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Sprouts Farmers Q1 Earnings Top Estimates on New Stores and E-commerce
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Key Takeaways
Sprouts Farmers topped Q1 sales and EPS estimates, aided by strong new-store productivity.
SFM comps fell 1.7%, but e-commerce rose 10% to nearly 16% of sales; private label topped 26%.
Sprouts Farmers opened six stores, entered New York, plans 40 in 2026, and raised EPS outlook.
Sprouts Farmers Market, Inc. (SFM - Free Report) reported first-quarter 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. The company benefited from solid new-store productivity, continued strength in private-label offerings and growth in e-commerce sales despite a challenging consumer backdrop and tough year-over-year comparisons.
SFM’s Sales Mix Leans on Digital and New Stores
Sprouts Farmers reported quarterly earnings of $1.71 per share, surpassing the Zacks Consensus Estimate of $1.67. The bottom line rose from $1.81 in the same period last year.
Net sales of this Phoenix, AZ-based natural and organic grocery retailer were $2,329.2 million, coming marginally ahead of the Zacks Consensus Estimate of $2,326 million. The figure increased 4% year over year, driven by strong new-store contributions, partially offset by lower comparable-store sales.
Comparable store sales declined 1.7% during the quarter, reflecting tough comparisons and a cautious consumer environment. Traffic remained soft, while basket size was modestly positive. We had expected a 2.3% decline in comparable store sales.
E-commerce sales rose 10% and accounted for nearly 16% of total sales, highlighting continued omnichannel momentum. Sprouts’ private-label products also remained a key growth driver, contributing more than 26% of total sales.
Sprouts Farmers leaned into its differentiation playbook, highlighting a robust pipeline of emerging brands and a fast-scaling loyalty program. Management said that it has already launched 1,500 new items this year, reinforcing the chain’s role as a preferred launch partner for health-and-wellness innovation.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
Gross profit increased to $917.3 million from $886.4 million in the year-ago quarter. However, the gross margin contracted 20 basis points to 39.4%, mainly due to loyalty program investments and higher shrink, partially offset by benefits from self-distribution initiatives. We had expected gross margin expansion of 60 basis points.
Operating income came in at $215.3 million, down from $226.3 million last year, while operating margin declined to 9.2% from 10.1% in the prior-year period, in line with our expectations.
SG&A expenses increased 5.7% year over year to $658.8 million. As a percentage of net sales, the metric deleveraged 42 basis points to 28.3% owing to fixed-cost deleverage from lower comparable-store sales, partially offset by cost discipline.
Sprouts Farmers’ Store Update
Sprouts Farmers opened six new stores during the quarter, ending with 483 stores across 25 states, including entry into New York. Management highlighted strong performance from newer stores and a robust pipeline, with plans to open 40-plus new stores in 2026.
The company also made progress in its supply-chain transformation, with self-distribution of meat nearly complete, which is expected to support margins over time.
Sprouts Farmers Keeps Balance Sheet Flexible
Sprouts Farmers’ cash generation continued to support self-funded growth and shareholder returns. Operating cash flow was $235.3 million in the quarter, funding $98 million of capital expenditures (net of landlord reimbursement) while still allowing meaningful buybacks.
The company repurchased 1.9 million shares for $140 million (excluding excise tax) and ended the quarter with $252.2 million in cash and cash equivalents. Sprouts Farmers had no balance on its $600 million revolving credit facility, while long-term debt and other finance obligations stood at $97 million.
SFM Raises 2026 Earnings View, Maintains Sales Outlook
Management maintained its full-year 2026 outlook on a 52-week basis, calling for net sales growth of 4.5% to 6.5% and comparable-store sales between down 1% and up 1%. Earnings before interest and taxes are still expected between $675 million and $695 million, while capital expenditures (net of landlord reimbursements) are projected within $280 million to $310 million.
This Zacks Rank #3 (Hold) company now anticipates full-year earnings between $5.32 and $5.48 per share, up from the prior guided range of $5.28-$5.44, and assumes at least $300 million in share repurchases. For second-quarter 2026, SFM expects comparable store sales in the range of down 2% to flat. Management guided earnings in the band of $1.32-$1.36 per share for the quarter.
Management also reiterated that 2026 will be a 53-week year, with the extra week expected to add about $200 million in sales and 21 cents to earnings per share.
Final Take on SFM
Sprouts Farmers delivered a modest earnings beat in the first quarter, navigating a challenging macro environment and tough comparisons. While near-term pressures persist, particularly on comparable store sales and margins, the company’s strong innovation pipeline, expanding store base and improving operational initiatives position it well for gradual recovery through 2026.
Shares of Sprouts Farmers have risen 6.4% over the past three months against the industry’s decline of 4%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and EPS calls for growth of 5% and 9.5%, respectively, from the year-ago reported numbers.
Post Holdings, Inc. (POST - Free Report) , a consumer-packaged goods holding company, currently carries a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 19.6%, on average.
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS suggests growth of 2.7% and 0.1%, respectively, from the year-ago reported numbers.
Casey's General Stores, Inc. (CASY - Free Report) , a leading convenience store chain in the United States, currently carries a Zacks Rank #2. CASY has a trailing four-quarter earnings surprise of 20%, on average.
The Zacks Consensus Estimate for Casey's current financial-year sales and EPS indicates growth of 8.2% and 24%, respectively, from the year-ago reported numbers.
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Sprouts Farmers Q1 Earnings Top Estimates on New Stores and E-commerce
Key Takeaways
Sprouts Farmers Market, Inc. (SFM - Free Report) reported first-quarter 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. The company benefited from solid new-store productivity, continued strength in private-label offerings and growth in e-commerce sales despite a challenging consumer backdrop and tough year-over-year comparisons.
SFM’s Sales Mix Leans on Digital and New Stores
Sprouts Farmers reported quarterly earnings of $1.71 per share, surpassing the Zacks Consensus Estimate of $1.67. The bottom line rose from $1.81 in the same period last year.
Net sales of this Phoenix, AZ-based natural and organic grocery retailer were $2,329.2 million, coming marginally ahead of the Zacks Consensus Estimate of $2,326 million. The figure increased 4% year over year, driven by strong new-store contributions, partially offset by lower comparable-store sales.
Comparable store sales declined 1.7% during the quarter, reflecting tough comparisons and a cautious consumer environment. Traffic remained soft, while basket size was modestly positive. We had expected a 2.3% decline in comparable store sales.
E-commerce sales rose 10% and accounted for nearly 16% of total sales, highlighting continued omnichannel momentum. Sprouts’ private-label products also remained a key growth driver, contributing more than 26% of total sales.
Sprouts Farmers leaned into its differentiation playbook, highlighting a robust pipeline of emerging brands and a fast-scaling loyalty program. Management said that it has already launched 1,500 new items this year, reinforcing the chain’s role as a preferred launch partner for health-and-wellness innovation.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
Sprouts Farmers Market, Inc. price-consensus-eps-surprise-chart | Sprouts Farmers Market, Inc. Quote
Taking a Sneak Peek Into SFM’s Margins
Gross profit increased to $917.3 million from $886.4 million in the year-ago quarter. However, the gross margin contracted 20 basis points to 39.4%, mainly due to loyalty program investments and higher shrink, partially offset by benefits from self-distribution initiatives. We had expected gross margin expansion of 60 basis points.
Operating income came in at $215.3 million, down from $226.3 million last year, while operating margin declined to 9.2% from 10.1% in the prior-year period, in line with our expectations.
SG&A expenses increased 5.7% year over year to $658.8 million. As a percentage of net sales, the metric deleveraged 42 basis points to 28.3% owing to fixed-cost deleverage from lower comparable-store sales, partially offset by cost discipline.
Sprouts Farmers’ Store Update
Sprouts Farmers opened six new stores during the quarter, ending with 483 stores across 25 states, including entry into New York. Management highlighted strong performance from newer stores and a robust pipeline, with plans to open 40-plus new stores in 2026.
The company also made progress in its supply-chain transformation, with self-distribution of meat nearly complete, which is expected to support margins over time.
Sprouts Farmers Keeps Balance Sheet Flexible
Sprouts Farmers’ cash generation continued to support self-funded growth and shareholder returns. Operating cash flow was $235.3 million in the quarter, funding $98 million of capital expenditures (net of landlord reimbursement) while still allowing meaningful buybacks.
The company repurchased 1.9 million shares for $140 million (excluding excise tax) and ended the quarter with $252.2 million in cash and cash equivalents. Sprouts Farmers had no balance on its $600 million revolving credit facility, while long-term debt and other finance obligations stood at $97 million.
SFM Raises 2026 Earnings View, Maintains Sales Outlook
Management maintained its full-year 2026 outlook on a 52-week basis, calling for net sales growth of 4.5% to 6.5% and comparable-store sales between down 1% and up 1%. Earnings before interest and taxes are still expected between $675 million and $695 million, while capital expenditures (net of landlord reimbursements) are projected within $280 million to $310 million.
This Zacks Rank #3 (Hold) company now anticipates full-year earnings between $5.32 and $5.48 per share, up from the prior guided range of $5.28-$5.44, and assumes at least $300 million in share repurchases. For second-quarter 2026, SFM expects comparable store sales in the range of down 2% to flat. Management guided earnings in the band of $1.32-$1.36 per share for the quarter.
Management also reiterated that 2026 will be a 53-week year, with the extra week expected to add about $200 million in sales and 21 cents to earnings per share.
Final Take on SFM
Sprouts Farmers delivered a modest earnings beat in the first quarter, navigating a challenging macro environment and tough comparisons. While near-term pressures persist, particularly on comparable store sales and margins, the company’s strong innovation pipeline, expanding store base and improving operational initiatives position it well for gradual recovery through 2026.
Shares of Sprouts Farmers have risen 6.4% over the past three months against the industry’s decline of 4%.
Stocks Looking Red Hot
Walmart Inc. (WMT - Free Report) , an omnichannel retailer, currently carries a Zacks Rank #2 (Buy). WMT has a trailing four-quarter earnings surprise of 0.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and EPS calls for growth of 5% and 9.5%, respectively, from the year-ago reported numbers.
Post Holdings, Inc. (POST - Free Report) , a consumer-packaged goods holding company, currently carries a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 19.6%, on average.
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS suggests growth of 2.7% and 0.1%, respectively, from the year-ago reported numbers.
Casey's General Stores, Inc. (CASY - Free Report) , a leading convenience store chain in the United States, currently carries a Zacks Rank #2. CASY has a trailing four-quarter earnings surprise of 20%, on average.
The Zacks Consensus Estimate for Casey's current financial-year sales and EPS indicates growth of 8.2% and 24%, respectively, from the year-ago reported numbers.