Liontrust Sustainable Future Defensive Managed Fund on Sprouts Farmers Market
Thesis
Liontrust held Sprouts Farmers Market, a US specialty grocer continuing to expand its store network. The latest results showed weaker underlying trading, with comparable-store sales declining 1%, while management forecast only modest third-quarter improvement and full-year comparable sales between -0.5% and 0.5%. The update explains the share-price weakness despite continuing store expansion. The investment remains exposed to whether new locations and a recovery in customer spending can offset weak like-for-like sales.
“This weighed on investor sentiment despite continued store expansion.”
Key risks
- Comparable-store sales declined and could remain weak.
- Management forecast only modest near-term improvement in trading.
- Higher oil prices squeezing consumer budgets.
- Higher yields and borrowing costs weakening consumer spending.