Sprouts Is Closing 11 Grocery Stores in 2023

While it isn't quite large enough to rival retail giants like Walmart and Costco, Sprouts Farmers Market has undoubtedly made a name for itself in the grocery scene. The Phoenix-based retailer, which specializes in healthy natural and organic foods, has grown to encompass 386 stores by the end of 2022 and plans to open at least 30 more by the end of 2023.

But store expansion is not the only major development on the horizon for Sprouts. In fact, the chain announced this week that it plans to shutter 11 locations in the first half of this year.

This makes Sprouts the latest chain to jump on a recent trend of grocery store closings. Walmart, for example, announced last month that it would be closing half a dozen stores nationwide. Aldi, Stop & Stop, Amazon Go, and Amazon Fresh are among the other retailers shutting down certain locations this year.

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In a statement, Sprouts said that its own closing stores were located in Texas, California, Georgia, Florida, and Washington.

"Choosing to close a store is always a difficult decision; however, these stores, on average, are approximately 30% larger than our current prototype and often underperformed," said Dan Sanders, chief store operations officer of Sprouts. Sanders added that the employees at those stores would have the opportunity to transfer to another location if they wanted to keep working for Sprouts.

The store closure plans date all the way back to 2020. Early that year, Sprouts was contemplating shutting down certain underperforming locations as it began to focus on a "smaller, more productive" store prototype, CFO Chip Molloy explained during a Sprouts earnings call.

"We consciously decided not to close those stores as the pandemic struck, so our communities would continue to have access to fresh, healthy groceries," Molloy said. He added that the company "recently revisited that decision."

One of the 11 stores will close in the first quarter of 2023 when its lease expires, while the rest will close in the second quarter. Once they're gone, Sprouts doesn't plan to open new locations more aligned with their current prototype in those same markets.

"As we've looked at the store portfolio, that strategy playing out really made us take a very hard look at those stores that are a little bit bigger, the lovely stores that were built by the previous team," CEO Jack Sinclair said during the call. "And in certain locations, we picked the wrong locations. We would have acted sooner on these stores, had it not been for the pandemic."

Regardless of the closures, Sprouts is still on its way to ending the year as a larger chain than it was at the start of 2023. The 30 new locations it plans to open will all be part of that current, smaller prototype, according to Molloy.