Phoenix-based Sprouts Farmers Market officially cancelled its relationship with Amazon Prime Now as of May 1, the company said during its first quarter earnings call held May 3.
CEO Amin Maredia said during the call the company was delivering using Prime Now in 15 stores. The company signed up with Instacart in late 2017 and now delivers from 16 stores.
Analysts questioned the growth of the Instacart business, which requires a delivery fee, compared to Amazon Prime Now, which is included in Prime membership.
“The transition will impact comps for the next several quarters,” Maredia said during the call. “Based on what we’ve seen early on here as the business has been building, is clearly the higher it (delivery fee) is, the more resistance you’re going to get from a customer. But to date, based on sales that we’re seeing in markets we’ve launched in and have been operation for 10, 12 weeks, without much marketing, we’re pretty positive around how this sort of business builds out.”
During the company’s 4th quarter conference call in February, Maredia said delivery business is growing, but not as fast as many think.
Sprouts reported a 2.7% increase in same store sales in the first quarter, with total sales of $1.3 billion. Sales increased by 14%.
Produce was tough this quarter, officials said, and is leading to a slightly lower outlook for same store sales.
“We had some supply tightness on the produce side in the first half of the quarter,” said Brad Lukow, chief financial officer, during the call. “It limited our ability to promote in the produce category.”