Hello Team,
I want to thank all of you for your efforts to serve our customers and remind you how much you mean to Sprouts and to the communities we serve. Food is critical to America’s survival, and this crisis has shone a bright light on the critical role you all play. It takes a community of dedicated individuals to keep our stores running smoothly during challenging times.
First Quarter Results
The first two months of the quarter were ahead of our 2020 budget due to the changes made in how we promote, price and source, focusing more on differentiation and less on competitor pricing. The environment shifted dramatically in early March with a substantial increase in the demand for food, resulting in additional sales as customers opted for healthier foods, and focused on eating out less and filling up their pantries.
Our results are as follows: we announced net sales of $1.6 billion, up 16% from Q1 2019. Comparable store sales increased 10.6% and online sales were up more than 160%. Stay-at-home orders and social distancing meant customers were cooking more at home, limiting the number of trips to the grocery store by purchasing online and putting more items in their basket each trip. We will use our learnings from this altered consumer behavior along with our strategy work to continue to successfully implement positive changes in our business. We believe the shifts in customer behavior bode well for us long term.
Looking Forward
Though it’s important we continue to focus on the constantly evolving situation at hand, COVID-19 has provided us the opportunity to create and capture awareness of our brand and capture new customer loyalty. Much of our strategy work has already begun and we will continue to identify and deepen our understanding of our target customer, refine our brand and marketing approach, and accelerate our ecommerce business. We will also focus on additional strategic pillars to move our business forward. We’ll update our store format and prioritize expansion in select markets, and we’ll improve our supply chain to ensure the food delivered to stores is as fresh as possible.
Our future stores will be smaller, with a footprint of 21,000 to 25,000 square feet, and they will be less expensive to build and maintain. We will not eliminate any category and the farmers market feel will remain, all in a smaller, more affordable space. We’ll create a larger concentration of stores, expanding into markets where our target customers live, and where our current and future DCs will be located with the intent of no store being outside of a 250-mile radius of a DC. The fresh produce we offer will truly be the freshest, traveling shorter distances from farm to DC to store. We’re confident that these focus areas along with other work that is already underway will allow us to deliver future earnings growth through the completion of these strategies.
I’m humbled by the team’s response to this crisis, from the stores to the distribution centers to the support office. I am very proud of the quick and decisive actions we took to ensure our stores remained open to serve our communities; it is a testament to the strong values of all our team members. I’m excited about the future as we implement our long-term strategy to build on this great brand that is good for you, good for your family, and good for the planet.
Thank you all again, and please take care of yourselves and take care of your families.