction of been that's a [indiscernible]. script, that Like that bit bit committee, and And estate only context the got I signed think the have said the marketplace. little is uncertain in in off XXX The we've we the it's just in -- we've got through cautious appropriate November, sites as December might to [ reason we've signed comfortable, a to what And to more. real in reflect a do trying been certain I leases or is next few to pipeline happen February, December XX year think, in is and in XX January, already of this really maybe XX got, get -- we've opposed the sort signed.So, ] plenty work. This we'll

digital what help well? guys you to still would DoorDash the can related Any -- performing on that the expected, just digital? great. then talk working to also are better doing drive And on you it Instacart Or than that strength, more or is is be partnership about

and Well, and we're have comfortable both some of the partnerships DoorDash that some business understanding terms with dynamic to customer into the added [Technical of value of us that and Difficulty] in and our some Instacart using come with information.

more able of be going to we'll use forward. that think I

is the on around our the that what with communication operating we in bespoke back a forward, so way do. we've our also but and trying that.And communicate communication terms been side e-commerce progress to we've communication, be of is both got or much one it paper-based and or teams there's right this We're changed things a keto digitally going them we that agency. for because such of alive, ] and alive.And the a and can over X our us, be you comment some some media we've the make progress, the variety use a I'm there or we've in or team marketing strong pretty the different the one I've So, -- the gluten-free better, -- is can for of -- quite will play I we're forward. and owned data about really, which tell quite people, very to has stories a be basically, X they've on And way going go. or the pleased of [ we've bit marketing key many [ stories a business understanding digital-based we're of more successful our to information think, those excited relationship the we've communicated long not going business, lot the more it the fundamentally -- personalization -- us can what ] -- is how and done help are to with think just that media some get progress get play. in of the made made And digital that how to communication picking attribute-based with And stories tell is communication.While communication, paleo look so different made of plant-based to many with terms them, we've it you last digital been I whether going we our to from digital got come to in changed that way how but our come digitally.If years -- doing in can

Krisztina our question line And from Bank. comes Katai of next the from Deutsche

And you, I well. my congratulations add Chip as to

on right? we been So customer are on lowest launched there you are seeing, you cohorts? the about talk think to how about you efforts. incremental across engagement runway with a about maybe have just traffic engage marketing, think or various as you what that And You've to 'XX, can taking? you've quartile seeing quintile base? customer that, share positive And your their the frequency customer in And had the you've how personalization question wallet much new focus that consistent the of

from and trips gaining Yes, an as there Difficulty] you that ones progress lot the [Technical a bricks-and-mortar And said we're both both on we're really of playing customers sides in are the we Krisztina. talked terms made in customers. in a in some We're omni-channel business.So, how question, script, and physical few the for progress some ] equation, communicating. [ We've both more becoming it's new are that existing seeing existing in that the of and customers. customers ecom successful game us,

enthusiasts. of space health them of this play into this All

to growing. hard we and wallet to we on that and making we're get continue that and more much continue share work We data really sure how more space, understand of

bit much don't just and has I would of that we forward doing digitally those in the talk being -- probably to people's total we'll make growing the the markets some customers, this share a both We're this well, few pattern bricks-and-mortar to going a and growth me traffic little we're We a more across our got big trying we of lot to whether the targeting ecom the work be that, those customers over points been it have -- as about see established spend. on bring a to be communicating encouragement. traffic in encouragingly, come in our between. that quarters which less think seeing and established been Florida in terms specifically, of traffic. and that better And need information of board, on nation in we've us alive.And it future. But happening a consistent work giving that's able is California as all more specifically.We've across seeing articulate kind what's premature grocery been in of traffic, numbers very last consistent markets

might more sort you recruiting just XX% and growth. the just and retaining is that you're on in of Or trying really stores feel it as be labor to you you with like better sounds on planning what It to of in than And question them? potentially the follow-up do opening and opening terms that's very be for? having difficulty that conservative the schedule number time a staffing them, unit But for confident is relates XXXX. any there

is labor seen potential forward. than got applications applications getting construction on ever of seeing XX% jobs it's more a bit, little are forward challenges the If -- the to going certainly, we've in anything, opposed our we're before, -- going Well, as company better. quality based for either and challenges

environment level in the here. through company. in a that good as challenging how quite build stores beyond the of the pandemic Retention on in terms part of it caught filling up quality culture applications. and a I in And and our up of of filling catching number As are was rates the applications of terms that again, that's been think we and a and at ever you our know, jobs had.We're we

a always One that an -- planet customers space. and doing people things good retention good a actually and ] as they're good in environment there's [ are in working good and for for company we think they where if space in our DNA of like the retention is applications for community.So, good the in feel been the the a

from going XX% So stores is to into year. challenge. in -- some there isn't The January on a based labor getting be slippage November, December more is next the people is

building stores think quite a that store amount are But up teams muscle, yes, a our a would job also teams, nice short I time. HR marketing of that, add Yes. I in few doing operations opening really teams of or

how big you for this stores quarter, every many at a number that's and If at quarter. pretty we look each opened we're just it and getting better us,

I how So, the I is think think on developed talent there, we've it. really do and to the muscle

next comes from our the And of Guggenheim line from Partners. question John Heinbockel

productivity also, of accretion? work path Myhre how This us on initial John And maturity? margin expect margin centers and dilution the you Heinbockel. gross from these do is Can through in to at to the for PCs walk distribution Anders produce how benefit you terms

to to DC it Southern to So added somewhat, ground, located, bigger a where DC off a this big it's lot situation the is. -- is dependent dilution, we as it in going In relates how miles much it's how the went California. take we many

-- that probably XX the at created now then And Texas. going bigger of you months then perspective, from going XX you've leverage. because -- space to the because it's expectations, a we first to it. created out It's you're that's a opening -- expanded we're to XX that underutilized start in going into bunch push. out get that be XX leverage dilutive space starting leverage into you'd to the point, And then probably they're going a probably Again, leverage, building get it.So months So grow the to capacity we're get you'll they're months be it. real And some you're of dilution to from open. you've probably into for that grow

And going that's Wilmar the in California. We've capacity programs distribution a in Texas built that built the Dallas, We've to in Florida capacity it. got support will to we've center support support store in it. and

are broadly now new some we've both the as well. board. coming on produce outside distributing, And of in support it to forward, that terms more So, space options gives ] [ us going stores the got capacity

So efficiency. future it's some of that terms in X, start the get X-year lot to we'll And anticipating costs. in not-too-distant distribution given us I'm our options a of efficiencies window, in

by of guess, pipeline so follow-up, early the market? clustering to on the And stores, especially what read the I DC, new in the of is context the XXXX

release Well, approximately think we'll stores we in XXXX. get our we that XX said in

in real of sees estate Beyond sites estate X, in committee we've real our XX that X XXX terms stores The at are this up we've portfolio. that, committees, got continues. moment month the signed to guiding signed. got leases probably and already a that we've That

call we So, the all question be 'XX, I think XX.And your towards maybe going think through. in established asked approximately what case, will we've and 'XX what was that about markets. our about, it's in a portfolio feel 'XX, leaning anticipating growth if like I seeing store going and you been the But with what XX-XX markets, confident between 'XX, probably line way to we we're through specifically non-established be that's

to it the the Coast So and going Southwest the to think going be ]. XX% [ from Coast probably be East stores, of the is Florida, other of XX about West those is

to you Would question you phone on Chuck. line next like And Research. to comes your from move the Still not our you, me the Northcoast next have Cerankosky hearing on Chuck Chuck, of might question? from mute.

that them then let's catch can end. back Yes, can Chuck, do and if the we to at we come

Our next Markets. Kelly of line question comes from the BMO from Capital Bania

Ben This for Wood on is Kelly.

if produce, understand And us in units to? can finally, past have inflation differently. some the that improving, are inflation is quarter-over-quarter. I that you your to So which but question consistent provide estimate was we of We you you categories then CPI, of Help XXX Wondering would subcategory asking pricing guys you basis points the the similar about guys to And in maybe about units level? to the in major them have slowdown start categories saw? center details wanted decelerated mentioned on store? expected magnitude believe a by food-at-home vitamins Sprouts little the in any talked tracking like you

if It's off. As it talk relates probably -- the far particularly to that's inflation, about not you right. [Technical too Difficulty]

said, to where Unit mentioned many units -- As -- times, that's -- we that were continuing of stabilize, it across as trade relates produce biggest challenge to X, the as of skip area in trading down, the -- are our they're the we our -- we've and unit. I'll is was down, sort trading is out instead they produce, customers right?Our a was had which

number units the produced, most that well. and see of stabilize the are We're to beginning price the lowest -- unit. have point in We as basket it's

question, the So categories, healthier it's fact stabilizing. getting perspective, what And call getting was in it's from what they're across -- other that the units our Ben? a would I

although maybe are bit, What So a -- capture the little that categories? Ben.

bigger of bit a Our our going more produce always because bit a proportion of bit There's inflation and business. is in -- got little to number dynamic mix be volatile, a different is always in our a business. of a produce we've little the

to So, that. we've got watch

We our capabilities decline this happening down have quality invested we've been little business business, terms in freshness bit.And seeing business, presentation some units and of in avocados the in products. improving the those encouraged in by strength and Chip in what's slowing in been and of bananas produce said, terms our the as given just a significant of we're

grocery has our dairy, business.And our we So flowing be where in question. about your little in space business seen through we of in by of real it's in differentiation, strongly and really with encouragement. may terms slowing really bit attribute frozen, talked probably some what -- well, of that's pleased as down produce get you line inflation been a that with terms or line in terms what I've in

been in you a same that the feeling dynamics, -- been level slowing now AURs decline Chip's those the slowing we've ] the talking about of call But change number. is down calls, that So the down in we're at of in overall units see our [ the time. where and story that and inflation previous

happen think So going into to is it's coming going what forward. sync, we is which

to if partnership I And you our previous of a By could rollout, has solid believe digital questioning with growth lap line math, comp for when DoorDash is pretty quantify follow-up would year-to-date. of your expectations on DoorDash? a of QX, to has the to how help then the just start been digital driven kind you incremental what growth we been about Wondering much on then contributor digital you by as think which And initial the as new lap? start are digital.

shared we our online going customer. omnichannel see are this target us is important to Well, The navigating customers key basket drifting way in the using that's our share driving and between the I as driving as to this of call, wallet to business and coming and forward. store we with think

proving Our company, The through. this DoorDash is are customers saw steadily bit a -- part, running as great -- business say, I -- So plays that using Instacart digital now effectively key is we a we have and going definitely were that an mediums through a coming that the partners assortment when in that's mix been at that differentiated mix curated customer lot as we are quite the the going work and we've and I us X% can ecom mix. again of so a store part We're joined XX% to But ecom DoorDash do little more to forward. -- unusual growing we there's which target got around how plays our forward.Instacart more go using very assortment And the of dynamic our as is year. relevant.And that much think which got, key digital online, communicate well, DoorDash with that business. understand we omnichannel I really that's a we've now I in think whole terms gives our can of confidence some

-- a providing non-ecom. picture, of our not providing target We that we ecom an think businesses So customer. omnichannel assortment for of don't it's our we're it's something that as service but business and encouraging an think and and

However, engage us. with they to choose

the ROTH. our Bill question of comes line from from And Kirk next

is your retirement. this count, my attempt by third at Chip,

roughly think touched you have on on you I many shoppers good And like a is and third on. Jack, at times, hopefully, But that So data it. you time just you've charm. touched how quantified this,

today So a remind you could the then few us to with that these like like you're So today, about, and what you over talking we've that you does this time? know? And what, over become that what percentage percentage programs been go is that percentage years? new

terms numbers we've the to to combination comes don't to of commit the to a of low. work that of in at grocery it pretty around we're customers past. nailed, it think moment which ways terribly we talked because good to of I We get got understanding communication in works.We myself of on need loyalty that of that on, you it how but about the more that that different we're this we've anticipate where Well, And the it numbers of information terms go Yes. in We doing quite than need the higher get we've in -- that lot digital communicating going about, progress it. doing doing I work high to doesn't but to terms want don't doesn't get space. can traditional is, kind the the it, we're in the Bill. it work on talked haven't XX% to our that us that make this is for got on of we a lot see it anticipate

lot a the with then that have to suspect customers, pretty in that. next able able will dramatically that, right -- our to of the the be to Part least customer to we will individual able get information, loyalty year, be I get road to a be of probably connect is those pilot in a a of basis purpose number able on think to little bit the talk to and we'll stages the and to journey, will a lot to the at program. that customers of early be for actually early more stages broad-based we're on down be more I grow but longer that. do And

for hand back to This session Jack I'd program. further does conclude the today's to program remarks. question-and-answer Sinclair the any like of

time. it year not giving everybody, Thanks, we're your be months' will for few before Yes. in interest and our company, numbers long a you in full

we Take Happy a So, to and that, Halloween. forward look wish everybody care. I

today's conclude Thank and you, for participation in your conference. This gentlemen, the ladies program. does

Good disconnect. now You may day.