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Sprouts Farmers Market, Inc. SFM reported better-than-expected first-quarter 2025 results, wherein the top and bottom lines increased year over year. Decent comparable sales, positive traffic trends, accelerating unit growth and robust e-commerce favorably impacted the quarterly performance. Following the results, management provided an upbeat outlook for 2025.
SFM’s Quarterly Performance: Key Metrics and Insights
The renowned grocery retailer delivered quarterly earnings of $1.81 per share, which beat the Zacks Consensus Estimate of $1.54. The bottom line increased 61.6% from $1.12 reported in the year-ago period. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Net sales of this Phoenix, AZ-based company came in at $2,236.4 million, which beat the Zacks Consensus Estimate of $2,195 million. The metric rose 18.7% 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 11.7% during the quarter under review, better than our estimate of a 10.5% jump. We note that e-commerce sales grew 28% and represented 15% 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
A Sneak Peek Into SFM’s Margins
Gross profit rose 22.7% year over year to $886.4 million in the quarter, while the gross margin expanded 129 basis points to 39.6% from the prior-year quarter, surpassing our expected 50 basis points expansion.
Sprouts Farmers reported operating income of $226.3 million, up from $148.3 million reported in the year-ago period. The operating margin expanded 220 basis points to 10.1%. We had envisioned an operating margin expansion of 140 basis points for the quarter under discussion.
SG&A expenses increased 15.5% year over year to $623.2 million. As a percentage of net sales, the metric leveraged 80 basis points to 27.9%, in sync with our projection.
Sprouts Farmers’ Store Update
During the quarter, Sprouts Farmers opened three new stores, taking the total count to 443 stores in 24 states as of March 30, 2025. It plans to open at least 35 new stores in 2025.
SFM’s Financial Health Snapshot
Sprouts Farmers ended the quarter with cash and cash equivalents of $285.7 million, long-term debt and finance lease liabilities of roughly $6.9 million and stockholders’ equity of $1,288 million. During the quarter, the company repurchased 1.6 million shares for a total investment of $219 million.
Sprouts Farmers generated cash from operations of $299.1 million and spent $49 million on capital expenditures, net of landlord reimbursement, year to date through March 30, 2025.
Management anticipates capital expenditures (net of landlord reimbursements) in the range of $230-$250 million for 2025.