Sprouts Farmers Market, Inc.
For the period ended Jun 29, 2025. Filed Jul 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2025 · Filed Jul 30, 2025
SFM$49.10-4.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-30; filed 2025-04-30.
0001575515-25-000178
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-29; filed 2025-07-30.
0001575515-25-000222
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 100 current paragraphs.
55 unchanged; 21 reworded; 15 added; 0 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 15 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Recent Developments
Current report
On July 17, 2025, we entered into a short-term extension agreement of our distribution agreement, dated as of July 18, 2018 with KeHE Distributors, LLC (“KeHE”), our primary distributor of dry grocery and frozen food products, to extend the term of the agreement beyond the July 18, 2025 expiration date, as we and KeHE continue to work to finalize the terms of a long-term agreement.
Current report
Results of Operations for Twenty-six Weeks Ended June 29, 2025 and June 30, 2024
Current report
Comparison of Twenty-six Weeks Ended June 29, 2025 to Twenty-six Weeks Ended June 30, 2024
Current report
Net Sales
Current report
Gross profit totaled $1.7 billion during the twenty-six weeks ended June 29, 2025, an increase of $0.3 billion, or 21%, compared to the twenty-six weeks ended June 30, 2024, driven by increased sales volume. Gross margin increased to 39.2% for the twenty-six weeks ended June 29, 2025, compared to 38.1% for the twenty-six weeks ended June 30, 2024, due to improved inventory management and continued promotional optimization efforts as well as leverage on our supply chain from higher sales.
Current report
Selling, general and administrative expenses
Current report
Depreciation and amortization
Current report
Store closure and other costs, net decreased $2.0 million to $3.2 million, compared to $5.2 million for the twenty-six weeks ended June 30, 2024. Store closure and other costs, net primarily consists of ongoing occupancy costs associated with our closed store locations.
Current report
Interest (income) expense, net
Current report
Interest (income) expense, net decreased to $1.4 million of income for the twenty-six weeks ended June 29, 2025, compared to $0.7 million of expense for the twenty-six weeks ended June 30, 2024 primarily due to lower average debt outstanding and higher interest income earned as a result of higher interest rates. See Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements.
Current report
Income tax provision
Current report
The effective tax rate decreased to 22.9% for the twenty-six weeks ended June 29, 2025 from 23.8% for the twenty-six weeks ended June 30, 2024. The decrease in the effective tax rate was primarily due to an increase in the benefit in the current year for stock-based compensation partially offset by an increase in the rate detriment in the current year for nondeductible executive compensation and a reduction in the rate benefit for federal employment credits in the current year.
Current report
Net income
Current report
Diluted earnings per share
Reworded paragraphs (21)
Previous wording
Sprouts Farmers Market offers a unique specialty grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. We continue to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. From our founding in 2002, we have grown rapidly, significantly increasing our sales, store count and profitability. Headquartered in Phoenix with 443 stores in 24 statesas of March 30, 2025, we are one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States.
Current wording
Sprouts Farmers Market offers a unique specialty grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. We continue to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. From our founding in 2002, we have grown rapidly, significantly increasing our sales, store count and profitability. Headquartered in Phoenix with 455 stores in 24 statesas of June 29, 2025, we are one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States.
Previous wording
•Market Expansion. We are delivering unique smaller stores with expectations of stronger returns, while maintaining the approachable, fresh-focused farmer’s market heritage Sprouts is known for. From 2021 through March 30, 2025, we have opened 78 new stores and remodeled one store featuring our updated format. Our geographic store expansion and new store placement will intersect where our target customers live, in markets with growth potential and supply chain support, which we believe will provide a long runway of approximately 10% annual unit growth.
Current wording
•Market Expansion. We are delivering unique smaller stores with expectations of stronger returns, while maintaining the approachable, fresh-focused farmer’s market heritage Sprouts is known for. From 2021 through June 29, 2025, we have opened 90 new stores and remodeled one store featuring our updated format. Our geographic store expansion and new store placement will intersect where our target customers live, in markets with growth potential and supply chain support, which we believe will provide a long runway of approximately 10% annual unit growth.
Previous wording
•Invest in Technology for Growth. We continue to make investments in technology in support of our strategy, with a focus on enhancing efficiency, scalability, and customer experience. While we are showing positive outcomes on our strategic investments in inventory management and customer personalization, we believe that ongoing investments in our technology foundation will allow us to streamline operations and improve decision making to execute on our strategy.
Current wording
•Invest in Technology for Scaleable Growth. We continue to make investments in technology in support of our strategy, with a focus on enhancing efficiency, scalability, and customer experience. While we are showing positive outcomes on our strategic investments in inventory management and customer personalization, we believe that ongoing investments in our technology foundation will allow us to streamline operations and improve decision making to execute on our strategy.
Previous wording
Net sales during the thirteen weeks ended March 30, 2025 totaled $2.2 billion, an increase of $352.6 million or 19%, compared to the thirteen weeks ended March 31, 2024. The sales increase was driven by sales from new stores opened in the last twelve months and a 11.7% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirteen weeks ended March 30, 2025 and approximately 94% of total sales for the thirteen weeks ended March 31, 2024.
Current wording
Net sales during the thirteen weeks ended June 29, 2025 totaled $2.2 billion, an increase of $0.3 billion, or 17%, compared to the thirteen weeks ended June 30, 2024. The sales increase was driven by sales from new stores opened in the last twelve months and a 10.2% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirteen weeks ended June 29, 2025 and approximately 94% of total sales for the thirteen weeks ended June 30, 2024.
Previous wording
Gross profit totaled $886.4 million during the thirteen weeks ended March 30, 2025, an increase of $164.1 million or 23%, compared to the thirteen weeks ended March 31, 2024, driven by increased sales volume. Gross margin increased by 1.3% to 39.6% for the thirteen weeks ended March 30, 2025, compared to 38.3% for the thirteen weeks ended March 31, 2024, primarily driven by improved inventory management.
Current wording
Gross profit totaled $0.9 billion during the thirteen weeks ended June 29, 2025, an increase of $0.1 billion, or 20%, compared to the thirteen weeks ended June 30, 2024, driven by increased sales volume. Gross margin increased by 0.9% to 38.8% for the thirteen weeks ended June 29, 2025, compared to 37.9% for the thirteen weeks ended June 30, 2024, primarily driven by improved inventory management.
Previous wording
Selling, general and administrative expenses increased $83.5 million or 15%, compared to the thirteen weeks ended March 31, 2024. The increase was primarily due to the increase in new stores opened since the comparable period last year. As a percentage of net sales, selling, general and administrative expenses improved slightly as a result of leverage gained from store compensation and occupancy costs.
Current wording
Selling, general and administrative expenses increased $88.8 million, or 16%, compared to the thirteen weeks ended June 30, 2024. The increase was primarily due to the increase in new stores opened since the comparable period last year. As a percentage of net sales, selling, general and administrative expenses improved slightly as a result of leverage gained from store compensation and occupancy costs.
Previous wording
Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $35.1 million for the thirteen weeks ended March 30, 2025, compared to $32.2 million for the thirteen weeks ended March 31, 2024. Depreciation and amortization expense primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment for new stores as well as remodel initiatives in older stores.
Current wording
Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $36.6 million for the thirteen weeks ended June 29, 2025, compared to $31.5 million for the thirteen weeks ended June 30, 2024. Depreciation and amortization expense primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment for new stores as well as remodel initiatives in older stores.
Previous wording
Store closure and other costs, net for the thirteen weeks ended March 30, 2025 of $1.7 million primarily related to disaster recovery charges from the California wildfires as well as ongoing occupancy costs associated with our closed locations. Store closure and other costs, net for the thirteen weeks ended March 31, 2024 of $2.0 million primarily related to ongoing occupancy costs associated with our closed store locations. See Note 12, “Store Closures” of our unaudited consolidated financial statements.
Current wording
Store closure and other costs, net for the thirteen weeks ended June 29, 2025 of $1.5 million primarily related to ongoing occupancy costs associated with exiting leases related to our closed locations. Store closure and other costs, net for the thirteen weeks ended June 30, 2024 of $3.2 million primarily related to ongoing occupancy costs associated with our closed store locations. See Note 12, “Store Closures” of our unaudited consolidated financial statements.
Previous wording
The decrease in interest (income) expense, net for the thirteen weeks ended March 30, 2025 compared to the thirteen weeks ended March 31, 2024 was primarily due to lower average debt outstanding. See Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements.
Current wording
The increase in interest income, net for the thirteen weeks ended June 29, 2025 compared to the thirteen weeks ended June 30, 2024 was primarily due to lower average debt outstanding. See Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements.
Previous wording
The effective tax rate decreased to 20.8% for the thirteen weeks ended March 30, 2025 from 22.6% for the thirteen weeks ended March 31, 2024. The decrease in the effective tax rate was primarily due to an increase in benefit from current year stock-based compensation partially offset by an increase in non-deductible executive compensation.
Current wording
The effective tax rate increased to 25.6% for the thirteen weeks ended June 29, 2025 from 25.2% for the thirteen weeks ended June 30, 2024. The increase in the effective tax rate was primarily due to an increase in non-deductible executive compensation in the current year partially offset by an increase in the benefit for stock-based compensation in the current year.
Previous wording
Net income increased $65.9 million primarily due to higher gross profit, partially offset by higher selling, general and administrative expenses for the reasons discussed above.
Current wording
Net income increased $38.4 million primarily due to higher gross profit, partially offset by higher selling, general and administrative expenses for the reasons discussed above.
Previous wording
The increase in diluted earnings per share of $0.69 was driven by higher net income and fewer diluted shares outstanding compared to the prior year, due primarily to the share repurchase program.
Current wording
The increase in diluted earnings per share of $0.41 was driven by higher net income and fewer diluted shares outstanding compared to the prior year, due primarily to the share repurchase program.
Previous wording
Cash flows from operating activities increased $79.4 million to $299.1 million for the thirteen weeks ended March 30, 2025 compared to $219.7 million for the thirteen weeks ended March 31, 2024. The increase in cash flows from operating activities was primarily a result of higher net income adjusted for non-cash items of $75.3 million and favorable changes in working capital of $9.9 million, partially offset by higher payments on our operating lease liabilities of $4.7 million due to growth.
Current wording
Cash flows from operating activities increased $99.0 million to $410.3 million for the twenty-six weeks ended June 29, 2025 compared to $311.3 million for the twenty-six weeks ended June 30, 2024. The increase in cash flows from operating activities was primarily a result of higher net income adjusted for non-cash items of $121.9 million and a $0.8 million decrease in payment on our operating lease liabilities partially offset by changes in working capital of $20.8 million.
Previous wording
Cash flows provided by operating activities from changes in working capital were $77.9 million in the thirteen weeks ended March 30, 2025 compared to $68.0 million in the thirteen weeks ended March 31, 2024. This $9.9 million increase in cash flows from changes in working capital was primarily attributable to $25.1 million change in accrued income taxes, $13.6 million change in accounts payable and accrued liabilities primarily due to timing differences of payments for goods and services and $2.2 million change in accounts receivable driven by the timing of collections. These increases were partially offset by $14.9 million change in prepaid expenses and other current assets primarily driven by switching from a new prepaid tax position to a net payable position and $12.1 million change in accrued salaries and benefits primarily driven by increased corporate bonuses. Certain other immaterial items combined to result in an additional $4.0 million net increase in cash flows from changes in working capital.
Current wording
Cash flows provided by operating activities from changes in working capital were $15.6 million in the twenty-six weeks ended June 29, 2025 compared to $36.4 million in the twenty-six weeks ended June 30, 2024. The $20.8 million decrease in cash flows from changes in working capital was primarily attributable to the following factors, each of which had a negative impact on working capital: (i) a $14.7 million change in prepaid expenses and other current assets primarily driven by lapsing a prepaid income tax position and (ii) $7.8 million change in accrued salaries and benefits primarily driven by increased corporate bonuses. These decreases were partially offset by a $4.6 million change in accounts payable and accrued liabilities primarily due to timing differences of payments for goods and services. Certain other immaterial items combined to result in an additional $2.9 million net decrease in cash flows from changes in working capital.
Previous wording
Cash flows used in investing activities consist primarily of capital expenditures in new stores, including leasehold improvements and store equipment, capital expenditures to maintain the appearance of our stores, sales enhancing initiatives and other corporate investments as well as cash outlays for acquisitions. Cash flows used in investing activities were $59.5 million and $51.2 million, for the thirteen weeks ended March 30, 2025 and thirteen weeks ended March 31, 2024, respectively.
Current wording
Cash flows used in investing activities consist primarily of capital expenditures in new stores, including leasehold improvements and store equipment, capital expenditures to maintain the appearance of our stores, sales enhancing initiatives and other corporate investments as well as cash outlays for acquisitions. Cash flows used in investing activities were $120.3 million and $108.9 million, for the twenty-six weeks ended June 29, 2025 and twenty-six weeks ended June 30, 2024, respectively.
Previous wording
Cash flows used in financing activities were $219.1 million for the thirteen weeks ended March 30, 2025 compared to $58.0 million for the thirteen weeks ended March 31, 2024. During the thirteen weeks ended March 30, 2025, cash flows used in financing activities primarily consisted of $218.8 million for stock repurchases.
Current wording
Cash flows used in financing activities were $293.7 million for the twenty-six weeks ended June 29, 2025 compared to $226.8 million for the twenty-six weeks ended June 30, 2024. During the twenty-six weeks ended June 29, 2025, cash flows used in financing activities primarily consisted of $292.2 million for stock repurchases and $$2.1 million for payments of excise tax on stock repurchases partially offset by $1.2 million in proceeds from the exercise of stock options.
Previous wording
During the thirteen weeks ended March 31, 2024, cash flows used in financing activities primarily consisted of $60.0 million for stock repurchases, partially offset by $2.3 million in proceeds from the exercise of stock options.
Current wording
During the twenty-six weeks ended June 30, 2024, cash flows used in financing activities primarily consisted of $125.0 million in payments on our Credit Agreement, $104.5 million for stock repurchases partially offset by $3.3 million in proceeds from the exercise of stock options.
Previous wording
See Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements for a description of our Credit Agreement and our Former Credit Facility (each as defined therein).
Current wording
See Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements for a description of our Credit Agreement and our Former Credit Facility (each as defined therein), as well as our new credit agreement entered into on July 25, 2025.
Previous wording
Subsequent to March 30, 2025 and through April 28, 2025, we repurchased an additional 0.3 million shares of common stock for $53.0 million, excluding excise tax.
Current wording
Subsequent to June 29, 2025 and through July 28, 2025, we repurchased an additional 0.1 million shares of common stock for $9.1 million, excluding excise tax.
Previous wording
Our principal contractual obligations and commitments arising in the normal course of business consist of obligations under our Credit Agreement, interest on our Credit Agreement, operating and finance leases, purchase commitments and self-insurance liabilities. Except as otherwise disclosed in Note 4, “Long-Term Debt and Finance Lease Liabilities” of our unaudited consolidated financial statements, there have been no material changes outside the normal course of business as of March 30, 2025 in our contractual obligations and commitments from those reported in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
Current wording
Our principal contractual obligations and commitments arising in the normal course of business consist of obligations under our Credit Agreement, interest on our Credit Agreement, operating and finance leases, purchase commitments and self-insurance liabilities. Except as otherwise disclosed in Note 4, “Long-Term Debt and Finance Lease Liabilities” and Note 6, "Commitments and Contingencies" of our unaudited consolidated financial statements, there have been no material changes outside the normal course of business as of June 29, 2025 in our contractual obligations and commitments from those reported in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
Previous wording
There have been no substantial changes to these estimates, or the policies related to them during the thirteen weeks ended March 30, 2025. For a full discussion of these estimates and policies, see “Critical Accounting Estimates” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
Current wording
There have been no substantial changes to these estimates, or the policies related to them during the thirteen and twenty-six weeks ended June 29, 2025. For a full discussion of these estimates and policies, see “Critical Accounting Estimates” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
The following tables set forth our unaudited results of operations and other operating data for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. All dollar amounts are in thousands, unless otherwise noted.
Current report — wording carried from elsewhere
Net sales during the twenty-six weeks ended June 29, 2025 totaled $4.5 billion, an increase of $0.7 billion, or 18%, over the same period of the prior fiscal year. The sales increase was primarily due to new stores opened in the last twelve months and a 10.9% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the twenty-six weeks ended June 29, 2025 and approximately 94% of total sales for the twenty-six weeks ended June 30, 2024.
Current report — wording carried from elsewhere
Cost of sales and gross profit
Current report — wording carried from elsewhere
Selling, general and administrative expenses increased by $0.2 billion, or 16%, compared to the twenty-six weeks ended June 30, 2024. The increase was primarily driven by the increase in new stores opened since the prior year period. As a percentage of net sales, selling, general and administrative expenses improved as a result of leverage gained from store compensation and occupancy costs.
Current report — wording carried from elsewhere
Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $71.7 million for the twenty-six weeks ended June 29, 2025, compared to $63.7 million for the twenty-six weeks ended June 30, 2024. Depreciation and amortization expenses (exclusive of depreciation included in cost of sales) primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment.
Current report — wording carried from elsewhere
Store closure and other costs, net
Current report — wording carried from elsewhere
Income tax provision differed from the amounts computed by applying the U.S. federal income tax rate to pretax income as a result of the following:
Current report — wording carried from elsewhere
Net income increased $0.1 billion primarily due to higher gross profit and lower store closure and other costs, partially offset by higher selling, general and administrative expenses for the reasons discussed above.
Current report — wording carried from elsewhere
The increase in diluted earnings per share of $1.10 was driven by higher net income and fewer diluted shares outstanding compared to the prior year due primarily to the share repurchase program.