SFM Filings — Sprouts Farmers Market, Inc. - FilingSpy
SFM
Sprouts Farmers Market, Inc.
A specialty grocery chain that sells fresh, natural, and organic foods, with produce front and center in its stores and its own Sprouts Brand products. It grew out of a fruit stand Henry Boney opened in San Diego in 1943; after selling that family chain, the Boney sons launched Sprouts in Chandler, Arizona, in 2002. The name comes from the fresh sprouts the founders wanted to highlight in their produce aisles.
Comparable store sales fell 1.0% as new stores lifted Q2 revenue 4.7% to $2.33B
fell 1.0% in Q2, extending the first sales decline run since 2021. rose 4.7% to $2,325.8M on new stores while rose 1% to $1.37 as buybacks offset a 3.4% drop to $129.2M. The growth story has shifted from comps to store count, with margin pressure from the loyalty program and fuel.
Key takeaways
declined 1.0% in Q2, the second straight quarterly drop after Q1's 1.7% fall, with new stores driving total up 4.7% to $2,325.8M.
fell 3.4% to $129.2M while rose 1% to $1.37, as a 4% lower from repurchases offset the earnings decline.
contracted 0.1 points to 38.7%, pressured by the loyalty program and elevated fuel costs, partially offset by self-distribution benefits and vendor participation.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 5% to $2.3B on new stores, but comparable store sales fell 1.0% and net income declined 3% to $129.2M.
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Total increased 5% to $2.3 billion, driven by new stores opened in the last twelve months, partially offset by a 1.0% decline in .
contracted 0.1 percentage points to 38.7%, pressured by the loyalty program and elevated fuel costs, partially offset by self-distribution benefits and vendor participation.
grew 6% to $682.6M and deleveraged to 29.4% of sales as lower met business investments.
decreased to $369.0M from $410.3M a year earlier, driven by a $72.5M negative swing from timing and bonus payouts.
The company repurchased 2.8M shares for $211.8M year-to-date and carried no borrowings under its .
What changed
Q2 came in at -1.0% versus the flagged watch item of whether Q1's -1.7% would reverse; the decline extended rather than reversed, marking two straight quarterly comp drops for the first time since 2021.
Q2 was 38.7%, down 0.1pt from Q1's 39.4% and below the 38.8% Q2 FY2025 level, confirming the flagged loyalty-program and shrink pressures persisted into the quarter.
New store openings were not stated in this filing against the approximately 10% unit growth target flagged for 2026; the company only cited stores opened in the last twelve months as the driver.
for Q2 was $45.0M, down 10.8% and down 66.5% from Q1's $134.1M, against the $280M–$310M full-year guide and remaining $1B authorization flagged after FY2025.
No remained outstanding and no credit-facility borrowings appeared, consistent with the flagged SOFR exposure watch item carrying no draw as of June 28, 2026.
Risk factors showed no material change from the FY2025 10-K, so the KeHE Distributors 52% purchase concentration and self-distribution completion flagged there carry forward unaltered.
What to watch
Q3 FY2026 — whether the two-quarter decline reverses or extends the first break in the growth run since 2021.
Q3 FY2026 against the 38.7% Q2 level as loyalty program and fuel pressures meet self-distribution cost settlement.
New store openings reported for Q2 and full-year 2026 against the approximately 10% unit growth target as the smaller format scales.
Full-year 2026 against the ~$310M guide and the remaining balance of the $1B authorization after $211.8M year-to-date buybacks.
Selling, general and administrative expenses grew 6% to $682.6 million, deleveraging 0.3 points to 29.4% of sales due to lower and business investments.
rose 1% to $1.37, as a 4% reduction in diluted share count from repurchases more than offset the decline in .
decreased to $369.0 million from $410.3 million, primarily due to a $72.5 million negative swing in driven by timing of and bonus payouts.
The company repurchased 2.8 million shares for $211.8 million year-to-date and expects fiscal 2026 of approximately $310 million.
Quantitative and Qualitative Disclosures About Market Risk
As described in Note 4, “Long-Term Debt and Other Finance Obligations” to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q, our Credit Agreement bears interest at a rate based in part on SOFR (as defined in the Credit Agreement). Ac…
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As described in Note 4, “Long-Term Debt and Other Finance Obligations” to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q, our Credit Agreement bears interest at a rate based in part on SOFR (as defined in the Credit Agreement). Accordingly, we could be exposed to fluctuations in interest rates. As of June 28, 2026, we had no outstanding borrowings under our Credit Agreement.
From time to time, we are a party to legal proceedings, including matters involving personnel and employment issues, product liability, personal injury, intellectual property and other proceedings arising in the ordinary course of business, which have not resulted in any materia…
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From time to time, we are a party to legal proceedings, including matters involving personnel and employment issues, product liability, personal injury, intellectual property and other proceedings arising in the ordinary course of business, which have not resulted in any material losses to date. Although management does not expect that the outcome in these proceedings will have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements of claims that could materially impact our results.
See Note 6, “Commitments and Contingencies” to our unaudited consolidated financial statements for information regarding certain legal proceedings in which we are involved.
Certain factors may have a material adverse effect on our business, financial condition and results of operations. You should carefully consider the risks and uncertainties referenced below, together with all of the other information in this Quarterly Report on Form 10-Q, includ…
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Certain factors may have a material adverse effect on our business, financial condition and results of operations. You should carefully consider the risks and uncertainties referenced below, together with all of the other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes. Any of those risks could materially and adversely affect our business, operating results, financial condition, or prospects and cause the value of our common stock to decline, which could cause you to lose all or part of your investment.
There have been no material changes to the Risk Factors described under “Part I – Item 1A. Risk Factors” in our 2025 Form 10-K.