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Sprouts Farmers (SFM) Q4 Earnings Top Estimates, Sales Up Y/Y
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Sprouts Farmers Market, Inc. (SFM - Free Report) saw its shares jump almost 13% on Mar 2 as the company announced solid fourth-quarter 2022 results. The top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Q4 in Detail
The renowned grocery retailer delivered quarterly earnings of 42 cents a share, which cruised past the Zacks Consensus Estimate of 37 cents, marking the 14th straight beat. Impressively, the bottom line increased 31% from 32 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company were $1,576.6 million, which surpassed the Zacks Consensus Estimate of $1,563 million. The metric increased 6% on a year-over-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 2.9% during the quarter under review, backed by a rise in basket because of retail inflation, somewhat negated by a narrow decline in basket items.
We note that e-commerce sales grew 16.5% from the year ago period and formed 11.4% of the company’s total quarterly sales. Deli remained a top performer. The grocery, dairy, frozen and bakery categories continued to depict strength. During the quarter, the company also announced its partnership with DoorDash.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
The gross profit rose from $533.2 million to $572.8 million. The gross margin expanded by approximately 60 basis points to 36.3%, primarily driven by price changes.
Sprouts Farmers reported an operating income of $61.9 million, up from $51.4 million reported in the year-ago period.
Selling, general and administrative (SG&A) expenses increased by $24 million year over year to $473 million driven by new stores, elevated marketing spend, increases in labor costs and higher commodity prices. During the quarter, store closure and other costs related to non-cash store asset impairments amounted to approximately $8 million.
Store Update
During the quarter, SFM opened seven new stores, taking the total count to 386 stores in 23 states as of Jan 1, 2023.
The company plans to open a minimum of 30 new stores in the year 2023. Also, it plans to close 11 stores during the first half of 2023.
Other Financial Aspects
Sprouts Farmers ended the year with cash and cash equivalents of $293 million, long-term debt and finance lease liabilities of roughly $259 million and stockholders’ equity of $1,046.5 million. The company had $700 million in its revolving credit facility as of the quarter end.
Sprouts Farmers repurchased 6.9 million shares for a total investment of $200 million in the year 2022. As of Jan 1, 2023, the company still has $412 million remaining under current share repurchase authorization.
The company generated cash from operations of $371 million and spent $112 million on capital expenditures, net of landlord reimbursement in 2022. Management anticipates capital expenditures (net of landlord reimbursements) in the $210-$230 million band for 2023.
Outlook
Sprouts Farmers announced its guidance for 2023 and envisions net sales growth of 4-6% and comparable store sales to increase in low-single digits. The company expects gross margin to be flat to slightly up. It also anticipates slight SG&A cost deleverage.
It projects adjusted earnings in the band of $2.41 to $2.53 per share for 2023, up from $2.39 reported in 2022. The company also expects adjusted earnings before interest and tax in between $355 million to $370 million.
For the first quarter of 2023, the company expects comparable store sales growth in the range of 1.5% to 2.5% and adjusted earnings in the band of 83-87 cents a share.
This Zacks Rank #4 (Sell) stock has risen 3.1% in the past three months against the industry’s decline of 7.4%.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 7.3% and 8.6%, respectively, from the corresponding year-ago reported figures. COST has a trailing four-quarter earnings surprise of 3.7%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and EPS suggests growth of 12.2% and 13.6%, respectively, from the year-ago corresponding figures. DECK has a trailing four-quarter earnings surprise of 31%, on average.
Kroger, which operates in the thin-margin grocery industry, carries a Zacks Rank of 2 at present. KR’s current financial-year revenues and EPS suggests growth of 7.5% and 12.5%, respectively. KR gave an earnings surprise of 7.3% in the last reported quarter. KR has a trailing four-quarter earnings surprise of 13.4%, on average.
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Sprouts Farmers (SFM) Q4 Earnings Top Estimates, Sales Up Y/Y
Sprouts Farmers Market, Inc. (SFM - Free Report) saw its shares jump almost 13% on Mar 2 as the company announced solid fourth-quarter 2022 results. The top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Q4 in Detail
The renowned grocery retailer delivered quarterly earnings of 42 cents a share, which cruised past the Zacks Consensus Estimate of 37 cents, marking the 14th straight beat. Impressively, the bottom line increased 31% from 32 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company were $1,576.6 million, which surpassed the Zacks Consensus Estimate of $1,563 million. The metric increased 6% on a year-over-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 2.9% during the quarter under review, backed by a rise in basket because of retail inflation, somewhat negated by a narrow decline in basket items.
We note that e-commerce sales grew 16.5% from the year ago period and formed 11.4% of the company’s total quarterly sales. Deli remained a top performer. The grocery, dairy, frozen and bakery categories continued to depict strength. During the quarter, the company also announced its partnership with DoorDash.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
Sprouts Farmers Market, Inc. price-consensus-eps-surprise-chart | Sprouts Farmers Market, Inc. Quote
Margins
The gross profit rose from $533.2 million to $572.8 million. The gross margin expanded by approximately 60 basis points to 36.3%, primarily driven by price changes.
Sprouts Farmers reported an operating income of $61.9 million, up from $51.4 million reported in the year-ago period.
Selling, general and administrative (SG&A) expenses increased by $24 million year over year to $473 million driven by new stores, elevated marketing spend, increases in labor costs and higher commodity prices. During the quarter, store closure and other costs related to non-cash store asset impairments amounted to approximately $8 million.
Store Update
During the quarter, SFM opened seven new stores, taking the total count to 386 stores in 23 states as of Jan 1, 2023.
The company plans to open a minimum of 30 new stores in the year 2023. Also, it plans to close 11 stores during the first half of 2023.
Other Financial Aspects
Sprouts Farmers ended the year with cash and cash equivalents of $293 million, long-term debt and finance lease liabilities of roughly $259 million and stockholders’ equity of $1,046.5 million. The company had $700 million in its revolving credit facility as of the quarter end.
Sprouts Farmers repurchased 6.9 million shares for a total investment of $200 million in the year 2022. As of Jan 1, 2023, the company still has $412 million remaining under current share repurchase authorization.
The company generated cash from operations of $371 million and spent $112 million on capital expenditures, net of landlord reimbursement in 2022. Management anticipates capital expenditures (net of landlord reimbursements) in the $210-$230 million band for 2023.
Outlook
Sprouts Farmers announced its guidance for 2023 and envisions net sales growth of 4-6% and comparable store sales to increase in low-single digits. The company expects gross margin to be flat to slightly up. It also anticipates slight SG&A cost deleverage.
It projects adjusted earnings in the band of $2.41 to $2.53 per share for 2023, up from $2.39 reported in 2022. The company also expects adjusted earnings before interest and tax in between $355 million to $370 million.
For the first quarter of 2023, the company expects comparable store sales growth in the range of 1.5% to 2.5% and adjusted earnings in the band of 83-87 cents a share.
This Zacks Rank #4 (Sell) stock has risen 3.1% in the past three months against the industry’s decline of 7.4%.
Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Costco (COST - Free Report) Deckers (DECK - Free Report) and Kroger (KR - Free Report) .
Costco sells high volumes of foods and general merchandise. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 7.3% and 8.6%, respectively, from the corresponding year-ago reported figures. COST has a trailing four-quarter earnings surprise of 3.7%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. DECK has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and EPS suggests growth of 12.2% and 13.6%, respectively, from the year-ago corresponding figures. DECK has a trailing four-quarter earnings surprise of 31%, on average.
Kroger, which operates in the thin-margin grocery industry, carries a Zacks Rank of 2 at present. KR’s current financial-year revenues and EPS suggests growth of 7.5% and 12.5%, respectively. KR gave an earnings surprise of 7.3% in the last reported quarter. KR has a trailing four-quarter earnings surprise of 13.4%, on average.