Incoming CEO Nick Konat acknowledged to investors on Wednesday that Sprouts Farmers Market’s recent performance “is not where it needs to be.”
New Pricing Strategy Aims to Boost Affordability
The specialty grocer plans to roll out a new pricing strategy nationally in January. It will introduce more affordable entry points into key categories and lower prices on high-frequency items. The strategy will also showcase better value around shoppers’ top-priority products.
While Sprouts’ net sales were up 5% during its third quarter, comparable-store sales were down 0.9%. Growth is coming from new stores, not existing ones.
Sprouts is focusing on affordability. Its core customers are checking out with smaller baskets due to a challenging economy, Konat said. He is currently the company’s president and will become CEO in early 2027.
The new strategy aims to offer “more compelling value” within Sprouts’ existing assortment. Konat clarified, “This is not a shift to broad-based discounting or an effort to compete on price alone.” The grocer plans to make “more meaningful price investments across a broader range of products.”
The company will build on existing popular initiatives. These include goods priced below $10, its $29.99 family meals, and freshly baked organic sourdough for $4.
Investments in Supply Chain and Technology
Sprouts is also investing in its supply chain to drive profitability. Self-distribution gives the company more control over freshness, inventory, and shrink. The next phase of this plan involves private label products and is currently in the planning stages.
Modernizing its systems is another priority. Sprouts will use artificial intelligence to help connect data across operations. Its loyalty program is a key part of this, as it provides a growing amount of customer data. Konat said these investments will impact near-term margins.
Sprouts lowered its full-year 2026 outlook. It now estimates comparable-store sales will decline by approximately 1.7%.
New store growth remains a bright spot. Sprouts opened a record 15 new stores in Q3, bringing its total for the year to 27. It is on track to open 42 by year’s end and has over 160 approved stores in its pipeline.
E-commerce and private label sales also grew. Online sales increased 12% and made up more than 16% of total sales. Sprouts’ store brand outperformed national brands, representing around 26% of sales.
A cyclospora outbreak this summer reduced comparable store sales by around 60 basis points during the quarter.
For 2027, Sprouts has three key priorities: grow its reach, add more differentiated healthy options, and “build what’s next” by connecting products with personalized engagement. “Sprouts must evolve faster,” Konat said. “Our level of innovation, investment and execution must rise to meet the customer and market opportunity in front of us.”
