Have you been paying attention to shares of Sprouts Farmers (SFM) ? Shares have been on the move with the stock up 15.6% over the past month. The stock hit a new 52-week high of $103.8 in the previous session. Sprouts Farmers has gained 99.3% since the start of the year compared to the 11.3% move for the Zacks RetailWholesale sector and the 29% return for the Zacks Food - Natural Foods Products industry. The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings cons ...

Shares of Sprouts Farmers Market soared 13% to an all-time high Tuesday after the company reported quarterly results that beat Wall Street expectations and raised its full-year guidance. The supermarket chain posted same-store sales growth of 6.7% and opened five new stores in the latest quarter. Sprouts now expects 2024 net sales growth of 9% to 10%, up from a previous projection of 7% to 8%. Shares of Sprouts Farmers Market (SFM) soared to an all-time high Tuesday after the supermarket chain reported quar ...

SDI Productions Sprouts Farmers Market, Inc. (NASDAQ:SFM), the grocery chain with a focus on health food, reported Q2 results that beat Wall Street estimates by an extremely wide margin for a grocery chain. With an increased 2024 outlook and the great financials, the market has taken the results incredibly well, with the stock up 18% in premarket trading at the time of writing. I previously wrote an article on the 9th of June on SFM, titled "Sprout Farmers Market's Stock Momentum Has Space Left". In the art ...

Core Insights - Sprouts Farmers Market reported strong financial performance, beating estimates on revenue and earnings per share [1][5] - The company is experiencing growth in comparable sales and market share, driven by its focus on fresh produce and wellness [2][3] - Future guidance indicates continued growth in comparable sales and earnings per share, surpassing previous forecasts [3][4] Financial Performance - Comparable sales increased by 6.7%, contributing to a revenue rise of 12% to $1.89 billion, exceeding the consensus estimate of $1.84 billion [1] - Gross margin improved from 37% to 37.9%, leading to earnings per share growth from $0.65 to $0.94, surpassing expectations of $0.78 [1] Market Position and Growth - The company's differentiated approach is resonating with customers, resulting in market share gains and new store openings [2] - Sprouts' stock has appreciated nearly 500% over the last five years, indicating strong investor confidence [2] Future Outlook - The company anticipates comparable sales growth of 3.5%-4.5% for the upcoming quarter and 4%-5% for the full year, an increase from the previous range of 2.5%-3.5% [3] - Projected earnings per share for the third quarter are $0.71-$0.75 and $3.29-$3.37 for the full year, better than earlier forecasts [3] Valuation - Sprouts' current valuation is at its highest in nearly a decade, with potential for further increases if the company continues to exceed estimates and raise guidance [4]

Shares of Sprouts Farmers Market, Inc. (SFM) advanced 15.2% during the after-market trading session on Jul 29, 2024. The stock gained following the company's better-than-expected second-quarter performance and an upbeat outlook for 2024. Shares of this Zacks Rank #3 (Hold) company have surged 68.1% in the past six months compared with the industry's growth of 14.7%. The renowned grocery retailer delivered quarterly earnings of 94 cents a share, which beat the Zacks Consensus Estimate of 77 cents. The bottom ...

Financial Data and Key Metrics - Total sales grew by 12% YoY to $1.9 billion in Q2 2024, driven by a 6.7% increase in comparable store sales and new store openings [3][25] - Diluted earnings per share (EPS) increased by 32% YoY to $0.94, compared to adjusted diluted EPS from the prior year [7] - Gross margin improved by 80 basis points YoY to 37.9%, driven by better inventory management, promotional optimization, and supply chain leverage [26] - E-commerce sales grew by 30% YoY, representing 14% of total sales for the quarter [5] - Net income for the quarter was $95 million, and operating cash flow year-to-date was $311 million, enabling $89 million in self-funded capital expenditures [7] Business Line Performance - Sprouts brand contributed 22% to total sales for the quarter, with over 200 new items released, driving comp sales above the company average [10][11] - The company saw strong performance across all categories, with improvements in inventory management, product assortment, and store operations [5][33] - E-commerce growth remained steady, supported by investments in omnichannel capabilities and customer engagement [5][34] Market Performance - The company experienced strong sales performance across all geographies, with early and strong seasonal produce sales contributing to the growth [25] - New store openings in 2024 have been successful, with strong performance in both established and emerging markets [13][14] - The company plans to open approximately 35 new stores in 2024, with the majority of openings in Q4 [8][14] Strategy and Industry Competition - The company is focused on becoming a go-to destination for health and wellness products, with a unique product assortment tailored to target customers [10][23] - Investments in category management and supply chain improvements have enhanced inventory management and reduced shrink [33] - The company is testing a loyalty program in select markets to increase customer engagement and share of wallet [34][62] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about the company's momentum and long-term growth potential, driven by a focus on health-conscious consumers [23][31] - For the full year 2024, the company expects total sales growth of 9% to 10% and comp sales growth of 4% to 5% [8] - Adjusted EPS for the full year is expected to be between $3.29 and $3.37, with continued pressure on SG&A due to wage increases and new store openings [8][9] Other Important Information - The company paid down $125 million of its outstanding revolver and returned $104 million to shareholders through share repurchases [28] - SG&A for the quarter totaled $556 million, an increase of $63 million YoY, primarily due to strategic investments and new store openings [6] - The company has $585 million remaining under its $600 million share repurchase authorization [28] Q&A Session Summary Question: New store growth and timing - The majority of new store openings in 2024 will occur in Q4, with some delays due to higher interest rates and development challenges [43][44] - The company has 110 approved sites and over 70 signed leases, with a healthy pipeline for future growth [44][110] Question: Gross margin sustainability - Gross margin expansion is expected to continue in the second half of 2024, driven by inventory management and promotional effectiveness [29][78] - The company is focused on maintaining its differentiated assortment and controlling margins, rather than investing in pricing [46][67] Question: E-commerce profitability - E-commerce is slightly dilutive to profitability due to fee structures, but larger baskets contribute to stronger net dollar profitability [89] - The company is indifferent to how customers shop, whether in-store or online, and expects e-commerce penetration to increase slightly over time [152][163] Question: Loyalty program expansion - The company is in the early stages of testing its loyalty program and is gathering customer data to refine the program before expanding to new markets [62][152] Question: Cannibalization and new store productivity - Cannibalization is expected to increase slightly as the company expands, particularly in established markets, but new stores are performing well [170] - New store productivity is strong, with comps in newer vintages outperforming older stores [155][158]

Core Insights - Sprouts Farmers (SFM) reported revenue of $1.89 billion for the quarter ended June 2024, reflecting an 11.9% increase year-over-year and a surprise of +3.61% over the Zacks Consensus Estimate of $1.83 billion [1] - The company's EPS for the quarter was $0.94, up from $0.71 in the same quarter last year, resulting in an EPS surprise of +22.08% compared to the consensus estimate of $0.77 [1] Financial Performance Metrics - Comparable store sales growth was 6.7%, exceeding the average estimate of 3.5% based on four analysts [3] - The number of stores at the end of the period was 419, slightly below the average estimate of 420 based on three analysts [3] - Five new stores were opened during the quarter, compared to the average estimate of six based on two analysts [3] - The number of stores at the beginning of the period was 414, matching the average estimate of 414 from two analysts [3] Stock Performance - Shares of Sprouts Farmers have returned +3.6% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.2% change [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [4]

Group 1: Earnings Performance - Sprouts Farmers reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.77 per share, and up from $0.71 per share a year ago, representing an earnings surprise of 22.08% [1] - The company posted revenues of $1.89 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 3.61%, compared to year-ago revenues of $1.69 billion [2] - Over the last four quarters, Sprouts Farmers has consistently surpassed consensus EPS estimates [2] Group 2: Stock Performance and Outlook - Sprouts Farmers shares have increased approximately 80.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 14.5% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $1.84 billion, and for the current fiscal year, it is $3.12 on revenues of $7.38 billion [7] Group 3: Industry Context - The Food - Natural Foods Products industry, to which Sprouts Farmers belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

We refer to adjusted gross profit, adjusted gross margin, EBIT, adjusted EBIT, adjusted EBIT Margin, and adjusted diluted earnings per share, each of which is a Non-GAAP Financial Measure. These measures are not prepared in accordance with, and are not intended as alternatives to, generally accepted accounting principles in the United States, or GAAP. The Company's management believes that such measures provide useful information to management, analysts and investors regarding certain additional financial a ...

Financial Performance - The Company's net sales for the twenty-six weeks ended June 30, 2024, were $3,777.3 million, an increase from $3,425.6 million for the same period in 2023, representing a growth of 10.3%[98]. - Net income for the twenty-six weeks ended June 30, 2024, was $209.4 million, up from $143.5 million for the same period in 2023, indicating a year-over-year increase of 46.0%[119]. - Basic net income per share for the twenty-six weeks ended June 30, 2024, was $2.08, compared to $1.39 for the same period in 2023, reflecting a growth of 49.6%[119]. - Net income for the thirteen weeks ended June 30, 2024, was $95.3 million, a 42% increase from $67.3 million in the prior year[191]. - Net sales for the thirteen weeks ended June 30, 2024, reached $1,893,519, up from $1,692,247 in the prior year, indicating a growth of approximately 11.9%[164]. - Gross profit for the thirteen weeks ended June 30, 2024, was $718.4 million, an increase of $92.4 million or 15%, with a gross margin of 37.9%[183]. - Gross profit totaled $1.4 billion, an increase of $164.6 million or 13%, with a gross margin of 38.1% compared to 37.3% in the previous year[224]. Stockholder Equity and Liabilities - For the thirteen weeks ended June 30, 2024, total stockholders' equity increased to $1,269,275 thousand from $1,148,547 thousand, representing a growth of approximately 10.5% year-over-year[36]. - As of June 30, 2024, total liabilities and stockholders' equity amounted to $3,410,519 thousand, compared to $3,327,428 thousand as of July 2, 2023, indicating an increase of about 2.5%[36]. - The company had no outstanding loans under the Credit Agreement as of June 30, 2024, after making principal payments of $125,000 thousand during the period[86]. - The company’s total long-term debt and finance lease liabilities were reported at $8,057 thousand as of June 30, 2024, down from $133,685 thousand as of December 31, 2023[80]. - The company’s long-term debt remained at $125 million as of June 30, 2024[141]. - The company had no long-term debt outstanding as of June 30, 2024, compared to $125.0 million as of December 31, 2023[214]. Share Repurchase and Stock Awards - The Company authorized a new $600 million share repurchase program, replacing the previous program with $119.3 million remaining available[91]. - The total cost of common shares acquired in the twenty-six weeks ended June 30, 2024, was $105.2 million, with an average price per share of $65.86[116]. - The company repurchased an additional 0.1 million shares of common stock for $7,400 thousand subsequent to June 30, 2024[65]. - The company had 1,080,489 stock awards outstanding as of June 30, 2024, with 5,584,937 shares remaining available for issuance under the 2022 Incentive Plan[100]. - The company granted share-based compensation awards totaling $6,789 during the thirteen weeks ended June 30, 2024, compared to $5,609 in the prior year[160]. Tax and Interest Expenses - The effective tax rate decreased to 23.8% for the twenty-six weeks ended June 30, 2024, compared to 24.0% for the same period in 2023, primarily due to increased excess tax benefits from share-based payment awards[89]. - The effective tax rate increased to 25.2% for the thirteen weeks ended June 30, 2024, compared to 24.7% for the same period in 2023[144]. - Total interest expense, net, decreased by 84% to $679,000 for the twenty-six weeks ended June 30, 2024, compared to $4.4 million in the prior year[201]. - Interest expense, net decreased to $0.7 million for the twenty-six weeks ended June 30, 2024, down from $4.4 million in the prior year due to lower average debt outstanding[229]. Store Operations - As of June 30, 2024, the company operated 419 stores across 23 states[139]. - The company opened 5 new stores during the thirteen weeks ended June 30, 2024, bringing the total number of stores to 419, up from 391 a year ago[164]. - The company closed 11 underperforming stores in 2023, resulting in a charge of $27.8 million related to impairment of leasehold improvements[131]. - Selling, general and administrative expenses increased by $58.4 million, or 12%, compared to the same period last year, primarily due to the increase in new stores[168]. Cash Flow - Cash flows from operating activities for the twenty-six weeks ended June 30, 2024, were $311,295, compared to $294,781 for the same period last year[150]. Performance Metrics - Comparable store sales growth was 6.7% for the thirteen weeks ended June 30, 2024, compared to 3.2% for the same period last year, reflecting improved performance[164]. - Comparable store sales growth was 5.4% for the twenty-six weeks ended June 30, 2024, compared to 3.2% in the prior year[223]. - Return on Invested Capital (ROIC) increased to 13.7% for the rolling four quarters ended June 30, 2024, compared to 13.0% for the previous year[208].