[EXCLUSIVE] Sprouts to Shutter Single Suburban Atlanta Store

Phoenix, Arizona-based Sprouts Farmers Market (NASDAQ:SFM), which entered the Atlanta market in 2014, announced earlier this week it plans to close a total of 11 stores by mid-year.  The company did not reveal the stores slated for closure, only saying that they would include those in California, Florida, Georgia, Texas and Washington.  ToNeTo Atlanta has confirmed with local sources that the Atlanta area Sprouts slated for closure is located at 2220 Peachtree Industrial Boulevard, Suite 200, in Duluth.  

The store opened May 11, 2016, and anchors the Sugarloaf Marketplace shopping center at the corner of Peachtree Industrial Boulevard and Sugarloaf Parkway.  The Sprouts closure comes at an unfortunate time for Cava, which just last week reopened a former Zoes Kitchen after investing in a weeks' long renovation process for the surviving Cava brand.  The absence of the upscale grocery anchor will undoubtedly affect the business negatively.  A more than 5,600 square foot Schlotzsky's Austin Eatery that also opened as part of the center closed more than a year ago and its drive-thru equipped space remains vacant and available.  

According to an employee at the Duluth store, a "closing sale" has yet to start, but the store is expected to close for good by the end of April.  The closure, which sources indicate is due to disappointing sales, is likely also related to the grocer's efforts to "right size" their store fleet and operate smaller stores.  The Duluth store and its 28,600 square feet are on the upper end of the size of stores that the company operates locally.   

During an earnings call last week, CEO Jack Sinclair and CFO Chip Molloy explained that the closing stores were opened by the previous leadership team and are approximately 30% larger than the current prototype and are generating negative cash flow.

The company does plan to open new stores but they will be smaller.  “We are expanding with our new 23,000-square-foot store and every store opened this year will be in our new format,” Sinclair said during a March 2 call with investors and analysts. “We’re excited about our robust pipeline of more than 80 approved stores and nearly 60 executed leases. We have already opened four new stores in this first quarter with a plan to open at least 30 stores this year, and we are on track to reach our 10%-unit growth starting in 2024." 

Sprouts in late 2018 closed their store in Dunwoody which was in turn taken over by Lidl which suffered a similar and faster fate, having closed their store this past February.  Lidl might have interest in the soon to close Duluth store if not for the fact that they opened a freestanding store basically across the street June 23, 2021.  

Including the Duluth store, Sprouts operates eighteen stores across Georgia including sixteen in greater metro Atlanta.  Metro Atlanta stores include those in Snellville, Tucker, Piedmont Heights, Johns Creek, Sandy Springs, Peachtree Corners and East Cobb while further out stores include those in Cumming, Woodstock, Peachtree City and Augusta, among others.   The grocery's most recent Atlanta area stores debuted in 2021 in Smyrna and Buford and are about 19,000 and 23,000 square feet respectively.  

Are you surprised that Sprouts is closing in Duluth?  Where do you do most of your grocery shopping?  What would you like to see open in place of Sprouts in Duluth?    

Please share your thoughts below.