Sprouts Farmers Market, Inc.
For the period ended Sep 28, 2025. Filed Oct 29, 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.
Sep 28, 2025 · Filed Oct 29, 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 2025-06-29; filed 2025-07-30.
0001575515-25-000222
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-28; filed 2025-10-29.
0001575515-25-000237
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 100 previous paragraphs and 99 current paragraphs.
64 unchanged; 32 reworded; 3 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 26 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 (3)
Current report
On September 3, 2025, we entered into a Distribution Agreement (the “Agreement”) with KeHE Distributors, LLC (“KeHE”), our primary distributor of dry grocery and frozen food products. The Agreement has a ten-year term and replaces our prior distribution agreement dated July 18, 2018 with KeHE. The Agreement includes terms relating to KeHE’s distribution of products to us, including product pricing, service level arrangements, product management and distribution procedures, and other ordinary course operational terms governing our distribution relationship with KeHE. The Agreement is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q.
Current report
Results of Operations for Thirty-nine Weeks Ended September 28, 2025 and September 29, 2024
Current report
Comparison of Thirty-nine Weeks Ended September 28, 2025 to Thirty-nine Weeks Ended September 29, 2024
Removed paragraphs (4)
Previous 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.
Previous report
Results of Operations for Twenty-six Weeks Ended June 29, 2025 and June 30, 2024
Previous report
Comparison of Twenty-six Weeks Ended June 29, 2025 to Twenty-six Weeks Ended June 30, 2024
Previous report
(2)Special items related to store closure and supply chain transition, net of tax.
Reworded paragraphs (32)
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 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.
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 464 stores in 24 statesas of September 28, 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 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.
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 September 28, 2025, we have opened 99 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 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.
Current wording
•Invest in Technology for Scalable 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 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.
Current wording
Net sales during the thirteen weeks ended September 28, 2025 totaled $2.2 billion, an increase of $254.7 million, or 13%, compared to the thirteen weeks ended September 29, 2024. The sales increase was driven by sales from new stores opened in the last twelve months and a 5.9% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirteen weeks ended September 28, 2025 and approximately 94% of total sales for the thirteen weeks ended September 29, 2024.
Previous 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.
Current wording
Gross profit totaled $851.1 million during the thirteen weeks ended September 28, 2025, an increase of $110.1 million, or 15%, compared to the thirteen weeks ended September 29, 2024, driven by increased sales volume. Gross margin increased by 0.6% to 38.7% for the thirteen weeks ended September 28, 2025, compared to 38.1% for the thirteen weeks ended September 29, 2024, primarily driven by improved shrink.
Previous 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.
Current wording
Selling, general and administrative expenses increased $73.0 million, or 13%, compared to the thirteen weeks ended September 29, 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 lower compensation expense, which was partially offset by increased benefit costs and pressure from our new store growth.
Previous 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.
Current wording
Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $38.9 million for the thirteen weeks ended September 28, 2025, compared to $34.4 million for the thirteen weeks ended September 29, 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 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.
Current wording
Store closure and other costs, net decreased $2.3 million to $1.5 million for the thirteen weeks ended September 28, 2025, compared to $3.7 million for the thirteen weeks ended September 29, 2024. Store closure and other costs, net primarily consists of ongoing occupancy costs associated with our closed store locations as well as one-time costs associated with disaster recovery activity. See Note 12, “Store Closures” of our unaudited consolidated financial statements.
Previous 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.
Current wording
The decrease in interest income, net for the thirteen weeks ended September 28, 2025 compared to the thirteen weeks ended September 29, 2024 was primarily due to lower average debt outstanding. See Note 4, “Long-Term Debt and Other Finance Obligations” of our unaudited consolidated financial statements.
Previous 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.
Current wording
The effective tax rate decreased to 24.0% for the thirteen weeks ended September 28, 2025 from 25.8% for the thirteen weeks ended September 29, 2024. The decrease in the effective tax rate was primarily due to benefit in the current quarter for purchase discount for transferable tax credits and a favorable return-to-provision adjustment in the current year compared to an unfavorable adjustment in the prior year partially offset by a reduction in the benefit for stock-based compensation in the current year.
Previous 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.
Current wording
Net income increased $28.5 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 $0.41 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 $0.31 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
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 wording
Net sales during the thirty-nine weeks ended September 28, 2025 totaled $6.7 billion, an increase of $934.4 million, or 16%, 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 9.3% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirty-nine weeks ended September 28, 2025 and approximately 94% of total sales for the thirty-nine weeks ended September 29, 2024.
Previous wording
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 wording
Gross profit totaled $2.6 billion during the thirty-nine weeks ended September 28, 2025, an increase of $418.4 million, or 19%, compared to the thirty-nine weeks ended September 29, 2024, driven by increased sales volume. Gross margin increased to 39.1% for the thirty-nine weeks ended September 28, 2025, compared to 38.1% for the thirty-nine weeks ended September 29, 2024, due to improved inventory management and continued promotional optimization efforts as well as leverage on our supply chain from higher sales.
Previous wording
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 wording
Selling, general and administrative expenses increased by $245.2 million, or 15%, compared to the thirty-nine weeks ended September 29, 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.
Previous wording
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 wording
Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $110.6 million for the thirty-nine weeks ended September 28, 2025, compared to $98.1 million for the thirty-nine weeks ended September 29, 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.
Previous wording
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 wording
Store closure and other costs, net decreased $4.3 million to $4.7 million, compared to $9.0 million for the thirty-nine weeks ended September 29, 2024. Store closure and other costs, net primarily consists of ongoing occupancy costs associated with our closed store locations as well as one-time costs associated with disaster recovery activity.
Previous wording
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 wording
Interest income, net increased to $2.0 million of income for the thirty-nine weeks ended September 28, 2025, compared to $0.4 million for the thirty-nine weeks ended September 29, 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 Other Finance Obligations” of our unaudited consolidated financial statements.
Previous wording
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 wording
The effective tax rate decreased to 23.2% for the thirty-nine weeks ended September 28, 2025 from 24.5% for the thirty-nine weeks ended September 29, 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 and benefit for purchase discount for transferable tax credits in the current year, partially offset by an increase in the rate detriment in the current year for nondeductible executive compensation, a reduction in the rate benefit for federal employment credits in the current year, and a reduced benefit impact in the current year for enhanced inventory donations in relation to the increase in pre-tax income.
Previous wording
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 wording
Net income increased $132.8 million 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.
Previous wording
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.
Current wording
The increase in diluted earnings per share of $1.41 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
(3)Net of tax amounts are calculated using the normalized effective tax rate for the periods presented.
Current wording
(2)Net of tax amounts are calculated using the normalized effective tax rate for the periods presented.
Previous wording
(4)2025 and 2024 estimated interest on operating leases is calculated by multiplying operating leases by the 7.0% and 7.2% discount rate, respectively, for each lease recorded as rent expense within direct store expense.
Current wording
(3)2025 and 2024 estimated interest on operating leases is calculated by multiplying operating leases by the 7.0% and 7.2% discount rate, respectively, for each lease recorded as rent expense within direct store expense.
Previous wording
(5)Average operating leases represents the average net present value of outstanding lease obligations over the past four trailing quarters.
Current wording
(4)Average operating leases represents the average net present value of outstanding lease obligations over the past four trailing quarters.
Previous 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.
Current wording
Cash flows from operating activities increased $57.1 million to $577.5 million for the thirty-nine weeks ended September 28, 2025 compared to $520.4 million for the thirty-nine weeks ended September 29, 2024. The increase in cash flows from operating activities was primarily a result of higher net income adjusted for non-cash items of $152.5 million partially offset by changes in working capital of $91.0 million and $1.0 million increase in payment on our operating lease liabilities.
Previous 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.
Current wording
Cash flows provided by operating activities from changes in working capital were $23.2 million in the thirty-nine weeks ended September 28, 2025 compared to $114.2 million in the thirty-nine weeks ended September 29, 2024. The $91.0 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) $50.3 million change in inventory related to improving on-shelf availability in certain departments; (ii) $16.7 million change in accounts payable and accrued liabilities primarily due to timing differences of payments for goods and services; (iii) $15.2 million change in accrued salaries and benefits primarily driven by increased corporate bonuses; and (iv) $13.3 million change in prepaid expenses and other current assets primarily driven by lapsing a prepaid income tax position. These decreases were partially offset by a $10.1 million change in accrued income tax. Certain other immaterial items combined to result in an additional $5.6 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 $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.
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 $176.1 million and $161.7 million, for the thirty-nine weeks ended September 28, 2025 and thirty-nine weeks ended September 29, 2024, respectively.
Previous 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 $$2.1 million for payments of excise tax on stock repurchases partially offset by $1.2 million in proceeds from the exercise of stock options.
Current wording
Cash flows used in financing activities were $343.1 million for the thirty-nine weeks ended September 28, 2025 compared to $250.8 million for the thirty-nine weeks ended September 29, 2024. During the thirty-nine weeks ended September 28, 2025, cash flows used in financing activities primarily consisted of $341.9 million for stock repurchases and $$2.1 million for payments of excise tax on stock repurchases partially offset by $1.7 million in proceeds from the exercise of stock options.
Previous 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.
Current wording
During the thirty-nine weeks ended September 29, 2024, cash flows used in financing activities primarily consisted of $125.0 million in payments on our Credit Agreement, $129.7 million for stock repurchases partially offset by $4.7 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), as well as our new credit agreement entered into on July 25, 2025.
Current wording
See Note 4, “Long-Term Debt and Other Finance Obligations” of our unaudited consolidated financial statements for a description of our Credit Agreement and our Former Credit Facility (each as defined therein).
Previous 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.
Current wording
Subsequent to September 28, 2025 and through October 27, 2025, we repurchased an additional 0.1 million shares of common stock for $10.0 million, excluding excise tax.
Previous 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.
Current wording
There have been no substantial changes to these estimates, or the policies related to them during the thirteen and thirty-nine weeks ended September 28, 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.