Sprouts Farmers Q4 Earnings & Sales Beat Estimates, Comp Sales Rise

Core Insights - Sprouts Farmers Market, Inc. (SFM) reported strong fourth-quarter 2024 results, with both revenue and earnings exceeding expectations and showing significant year-over-year growth [1][4][5]. Financial Performance - The company achieved earnings of 79 cents per share, surpassing the Zacks Consensus Estimate of 73 cents, marking a 61.2% increase from 49 cents in the previous year [4]. - Net sales reached $1,996.2 million, exceeding the Zacks Consensus Estimate of $1,957 million, and reflecting a 17.5% year-over-year increase driven by new store openings and improved comparable store sales [5]. - Comparable store sales rose by 11.5%, outperforming the anticipated 9% growth, with e-commerce sales growing by 37%, accounting for 14.5% of total sales [6]. Margin and Profitability - Adjusted gross profit increased by 22.5% year over year to $759.9 million, with the adjusted gross margin expanding by 160 basis points to 38.1% [7]. - Adjusted EBITDA was reported at $142.7 million, a 37.8% increase from $103.6 million in the prior year, with the adjusted EBITDA margin improving by 110 basis points to 7.2% [8]. Operating Expenses - SG&A expenses rose by 19.7% year over year to $614.9 million, but as a percentage of net sales, it decreased by 60 basis points to 30.8% [9]. Store Expansion - During the quarter, Sprouts Farmers opened 12 new stores, bringing the total to 440 stores across 24 states, with plans to open approximately 35 additional stores in 2025 [10]. Financial Health - As of the end of the quarter, the company had cash and cash equivalents of $265.2 million, long-term debt of approximately $7.2 million, and stockholders' equity of $1.32 billion [11]. Share Repurchase and Capital Expenditures - In 2024, the company initiated a $600 million share repurchase program, repurchasing 2.7 million shares for a total of $238 million, and generated $645 million in operating cash flow [12]. Future Outlook - For the first quarter of 2025, the company anticipates comparable store sales growth of 10-11% and adjusted earnings per share between $1.51 and $1.55, with a gross margin improvement of approximately 50 basis points [15]. - For the full year 2025, net sales growth is expected to be between 10.5% and 12.5%, with adjusted earnings per share projected to range from $4.52 to $4.68, up from $2.84 in 2024 [16].