Sprouts Farmers Market (SFM) faces a potential risk from Kroger's (KR) plan to cut prices as Sprouts' customer base largely overlaps with Kroger's and narrowing price gaps combined with high gas prices could lead to trip consolidation, RBC Capital Markets said in a note Monday.
Citing Numerator Insights data, the brokerage said about 66% of Sprouts shoppers have also shopped at a Kroger and roughly 16.2% of households have shopped at both Sprouts and Kroger in the last 12 months, indicating a relatively high degree of overlap in markets where both stores exist.
Higher gas prices likely adversely affect Sprouts given its role as a supplementary grocery store, according to the note.
The brokerage said a spot analysis of RBC Elements' price monitoring data shows that Sprouts' price positioning on about 120 items compared with Kroger's has "worsened modestly" since July 2025, although it is more "prudent" to focus on directional changes in pricing rather than absolute price gaps.
RBC kept an outperform rating on Sprouts Farmers Market, with a price target of $114.
Shares of Sprouts Farmers Market were down more than 2% in Monday trading.
Price: $80.80, Change: $-1.83, Percent Change: -2.21%