Sprouts Farmers Market(US:SFM)2024-10-30 20:08Financial Position - The Company reported an ending balance of gift card liabilities of $8,640,000 as of September 29, 2024, down from $10,906,000 on October 1, 2023[22]. - The Company had long-term debt of $125,000,000 as of December 31, 2023, which was fully paid down by September 29, 2024[44]. - The Company had restricted cash of $2,100,000 related to its defined benefit plan and other liabilities as of September 29, 2024[24]. - The Company made principal payments of $125,000,000 during the thirteen weeks ended September 29, 2024, resulting in no outstanding debt under the Credit Agreement[44]. - The Company issued letters of credit totaling $19,600,000 under its Credit Agreement as of September 29, 2024[37]. - The company had no long-term debt outstanding as of September 29, 2024, compared to $125.0 million as of December 31, 2023[132]. Revenue and Sales Performance - The Company recognized revenue from gift cards of $3,825,000 during the thirty-nine weeks ended September 29, 2024[22]. - Net sales for the thirteen weeks ended September 29, 2024, were $1,945.7 million, a 13.5% increase from $1,713.3 million in the same period of 2023[64]. - Net sales for the thirteen weeks ended September 29, 2024, totaled $1.9 billion, an increase of $232.5 million or 14% compared to the same period in 2023[89]. - Total net sales for the thirty-nine weeks ended September 29, 2024, reached $5.72 billion, an increase of $584.2 million or 11% year-over-year[108]. - Net sales increased by $584.2 million, or 11%, to $5.7 billion for the thirty-nine weeks ended September 29, 2024, compared to $5.1 billion for the same period in 2023[109]. - Comparable store sales growth was 8.4% for the thirteen weeks ended September 29, 2024, compared to 3.9% for the same period in 2023[92]. - Comparable store sales growth was 6.4% for the thirty-nine weeks ended September 29, 2024, compared to 3.4% in the prior year[107]. Profitability - Basic net income per share for the thirteen weeks ended September 29, 2024, was $0.91, up from $0.64 in the same period of 2023[60]. - Diluted net income per share for the thirty-nine weeks ended September 29, 2024, was $2.97, compared to $2.01 for the same period in 2023[60]. - Net income for the thirteen weeks ended September 29, 2024, was $91.6 million, a 40% increase from $65.3 million in the prior year[103]. - Net income for the thirty-nine weeks ended September 29, 2024, was $301.0 million, an increase of $92.2 million, or 44%, compared to $208.8 million for the same period in 2023[116]. - Gross profit increased by $115.5 million or 18% to $740.9 million, with a gross margin of 38.1%, up from 36.5%[95]. - Gross profit rose by $280.1 million, or 15%, to $2.2 billion, with a gross margin improvement to 38.1% from 37.0% due to better inventory management and promotional optimization[109]. Expenses - Selling, general and administrative expenses rose by $77.5 million or 15%, primarily due to new store openings and higher incentive compensation costs[96]. - Selling, general and administrative expenses increased by $189.5 million, or 13%, to $1.7 billion, representing 29.3% of net sales, driven by new store openings and higher incentive compensation costs[110]. - Share-based compensation expense for the thirteen weeks ended September 29, 2024, was $6.7 million, up from $5.3 million in the same period in 2023[76]. - Total unrecognized compensation expense related to outstanding share-based awards was $35.7 million as of September 29, 2024[78]. - Depreciation and amortization expenses were $34.4 million, up from $31.8 million, reflecting costs associated with new stores and remodel initiatives[98]. - Store closure and other costs were $3.7 million, an increase of 18% compared to the prior year, primarily related to ongoing occupancy costs[99]. Taxation - The effective tax rate increased to 25.8% for the thirteen weeks ended September 29, 2024, compared to 24.0% for the same period in 2023[49]. - For the thirty-nine weeks ended September 29, 2024, the effective tax rate was 24.5%, up from 24.0% in the prior year[50]. - The effective tax rate increased to 25.8% from 24.0% due to higher non-deductible executive compensation and unfavorable true-up adjustments[102]. - The effective tax rate increased to 24.5% from 24.0% due to unfavorable true-up adjustments and increased pre-tax income[115]. Shareholder Activities - The company repurchased 264,135 shares at an average price of $96.60 for a total cost of $25.5 million during the thirteen weeks ended September 29, 2024[56]. - For the thirty-nine weeks ended September 29, 2024, the company repurchased 1,861,453 shares at an average price of $70.22, totaling $130.7 million[56]. - The share repurchase program authorized by the board includes a total of $600,000, with $480,715 spent as of September 29, 2024[133]. - A total of 1,861,453 common shares were repurchased at an average price of $70.22 during the thirty-nine weeks ended September 29, 2024[134]. - The company repurchased an additional 0.1 million shares for $5.6 million subsequent to September 29, 2024[135]. Operational Highlights - The company opened 9 new stores during the thirteen weeks ended September 29, 2024, bringing the total store count to 428[92]. - The company aims for approximately 10% annual unit growth through geographic store expansion and new store placements[88]. - The company incurred a charge of $27.8 million related to the closure of 11 underperforming stores during the thirty-nine weeks ended October 1, 2023[81]. - The acquisition of Ronald Cohn, Inc. in March 2023 involved an aggregate consideration of $31.1 million, including $18.1 million in common shares and $13.0 million in cash[82]. Cash Flow - Cash flows from operating activities improved to $520.4 million for the thirty-nine weeks ended September 29, 2024, compared to $409.0 million for the same period in 2023[124]. - Cash flows from operating activities increased by $111.4 million to $520.4 million for the thirty-nine weeks ended September 29, 2024, compared to $409.0 million for the same period in 2023[126]. - Cash flows from changes in working capital were $114.2 million for the thirty-nine weeks ended September 29, 2024, up from $70.8 million in the prior year, reflecting a $20.2 million change in accounts receivable and a $17.0 million change in accounts payable[127]. - Cash flows used in investing activities decreased to $161.7 million for the thirty-nine weeks ended September 29, 2024, from $178.0 million in the same period in 2023[128]. - Cash flows used in financing activities were $250.8 million for the thirty-nine weeks ended September 29, 2024, compared to $272.3 million for the same period in 2023[130]. Other Considerations - The Company expects new accounting pronouncements to impact its segment disclosures but does not anticipate any material impact on its financial condition[25][27]. - Inflation and deflation in food prices may impact sales and profitability, but the company does not expect a material impact on its long-term business strategy[138]. - Return on Invested Capital (ROIC) improved to 14.2% for the trailing four quarters ended September 29, 2024, compared to 12.9% for the prior year[122].