Core Insights - Sprouts Farmers Market, Inc. (SFM) reported strong first-quarter 2025 results, with both top and bottom lines exceeding expectations and showing year-over-year growth [1][2] Financial Performance - Quarterly earnings were $1.81 per share, surpassing the Zacks Consensus Estimate of $1.54, and reflecting a 61.6% increase from $1.12 in the same period last year [2] - Net sales reached $2,236.4 million, exceeding the Zacks Consensus Estimate of $2,195 million, and representing an 18.7% year-over-year increase driven by new store sales and comparable store sales growth [2] - Comparable store sales increased by 11.7%, outperforming the estimate of 10.5%, while e-commerce sales grew by 28%, accounting for 15% of total sales [3] Margin Analysis - Gross profit rose by 22.7% year over year to $886.4 million, with gross margin expanding by 129 basis points to 39.6%, exceeding the expected 50 basis points expansion [4] - Operating income increased to $226.3 million from $148.3 million in the prior year, with operating margin expanding by 220 basis points to 10.1%, surpassing the anticipated 140 basis points expansion [5] Store Expansion - During the quarter, Sprouts Farmers opened three new stores, bringing the total to 443 stores across 24 states as of March 30, 2025, with plans to open at least 35 new stores in 2025 [6] Financial Health - The company ended the quarter with cash and cash equivalents of $285.7 million, long-term debt of approximately $6.9 million, and stockholders' equity of $1,288 million [7] - Cash generated from operations was $299.1 million, with capital expenditures of $49 million year to date through March 30, 2025 [7] Future Outlook - For the second quarter of 2025, Sprouts Farmers anticipates comparable store sales growth between 6.5% and 8.5%, with adjusted earnings projected between $1.19 and $1.23 per share compared to 94 cents in the prior year [9] - The company expects full-year net sales growth of 12% to 14% and comparable store sales growth of 5.5% to 7.5%, with adjusted earnings before interest and taxes projected between $640 million and $660 million for 2025 [10] - Full-year earnings are projected to be between $4.94 and $5.10 per share, indicating growth from $3.75 per share reported in 2024 [11]

Financial Performance - For the quarter ended March 2025, Sprouts Farmers (SFM) reported revenue of $2.24 billion, an increase of 18.7% year-over-year [1] - EPS for the quarter was $1.81, up from $1.12 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $2.2 billion, resulting in a surprise of +1.88% [1] - The company delivered an EPS surprise of +17.53%, with the consensus EPS estimate being $1.54 [1] Key Metrics - Comparable store sales growth was 11.7%, surpassing the average estimate of 10.7% based on four analysts [4] - The number of stores at the end of the period was 443, slightly below the four-analyst average estimate of 444 [4] - Three new stores were opened, compared to an average estimate of four by three analysts [4] - The number of stores at the beginning of the period was 440, matching the two-analyst average estimate [4] Stock Performance - Shares of Sprouts Farmers have returned +11% over the past month, while the Zacks S&P 500 composite experienced a -0.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential outperformance against the broader market in the near term [3]

Core Insights - Sprouts Farmers (SFM) reported quarterly earnings of $1.81 per share, exceeding the Zacks Consensus Estimate of $1.54 per share, and showing a significant increase from $1.12 per share a year ago, resulting in an earnings surprise of 17.53% [1] - The company achieved revenues of $2.24 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.88% and up from $1.88 billion year-over-year [2] - Sprouts Farmers shares have increased approximately 35.6% since the beginning of the year, contrasting with a decline of 5.5% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.14 on revenues of $2.14 billion, and for the current fiscal year, it is $4.68 on revenues of $8.65 billion [7] - The estimate revisions trend for Sprouts Farmers is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Food - Natural Foods Products industry, to which Sprouts Farmers belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Performance Food Group (PFGC), another company in the same industry, is expected to report quarterly earnings of $0.86 per share, reflecting a year-over-year increase of 7.5% [9]

Financial Data and Key Metrics Changes - Total sales for the first quarter reached $2.2 billion, an increase of $353 million or 19% compared to the same period last year, driven by an 11.7% increase in comparable store sales [9][10] - Diluted earnings per share reached $1.81, reflecting a 62% increase compared to the same period last year [6][12] - Gross margin was 39.6%, an increase of 129 basis points compared to the same period last year, primarily due to improvements in inventory and category management [11][12] Business Line Data and Key Metrics Changes - E-commerce sales grew approximately 28%, representing 15% of total sales for the quarter, with strong performance from all partners [10] - Sprouts brand contributed 24% to total sales for the quarter [10] - The vitamin department saw increased sales due to a harsh cold and flu season, contributing approximately 50 basis points to comparable sales growth [10] Market Data and Key Metrics Changes - The target market opportunity for health and wellness products is now estimated at approximately $290 billion, out of the $1.6 trillion spent on food at home [7] - Customer engagement remains central to the strategy, with plans to launch a new loyalty program to enhance customer access to healthy products [7][21] Company Strategy and Development Direction - The company plans to open at least 35 new stores in 2025, with a focus on enhancing store density in existing markets and expanding into new regions [14][24] - A significant move to self-distribute fresh meat and seafood through distribution centers aims to enhance product freshness and optimize supply chain capacity [8][22] - The company is committed to investing in customer engagement, supply chain optimization, and enhancing the shopping experience [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties from the macro environment, emphasizing a strong financial position and execution of strategic initiatives [17] - For 2025, the company expects total sales growth of 12% to 14% and comparable sales growth in the range of 5.5% to 7.5% [14][15] - Management noted that customer engagement remains strong, with expectations for continued solid performance in the second quarter [16][102] Other Important Information - The company generated $299 million in operating cash flow during the first quarter, allowing for self-funded investments of $49 million in capital expenditures [13] - The company returned $219 million to shareholders through share repurchases, with $232 million remaining under the current share repurchase authorization [13] Q&A Session Summary Question: Insights on gross margin expansion and potential reinvestment - Management indicated that investments are being made in loyalty, supply chain systems, and self-distribution, similar to last year [30] Question: Consumer shift to health and wellness and competitive landscape - Management remains focused on maximizing offerings for health enthusiast customers, confident in their differentiated position despite competitors entering the market [32][33] Question: Performance of new stores and loyalty program - New stores are performing well, and the loyalty program is expected to launch nationally in the second half of the year, showing positive early results [40][41] Question: Household additions and customer engagement - The company is seeing strong new customer growth and higher engagement from existing customers, driving a higher share of wallet [46][48] Question: Impact of tariffs and pricing actions - Management is monitoring potential impacts of tariffs on building costs but currently feels well-positioned regarding food sourcing [95][96] Question: Supply constraints and inventory management - Management acknowledged challenges with fresh product transitions but is focused on improving stock levels to meet customer demand [120]

Financial Data and Key Metrics Changes - Total sales for Q1 2025 reached $2.2 billion, an increase of $353 million or 19% compared to the same period last year, driven by an 11.7% increase in comparable store sales [8][10] - Diluted earnings per share were $1.81, reflecting a 62% increase year-over-year [5][11] - Gross margin improved to 39.6%, an increase of 129 basis points compared to the same period last year [10][11] - Net income for the quarter was $180 million [11] Business Line Data and Key Metrics Changes - E-commerce sales grew approximately 28%, representing 15% of total sales for the quarter [9] - Sprouts brand contributed 24% to total sales for the quarter [9] - The vitamin department saw increased sales due to a harsh cold and flu season, contributing approximately 50 basis points to comparable sales growth [9] Market Data and Key Metrics Changes - The target market opportunity for health and wellness products is now estimated at approximately $290 billion, out of the $1.6 trillion spent on food at home [6] - Customer engagement remains central to the strategy, with plans to launch a new loyalty program to enhance customer access to healthy products [6][20] Company Strategy and Development Direction - The company plans to open at least 35 new stores in 2025 and is focused on enhancing its offerings and customer engagement [14][22] - A significant move to self-distribute fresh meat and seafood through distribution centers is expected to enhance product control and freshness [7][21] - The company is committed to its differentiation strategy, focusing on health-driven products such as organic, gluten-free, and vegan options [18][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties in the macro environment while focusing on long-term sustainable earnings growth [15][25] - For 2025, the company expects total sales growth of 12% to 14% and comparable sales growth of 5.5% to 7.5% [13][14] - Management noted that customer engagement remains strong, with expectations for continued solid performance in the second quarter [14][15] Other Important Information - The company generated $299 million in operating cash flow and returned $219 million to shareholders through share repurchases [12] - The company has a strong balance sheet, ending the quarter with $286 million in cash and cash equivalents [12] Q&A Session Summary Question: How is the company thinking about potential reinvestment given the decelerating trend in comp outlook? - The company is investing in loyalty, supply chain systems, IT, and self-distribution, similar to last year's investment levels [28] Question: Is the broader trend towards health and wellness becoming too hard for other retailers to ignore? - The company remains focused on maximizing offerings for health enthusiast customers and believes there is still significant room for growth in its target market [30][32] Question: Any surprises in new store performance? - New stores are performing well, with strong comps from recent openings [35][36] Question: How is the loyalty program performing? - The loyalty program is showing positive results, with good uptake on sign-ups and scans [40] Question: What is the cadence of comp momentum throughout the quarter? - The cadence was steady, with no significant changes in consumer behavior noted [67] Question: Can Sprouts achieve double-digit EBITDA margins long-term? - The company aspires to improve its business and maintain stable margins, with opportunities for further improvement [104][106] Question: Are there any impacts from supply constraints? - Supply constraints were noted in fresh products and eggs, but the company is working to improve inventory levels [114][115]

SPROUTS FARMERS MARKET Investor Deck April 2025 Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the "Company") or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other simil ...

Financial Performance - Net sales for the thirteen weeks ended March 30, 2025, were $2.24 billion, a 19% increase from $1.88 billion for the same period in 2024 [71]. - The company's net income for the thirteen weeks ended March 30, 2025, was $180.03 million, compared to $114.10 million for the same period in 2024, representing a 58% increase [67]. - Basic net income per share increased to $1.83 for the thirteen weeks ended March 30, 2025, up from $1.13 in the prior year [67]. - The company reported that perishables accounted for 56.8% of net sales, totaling $1.27 billion, while non-perishables made up 43.2%, totaling $966.70 million [73]. Tax and Liabilities - The effective tax rate decreased to 20.8% for the thirteen weeks ended March 30, 2025, compared to 22.6% for the same period in 2024, primarily due to an increase in benefits from stock-based compensation [56]. - The Company recognized an income tax effect of $12.8 million from excess tax benefits of share-based payment awards for the thirteen weeks ended March 30, 2025 [56]. - The Company reported a beginning balance of gift card liabilities of $11,071,000 as of March 30, 2025, with an ending balance of $9,497,000 after recognizing $2,703,000 in revenue from the beginning liability [28]. Debt and Credit Agreement - As of March 30, 2025, the Company had no outstanding debt under its $700.0 million Credit Agreement, having made principal payments of $125.0 million during 2024 [52]. - The Company has a maximum total net leverage ratio requirement of 3.75 to 1.00 under the Credit Agreement, which it was in compliance with as of March 30, 2025 [54][55]. - Letters of credit totaling $21.6 million have been issued under the Credit Agreement as of March 30, 2025, primarily to support the Company's insurance programs [44]. - The Company capitalized debt issuance costs of $3.4 million related to the Credit Agreement, which are being amortized over the five-year term [43]. - As of March 30, 2025, the Company had no outstanding borrowings under its Credit Agreement, which bears interest based on SOFR [138]. Share Repurchase - The company authorized a $600 million share repurchase program on May 22, 2024, replacing the previous program with $231.76 million available for future repurchases [62]. - For the thirteen weeks ended March 30, 2025, the company repurchased 1,568,017 shares at an average price of $140.68, totaling $220.59 million [63]. - The company repurchased an additional 0.3 million shares for $53 million from March 30, 2025, to April 28, 2025 [65]. Compensation and Stock Options - Share-based compensation expense for the thirteen weeks ended March 30, 2025, was $6.66 million, slightly up from $6.48 million in the prior year [87]. - As of March 30, 2025, the company had 1.15 million options and 0.31 million PSAs outstanding, with total unrecognized compensation expense of $64.19 million [87]. Operational Insights - The company operates one reportable segment, healthy grocery stores, deriving all revenues from product sales across the United States [68]. - The Company's goodwill balance was $381.8 million as of March 30, 2025, with no accumulated goodwill impairment losses [88]. - No stores were closed during the thirteen weeks ended March 30, 2025 [89]. - The Company does not have any material contract assets or receivables from contracts with customers as of March 30, 2025 [29]. - The Company expects the recently issued accounting pronouncement on income tax disclosures to impact its disclosures but not its results of operations or financial condition [31]. Restricted Cash - Restricted cash related to the Company's defined benefit plan and other liabilities amounted to $2.1 million as of March 30, 2025 [30].

PHOENIX, Ariz. – (Business Wire) – April 30, 2025 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week first quarter ended March 30, 2025. "We are delighted with Sprouts' strong start to 2025," said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "These results highlight the effectiveness of our differentiated strategy and excellent execution. Our team members bring knowledge and passion for healthy eating to our core customers every day, and we remain confid ...

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Core Viewpoint - Sprouts Farmers Market, Inc. (SFM) is set to announce its first-quarter 2025 earnings results, and investors are evaluating whether to add, hold, or sell the stock based on its potential performance [1] Financial Performance Expectations - The Zacks Consensus Estimate for first-quarter revenues is $2,191 million, reflecting a 16.3% increase from the previous year [3] - The earnings consensus estimate has risen to $1.54 per share, indicating a 37.5% year-over-year increase [3] - Sprouts Farmers has a trailing four-quarter earnings surprise of 15.1%, with an 8.2% beat in the last reported quarter [4] Earnings Prediction Model - The Zacks model predicts an earnings beat for Sprouts Farmers, supported by a positive Earnings ESP of +1.23% and a Zacks Rank of 2 (Buy) [5][6] Growth Drivers - The company is focusing on product innovation, technology, and competitive pricing, which are expected to positively impact sales [7] - Comparable store sales growth is anticipated to be 10.5% for the quarter [8] - E-commerce sales grew by 37% in the fourth quarter of 2024, indicating strong digital infrastructure and consumer preference for online shopping [10] Stock Performance - Sprouts Farmers' stock has surged 157.1% over the past year, outperforming the industry growth of 69.2% [11] - Compared to peers, Sprouts Farmers has significantly outperformed companies like Farmer Bros. Co. and SpartanNash Company [11] Valuation Analysis - The company trades at a forward 12-month price-to-sales (P/S) ratio of 1.87, which is higher than the industry average of 0.26 and the S&P 500's 4.78 [12] - This premium valuation suggests that investors may be paying more relative to anticipated sales growth compared to peers [12][13] Strategic Positioning - Sprouts Farmers' focus on health-conscious consumers, omnichannel capabilities, and strategic expansion plans positions it well for long-term growth [16] - The company is expected to maintain its position in the market, while potential investors should consider the stock's premium valuation [16][17]