LOS ANGELES (Reuters) - Sprouts Farmers Market Inc (O:SFM) said on Thursday it ended its Prime Now delivery partnership with Amazon.com (O:AMZN) on May 1 and cut its full-year sales targets, sending shares of the U.S. supermarket chain down almost 12 percent.
The partnership was struck before Amazon bought rival specialty grocery Whole Foods Market (NASDAQ:WFM) for $13.7 billion last summer. Amazon Prime Now had delivered from 15 of its 298 Sprouts stores.
"The transition will impact comps for the next several quarters, but we remain very confident about growing our home delivery business as it brings a unique health and value proposition to our customers," Chief Executive Amin Maredia said on a conference call with investors.
Sprouts will continue to deliver groceries through Instacart, a relationship it started at the beginning of the year, and expand that to its major markets.
Amazon Prime Now provides free delivery, with some restrictions, for subscribers of Amazon's $99 Prime service that also offers free video streaming and other perks. Instacart users in Los Angeles pay a delivery fee of $5.99 to $7.99 at Sprouts, or can choose to pay a $149 membership fee.
Sprouts also cut its full-year sales forecasts.
Its new net sales forecast calls for growth in the range of 10.5 percent to 11.5 percent versus 11.5 percent to 12.5 percent previously.
For same-store sales, it forecast a rise of 1.5 percent to 2.5 percent versus 2.5 percent to 3.5 percent previously.
Shares in Sprouts fell 13 percent to $21.22 shortly before the close of trading.