Sprouts Farmers Market(SFM) - 2026 Q1 - Quarterly Report

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].