Sprouts Farmers Market, Inc. (NASDAQ:SFM) Q3 2023 Earnings Call Transcript

Page 6 of 6

Ben Wood: Great. That’s helpful. And then just to follow-up on the previous line of questioning on digital. By our math, digital has been a pretty solid contributor to comp year-to-date. Wondering if you could help kind of quantify how much of digital growth has been driven by the incremental new partnership with DoorDash. And then, as we think about Q4, which I believe is when you would start to lap the initial DoorDash rollout, what are your expectations for digital growth as you start to lap?

Chip Molloy: I think as we said in the call, we see omnichannel as the key to our business going forward. The way customers are navigating and drifting between coming to the store and using online is driving basket and driving this share of wallet that’s important to us with our target customer. So digital plays a key part. E-com plays a key part in that whole dynamic going forward. Instacart and DoorDash have been great partners this year. The DoorDash — our business is now, we saw, when I joined the company, we were at 2% mix, we are now running around a 12% mix in terms of our e-com business. I am not — steadily growing a little bit as we go through, but I, as I say, the customers that are using online are definitely using, coming to the store as well, which I think is an unusual mix, quite how much omnichannel we’ve got, which again, gives us a lot of confidence that our assortment and our curated assortment that’s differentiated is proving very relevant.

And I think there’s more work we can do with DoorDash and Instacart to really understand that target customer so that we can communicate more effectively through some of the digital mediums that we’ve got going forward. So, it’s an encouraging picture, but it’s not something we don’t think of our business as e-com and non-e-com. We think of our business as omnichannel and that we’re providing a service and providing an assortment for that target customer, however they choose to engage with us.

Ben Wood: Great. Thank you, guys.

Operator: Thank you. One moment for our next question, and our next question comes from the line of Bill Kirk from Roth. Your question please?

Bill Kirk: Good morning, everybody. Chip by my count, this is your third attempt at retirement, so hopefully third time’s a charm.

Chip Malloy: Third time’s a charm. Very good, Bill.

Bill Kirk: And Jack, you touched on this and you just touched on it, but at times I think you’ve quantified like roughly how many shoppers that you have good data on. So, could you remind us like what that percentage is today? Like the percentage that you know, and then with these new programs that we’ve been talking about, what does that percentage become over time? So, you are this today and you go to what over a few years?

Jack Sinclair: Yeah, well, I think we’ve talked about it in the past and the combination of different ways we get to it comes to around 13% of our customers that we’ve got good information on, which is pretty low. We anticipate the work that we’re doing in terms of the loyalty that we’ve talked about, the work that we’re doing in terms of understanding how this digital communication works, we can get that higher than where it is, but it doesn’t need to get to the kind of numbers that you see in the more traditional grocery space. We can, we don’t anticipate it going, it doesn’t need to go terribly high for us to make a lot of progress on this in terms of communicating it. I don’t want to commit myself to numbers on that because we haven’t quite got that nailed, but we’re doing a lot of work on it, Bill.

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

Bill Kirk: Thank you. That’s the only question I had and good luck on all fronts, guys.

Operator: Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to Jack Sinclair for any further remarks.

Jack Sinclair: Yeah, thanks everybody for your interest in our company and it’ll not belong before we’re giving you two-year numbers in a few months’ time, so we look forward to that. And I wish everybody a happy Halloween. Take care.

Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

Follow Sprouts Farmers Market Inc. (NASDAQ:SFM)

Page 6 of 6