We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sprouts Farmers (SFM) Beats on Q2 Earnings, Raises FY23 View
Read MoreHide Full Article
Sprouts Farmers Market, Inc. (SFM - Free Report) came up with second-quarter 2023 results, wherein the top and bottom lines not only increased year over year but also beat their respective Zacks Consensus Estimate. Following the results, management raised the earnings per share view for the full year.
Q2 in Details
The renowned grocery retailer delivered adjusted quarterly earnings of 71 cents a share, which cruised past the Zacks Consensus Estimate of 64 cents. Impressively, the bottom line increased 25% from the 57 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company came in at $1,692.2 million, which came ahead of the Zacks Consensus Estimate of $1,691 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 3.2% during the quarter under review, better than our estimate of a 3% jump, backed by traffic growth and a net increase in the basket due to retail inflation. We note that e-commerce sales grew 16% and represented 12.1% of total sales in the quarter.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
The adjusted gross profit rose 8% year over year to $627.6 million in the quarter. The gross margin expanded approximately 70 basis points to 37.1% from the prior-year quarter. We had expected a 20-basis point increase in the gross margin.
Sprouts Farmers reported an adjusted operating income of $99.7 million, up from the $86.5 million reported in the year-ago period. The adjusted operating margin expanded 50 basis points to 5.9%.
SG&A expenses increased 8% year over year to $498 million due to the addition of new stores and higher e-commerce fees. Excluding the impact of special items, adjusted SG&A expenses totaled $494 million, an increase of $32 million from the year-ago period. We had anticipated a 7.7% increase in SG&A expenses for the quarter under review.
Store Update
During the quarter, Sprouts Farmers opened six new stores and closed 10 stores, thereby taking the total count to 391 stores in 23 states as of Jul 2, 2023. The company plans to open 30 new stores in 2023.
Other Financial Aspects
Sprouts Farmers ended the year with cash and cash equivalents of $259.5 million, long-term debt and finance lease liabilities of roughly $184.2 million and stockholders’ equity of $1,075.2 million.
Sprouts Farmers repurchased 1.4 million shares for a total investment of $50 million in the quarter. As of Jul 2, 2023, the company still has $264 million remaining under the current share repurchase authorization.
Sprouts Farmers generated cash from operations of $295 million and spent $93 million on capital expenditures, net of landlord reimbursement, year to date through Jul 2, 2023. Management anticipates capital expenditures (net of landlord reimbursements) in the range of $190-$210 million for 2023.
Outlook
Sprouts Farmers expects net sales growth of 5-6% and comparable store sales growth of 2-3% in 2023. Management expects the gross margin to be slightly up and anticipates marginal deleverage in SG&A expenses.
The company guided adjusted earnings before interest and taxes between $378 million and $390 million for 2023, up from its prior projection of $370 million to $385 million. It now foresees full-year adjusted earnings in the band of $2.68-$2.76 per share, up from the $2.39 reported in 2022, assuming no additional share repurchases. The company had earlier guided earnings between $2.58 and $2.68 per share.
For the third quarter, Sprouts Farmers expects comparable store sales growth of approximately low single digits and adjusted earnings in the band of 59-63 cents a share compared with 61 cents reported in the year-ago period.
This Zacks Rank #3 (Hold) stock has risen 13.6% in the past six months compared with the industry’s growth of 8%.
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 11.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales suggests growth of 9.3% from the year-ago period. GO has a trailing four-quarter earnings surprise of 13.7%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 4.6% and 12.6%, respectively, from the year-ago reported numbers.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Sprouts Farmers (SFM) Beats on Q2 Earnings, Raises FY23 View
Sprouts Farmers Market, Inc. (SFM - Free Report) came up with second-quarter 2023 results, wherein the top and bottom lines not only increased year over year but also beat their respective Zacks Consensus Estimate. Following the results, management raised the earnings per share view for the full year.
Q2 in Details
The renowned grocery retailer delivered adjusted quarterly earnings of 71 cents a share, which cruised past the Zacks Consensus Estimate of 64 cents. Impressively, the bottom line increased 25% from the 57 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company came in at $1,692.2 million, which came ahead of the Zacks Consensus Estimate of $1,691 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 3.2% during the quarter under review, better than our estimate of a 3% jump, backed by traffic growth and a net increase in the basket due to retail inflation. We note that e-commerce sales grew 16% and represented 12.1% of total sales in the quarter.
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 adjusted gross profit rose 8% year over year to $627.6 million in the quarter. The gross margin expanded approximately 70 basis points to 37.1% from the prior-year quarter. We had expected a 20-basis point increase in the gross margin.
Sprouts Farmers reported an adjusted operating income of $99.7 million, up from the $86.5 million reported in the year-ago period. The adjusted operating margin expanded 50 basis points to 5.9%.
SG&A expenses increased 8% year over year to $498 million due to the addition of new stores and higher e-commerce fees. Excluding the impact of special items, adjusted SG&A expenses totaled $494 million, an increase of $32 million from the year-ago period. We had anticipated a 7.7% increase in SG&A expenses for the quarter under review.
Store Update
During the quarter, Sprouts Farmers opened six new stores and closed 10 stores, thereby taking the total count to 391 stores in 23 states as of Jul 2, 2023. The company plans to open 30 new stores in 2023.
Other Financial Aspects
Sprouts Farmers ended the year with cash and cash equivalents of $259.5 million, long-term debt and finance lease liabilities of roughly $184.2 million and stockholders’ equity of $1,075.2 million.
Sprouts Farmers repurchased 1.4 million shares for a total investment of $50 million in the quarter. As of Jul 2, 2023, the company still has $264 million remaining under the current share repurchase authorization.
Sprouts Farmers generated cash from operations of $295 million and spent $93 million on capital expenditures, net of landlord reimbursement, year to date through Jul 2, 2023. Management anticipates capital expenditures (net of landlord reimbursements) in the range of $190-$210 million for 2023.
Outlook
Sprouts Farmers expects net sales growth of 5-6% and comparable store sales growth of 2-3% in 2023. Management expects the gross margin to be slightly up and anticipates marginal deleverage in SG&A expenses.
The company guided adjusted earnings before interest and taxes between $378 million and $390 million for 2023, up from its prior projection of $370 million to $385 million. It now foresees full-year adjusted earnings in the band of $2.68-$2.76 per share, up from the $2.39 reported in 2022, assuming no additional share repurchases. The company had earlier guided earnings between $2.58 and $2.68 per share.
For the third quarter, Sprouts Farmers expects comparable store sales growth of approximately low single digits and adjusted earnings in the band of 59-63 cents a share compared with 61 cents reported in the year-ago period.
This Zacks Rank #3 (Hold) stock has risen 13.6% in the past six months compared with the industry’s growth of 8%.
3 Stocks Looking Red Hot
Here we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 11.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales suggests growth of 9.3% from the year-ago period. GO has a trailing four-quarter earnings surprise of 13.7%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 4.6% and 12.6%, respectively, from the year-ago reported numbers.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.