Sprouts Farmers Market(SFM) - 2026 Q3 - Quarterly Report

Financial Performance - Net sales for the thirteen weeks ended September 28, 2025, were $2,200.43 million, a 13.1% increase from $1,945.74 million for the same period in 2024[85]. - Net income for the thirteen weeks ended September 28, 2025, was $120.1 million, resulting in a basic net income per share of $1.23[80]. - Net income for the thirty-nine weeks ended September 28, 2025, was $433.85 million, up 44.1% from $300.99 million for the same period in 2024[85]. - For the thirty-nine weeks ended September 28, 2025, the total cost of common shares acquired was $344.9 million, with an average price of $143.76 per share[75]. - Perishable product sales for the thirty-nine weeks ended September 28, 2025, were $3,806.84 million, representing 57.2% of total net sales[87]. Debt and Liabilities - The Company has a total long-term debt and other finance obligations of $53,423,000 as of September 28, 2025, up from $7,248,000 as of December 29, 2024[44]. - The Company reported an ending balance of $11,920,000 in gift card and loyalty program liabilities as of September 28, 2025, compared to $8,640,000 as of September 29, 2024, reflecting an increase of 38.5%[29]. - The Company had no outstanding debt under the Credit Agreement as of September 28, 2025, following principal payments of $125,000,000 made during 2024[56]. - The Company is required to maintain a maximum total net leverage ratio not to exceed 3.75 to 1.00 and a minimum interest coverage ratio of not less than 3.00 to 1.00[60]. Taxation - The effective tax rate decreased to 24.0% for the thirteen weeks ended September 28, 2025, down from 25.8% for the same period in 2024, primarily due to a benefit from transferable tax credits[63]. - For the thirty-nine weeks ended September 28, 2025, the effective tax rate was 23.2%, a decrease from 24.5% in the prior year, attributed to increased benefits from stock-based compensation[64]. - The Company executed agreements to purchase transferable federal tax credits estimated at $63 million during the thirty-nine weeks ended September 28, 2025, which will reduce federal income taxes payable[69]. Shareholder Actions - A new $1 billion share repurchase program was authorized on August 13, 2025, replacing a previous $600 million program[72]. - The Company repurchased 364,852 shares at an average price of $137.49 for a total cost of $50.2 million during the thirteen weeks ended September 28, 2025[75]. - The company granted a total of 185,561 RSUs and options under the 2022 Incentive Plan during the thirty-nine weeks ended September 28, 2025[90]. - The total unrecognized compensation expense related to outstanding share-based awards was $47.56 million as of September 28, 2025[100]. Customer Programs - The Company implemented a customer loyalty program in July 2025, allowing customers to earn points on qualifying purchases, which are accounted for as a separate performance obligation[28]. - The Company recognized revenue of $3,978,000 from the beginning liability of gift cards and loyalty points during the thirty-nine weeks ended September 28, 2025[29]. Corporate Developments - The Company executed a real estate lease for a new corporate headquarters with total non-cancellable lease payments of $110.0 million over an initial term of 10 years[62]. - The Company is currently involved in litigation with Harvest Sherwood Food Distributors, which filed for Chapter 11 bankruptcy, and the outcome remains uncertain[71]. - The company did not close any stores during the thirty-nine weeks ended September 28, 2025[103]. Other Financial Information - The Company’s restricted cash related to healthcare and liability plans was $3,100,000 as of September 28, 2025[31]. - The Company capitalized debt issuance costs of $1,600,000 related to the new Credit Agreement, which will be amortized over the five-year term[46]. - The Company executed letters of credit totaling $23,100,000 under the new Credit Agreement as of September 28, 2025, primarily to support its insurance programs[47]. - The company's goodwill balance was $381.8 million as of September 28, 2025, with no accumulated goodwill impairment losses[102].