Curtis Valentine: They play a little differently geography wise too. So again, it’s allowing us to access new and different customers and it’s an increasingly omni channel world and then that helps us as well from a convenience standpoint for those customers that are a little further away from our stores.
Rupesh Parikh: Great. And then maybe just one follow-up question, just given all the concerns out there in the macro, clearly, your business is performing quite well, but just curious what you’re seeing from the consumer. Any new trends to note or just anything — any changes what you’re seeing with your consumer?
Jack Sinclair: Well, one of the things we’ve always talked about is that we feel pretty confident that the assortment that we have if you’re a vegan, you’re going to stay vegan irrespective of what’s going to happen in the macro world. So we feel there’s some more to feel like to the macroeconomic environment. I think there is a lot of uncertainty and we continue to watch it very closely. We believe that what we are doing and targeting those specific health enthusiast customers. There’s a few more of them, again, whatever happens in the macro environment and we feel that that’s going to stand us in good stead going forward over the next couple of years as that customer base continues to grow and we continue to work hard at serving that customer base appropriately.
So again, I don’t want to dismiss the macro environment, but it’s something that we think we’re a little bit shielded from them, almost from them whatever happens here. And to be honest, Rupesh, your guess is as good as me what’s going to happen in the macro environment.
Rupesh Parikh: Great. Thank you. Best of luck.
Jack Sinclair: Thank you.
Curtis Valentine: Thanks.
Operator: And one moment for our next question. Our next question will come from Scott Mushkin of R5 Capital. Your line is open.
Scott Mushkin: Hey, guys. Thanks for taking my questions. So kind of a two part question here. So I mean, obviously, margins have been trending up and you talked about it being stable. But just from like a company philosophy perspective versus margin rate versus margin dollars, where do you kind of think the rate is kind of where you want it to be and you’re going to focus more on the dollars and even accelerating sales more?
Jack Sinclair: Yes. Scott, let me have a start to that and then I’ll pass it on to Curtis to talk specifically on the margins. Our primary focus is traffic and top line. And then everything we’re doing is making sure that we’re serving our target customers better and better. And we will be able to manage our margin within that context, but we’ll be sensitive to it in terms of how that works going forward. Having said that, I think the elements of what we’ve talked about in terms of shrink, in terms of the mix of the product and the better thinking around our promotion or evolving thinking on our promotion gives us opportunities going forward. But at no stage will we compromise margin or customer top line if there’s an interaction between it. So far we haven’t hit that point and I’m feeling pretty confident about that we can manage both pretty effectively. But as I say, the important thing for us is traffic.
Curtis Valentine: Thanks, Scott. I’d just add to that. I mean, I think about it on the bottom line and EBIT margins being stable and we feel really good about being able to do that in the short term, long-term, et cetera to what Jack spoke about. And sometimes that will mean a little bit of investment in SG&A, I feel like an inventory management investment, so that we can get a better shrink. So we’re going to work the immaturity in our business and sometimes that’ll fall in a gross benefit and sometimes that’ll be an SG&A benefit, but really we’re focused on that bottom line stability and maintaining that going forward and we feel pretty good about being able to do that.
Scott Mushkin: So my follow-up question to that is, let’s just say the strength in the business continues. Obviously, you guys have had a nice little string of quarters and it seems like the customers coming your way, macro may not matter as much. So if this strength of the business continues, what areas would you invest in more over the next couple of years?
Curtis Valentine: I think it’s the same places we’re investing this year will be key components, right. So inventory management, we’ve talked about, the technology underpinnings for scalability. We’ll continue to work on that and make sure we have the right foundation to continue to grow. And then loyalty will be a multi-year journey that we will continue to improve upon. And I think the last piece is team and talent is critical for us, as we’ve got to continue to find store managers, department managers and great team members who engage with the customer, take care of our target customers and provide a great experience in the store. So those would be the places that we’ll continue to double down and make sure that we’ve got the right foundation or scalable for the long haul.
Jack Sinclair: And we need to invest going forward, supply chain is going to be important to us as well, Scott, in terms of making sure that we’re giving ourselves the options of supplying maybe broader geographies and where we’re at the moment. That’s not for now. But as we go forward, there’s plenty of places in the country that we don’t have a Sprouts store. So we continue to accelerate that as we continue to see success and strengthen our business.
Scott Mushkin: Perfect, guys. Thanks very much.
Jack Sinclair: Thanks.
Curtis Valentine: Thanks, Scott.
Operator: And one moment for our next question. Our next question will be coming from Robbie Ohmes of Bank of America. Your line is open.
Robert Ohmes: Hey, great quarter and thanks for taking my questions. Jack, can you talk a little more about the new store performance in the first quarter? It was a pretty significant improvement in your new store productivity. And I know you mentioned a little bit, any more color on where stores opened a lot, say, earlier in the quarter? Like how did — how was there such a dramatic improvement in new store productivity?
Curtis Valentine: Well, it’s only seven stores and we were pleased by how those seven stores performed. Most of them are six of the seven stores we’re very pleased with. But I think partly is what I alluded to in the remarks. I think we’re seeing the success of our new store modeling, just beginning to find the right place a little bit more accurate in terms of where we open stores. And that’s something that’s encouraging. I think again, when you look back when we open stores during the pandemic, I think it was harder to drive traffic to those stores as people were reluctant to go to lots of places to buy their groceries. And we talked a lot about that probably over our conversations in the last couple of years. So I think the benefit we’re getting a better store model.
I think we’re getting a little bit better at marketing. I think putting the right — putting concentrating stores, so that we’ve got more stores in geographies. People are beginning, awareness has always been a challenge for us in markets where we’re not known and getting more of them and driving that awareness. I think Florida has helped us a little bit in that sense, the work we’ve been doing in Florida. We’re up to a significant number of stores there and now we’re filling in and that’s I think benefiting us as well going forward as we build this — as we build the store program. And I think we’ll see that benefit start to happen fairly significantly in the mid-Atlantic going forward as we go into the next couple of years, because we’ve got a lot of stores coming in all sorts of places.
And we think there’s some real benefit by having that concentration in our store portfolio.
Robert Ohmes: And any regional any more regional differences to call out? You mentioned Florida, but were any regions particularly stronger this quarter than others or types of markets new versus existing?
Jack Sinclair: No, I think the trends have been pretty consistent for us. We’re not seeing any major departures from what we’ve seen last several quarters. The new markets are performing well. We’re excited for the momentum, but it’s kind of come in similar to what we’ve seen in prior quarters.
Curtis Valentine: And it has given us a lot of encouragement when we open at place like Bartonsville, Maryland, where the team are doing a terrific job. That is making us real confidence. We kind of expect — change that we expect to do well in California, but we’re doing well outside of that as well. So that’s very encouraging and Florida as we talked about.
Robert Ohmes: That’s great. Thank you.
Curtis Valentine: Thank you.
Operator: One moment for our next question. Our next question will be coming from Kelly Bania of BMO Capital Markets. Your line is open. Again, Kelly Bania of BMO Capital Markets. Your line is open.
Kelly Bania: Hi, thanks for taking the questions. This is Kelly Bania. Just wanted to follow-up on the e-commerce topic. Are DoorDash and Instacart still growing? I assume maybe some of the outsized growth here is coming from the newest partner, at Uber. But just wondering if you could talk about that. And also just to see structures, are they similar for Sprouts and for consumers across the three or is there any preference, I guess from your vantage point between the different partners? And then also just to follow-up on competition with e-commerce, would you expect any competitive impact from Whole Foods given the new membership model that they recently announced with Amazon?
Curtis Valentine: I’ll cover kind of the first couple of those and maybe I’ll let Jack cover the last one. But all three are really performing well for us. So we’re really pleased with the results in all three and I won’t get very specific, but definitely all three are growing and we’re seeing strong overall e-comm performance. On the fee structure, again, won’t get into specifics there, but we’re comfortable with the fees we have. We work closely with our partners and for us, there’s really no preference between the three. Wherever the customer wants us to be, we’re happy to be there for them and if they want to go through the stores, great. If they want to go through Instacart rate, DoorDash, Uber Eats, however they want to engage with us, we’re happy to have them.
Jack Sinclair: And to be just to reinforce what Curtis said, we’re very pleased with all three partners. They do a great job for us and all three of them are performing well in the context of our e-comm growth. With regard to the Amazon Whole Foods conversation, Kelly, we watch Whole Foods. Amazon have made a lot of statements about food and fresh and we kind of watch them with interest. We feel our positioning is pretty strong against Whole Foods, which is the context of this that I would look at. In terms of value on produce, particularly organic produce, We feel we’re in a really strong place for the customer irrespective of whatever the delivery charges are. We’re in a good place relative value on fresh produce, which is an important part of our mix, less important part of their mix, but an important part of our mix.
