Sprouts Farmers Market, Inc. Q3 FY2025 earnings call

• Delivered strong earnings growth, up 34% year-on-year with a 5.9% comp and strong new store performance. • Customer traffic increased as they engaged with target customers, and differentiated products drove sales. • Inventory management improvements and supply chain efforts expanded EBIT margin. • Opened 9 new stores, ending the quarter with 464 stores across 24 states. • Launched new wellness bowls priced under $10. • Loyalty program fully launched this week, with encouraging early signs of increased shopping frequency and sales per customer. • Ongoing transition to self-distribution in fresh meat and seafood, with plans to complete by Q2 2026.

In the third quarter, total sales were $2.2 billion, up $255 million or 13% compared to the same period last year. Comparable store sales increased by 5.9%. E-commerce sales grew 21%, representing approximately 15.5% of total sales for the quarter. The Sprouts brand now accounts for more than 25% of total sales. More than 1/3 of sales come from organic products.

• Full-year total sales growth expected to be approximately 14% and comp sales ~7%. • EBIT expected to be between $675 million and $680 million, EPS between $5.24 and $5.28. • Fourth quarter comp sales expected in the range of 0% to 2% and EPS between $0.86 and $0.90. • Plan to open 37 new stores in 2025. • Expect to continue repurchasing shares opportunistically. • Capital expenditures, net of landlord reimbursements, expected to be between $230 million and $250 million.

• Comp sales moderated faster than expected due to challenging year-on-year comparisons and softening consumer. • Consumer softness in certain trade areas and demographics. • Competitive pressures in the market. • Limited impact from SNAP spend, but policy changes and government shutdowns could have potential impacts.

Q: Competitive environment, exposure to SNAP spend?

A: Jack said SNAP spend is a limited impact, around 2%-3% of business.

Q: New store cannibalization and response to shopper caution?

A: Curtis said cannibalization is in the range of 125-150 basis points, and Jack stated new stores are performing well and they're bullish on new store openings despite shopper caution.