Dive Brief:

• Sprouts Farmers Market CEO Amin Maredia will step down on December 30 to pursue other opportunities, the retailer announced. He will remain on as an advisor while the company searches for a successor. Sprouts’ stock dropped $4.43, or 16.4%, in mid-morning trading.
• Jim Nielsen, Sprouts’ president and chief operating officer, along with Brad Lukow, chief financial officer, will serve as co-CEOs until a successor is named. The retailers said it is in the process of appointing an executive search firm to find a replacement for Maredia.  
• “It has been an enormous privilege to have been part of the Sprouts team during this incredible period in the company’s history over the past eight years,” Maredia said in a statement. “As I transition, it is comforting knowing that Sprouts is well-positioned with a strong management team for robust growth and sustained success.”

Dive Insight:

Sprouts is one of the fastest-growing grocery chains in the U.S., but Amin Maredia has done more than just push the accelerator. He also helped develop a broader vision for the company and sharpen its competitive edge.

Maredia joined Sprouts in 2011 as chief financial officer after serving in various strategic and finance roles for Burger King. His appointment came just a few months after private equity firm Apollo Management acquired a majority stake in Sprouts and combined it with another specialty retailer it owned, Henry’s Farmers Market, creating a chain that operated 98 stores across several western and southwestern U.S. states.

This was the beginning of Sprouts’ rapid growth phase. In 2012, the company acquired 35 Sunflower Farmers Market stores in four states. The year after that, it went public, and by the time Sprouts named Maredia CEO in 2015, it had more than 200 locations. Fast forward to today, and Sprouts has more than 300 stores across 19 states, including the southeast and Mid-Atlantic. It built 30 stores this year and plans to match that total in 2019.

Sprouts has always led with produce, and the company deepened its “fresh” focus under Maredia. The chain has expanded its perishables assortment during the past three years, including prepared foods, meat and seafood. Maredia also has overseen the development of an “enhanced” store model that positions locations as meal destinations offering soups, salads, sandwiches and more. New Sprouts locations, as well as legacy ones, are incorporating this enhanced model — and seeing a significant sales lift as a result.

Under Maredia, Sprouts built a chain-wide e-commerce platform, boosted private label offerings, increased wages for its workforce and oversaw operational innovations like a new fresh management program aimed at optimizing assortment.

In a research note, Rupesh Parikh, an analyst with Oppenheimer, said Maredia played a key role in shaping the company's vision. While Parikh said Maredia's departure was a short-term loss for the grocer, he remained upbeat on the company's future. "This does not change our view on the attractiveness of the SFM model and the potential to continue gaining share against a dynamic grocery backdrop," he said. 

In an interview with Grocery Dive last year, Maredia said he sees Sprouts as a disruptive force in an industry full of over-sized, slow-to-evolve conventional chains. “If you think about conventional grocers, their heaviest growth was from the fifties to the nineties,” he said. “Those grocery stores have not kept up with the consumer.”

But investors remain skeptical of Sprouts’ ability to stand out against the 800-pound gorilla in the field: Amazon-owned Whole Foods. So far, Sprouts’ financials haven’t seen much of an impact from the web giant's integration of Whole Foods, which has focused on e-commerce expansion and integrating its Prime loyalty program. But Wall Street remains cautious.

Sprouts’ next CEO will need to build on the momentum Maredia established and also further define the company’s value proposition. During last year’s interview, Maredia said he wanted Sprouts to continue refining its assortment according to consumer health needs. Will the next CEO take up that mantel or prioritize some other part of Sprouts’ business? At the rate the company is growing, these sorts of questions are vitally important and need to be addressed quickly as the grocery space continues to rapidly evolve.