Retail

Sprouts says it ended Amazon Prime partnership as of May, cuts sales target

Key Points
  • Sprouts ended its 18-month delivery partnership with Amazon effective May 1.
  • It announced a new partnership with Instacart in January.
  • Sprouts cut its same-store sales forecast, citing lower-than-expected inflation and disruptions from its delivery model shift.
InstaCart employees fulfill orders for delivery
Patrick T. Fallon | Bloomberg | Getty Images

Natural food grocer Sprouts Farmers Market told analysts Thursday morning that it ended its delivery partnership with Amazon Prime as of May 1, and its transition to Instacart will have a slight drag on its sales.

Sprouts had an 18-month partnership with Amazon for 15 of its stores, which it used as distribution hubs for broader food delivery.

Amazon last year acquired Sprouts' rival, Whole Foods, and is making its own aggressive push into the grocery industry.

Sprouts in January announced a new partnership with Instacart. Thursday morning, its executives told analysts that for the quarter there were roughly a dozen stores on Instacart. It expects to ramp up the partnership "fairly quickly."

" ...Any time you switch over, there's always going to be timing differences to grow the business. But we're very confident that throughout this year, we'll grow this business in a similar fashion, if
not better than what we had with our previous relationship and the markets that we operated in," according to an initial transcript from Factset.

Sprouts said the transition to Instacart, along with lower-than-expected inflation, will hurt its forecast for same-store sales. The grocer revised its 2018 growth estimate to between 1.5 percent and 2.5 percent, from a range of 2.5 percent to 3.5 percent.

Shares of the grocer were down nearly 13 percent in mid-afternoon trading.