Sprouts Farmers Market, Inc. (SFM)

Sprouts Farmers Market reported third-quarter 2026 results on 28 October, with net sales of $2.3 billion, up 5 percent from the same quarter in 2025 1. Comparable store sales were down 0.9 percent, and diluted earnings per share were $1.21 against $1.22 a year earlier 1. The Shelby Report described net sales growing on the strength of new stores 5.

The 10-Q says the quarter had headwinds from the cyclospora outbreak, which hurt a number of produce categories, and from an uneven economy that meant lower traffic 2. Transactions fell 3.3 percent while the average transaction rose 2.5 percent, and the outbreak alone took 0.6 percent off comparable sales 2.

Chief executive Jack Sinclair said the company needs to improve its performance and is increasing investments in affordability 1. For the fourth quarter, the company expects comparable store sales down 2.0 percent to 4.0 percent 1. The 10-Q adds that it expects to accelerate affordability investments, which with lower comparable sales could pressure margins 2.

Separately, Chief Technology Officer James Bahrenburg stepped down on 12 October and stays as an advisor through 31 March 2027 4. The open question is how customers respond, which the company says it keeps assessing 2.

Sprouts was founded in 2002 and says it has grown rapidly since, increasing its sales, store count and profitability 3. It added Henry's Farmers Market in 2011, Sunflower Farmers Market in 2012 and Ronald Cohn, Inc. in 2023 through acquisitions 3.

In fiscal 2023 a review of its real estate led to 11 store closures 3. The stores were about 30 percent larger than the current prototype and were underperforming financially 3.

Since 2020 the company has followed a growth strategy that it says lifted its margin structure above the 2019 baseline 2. From 2021 through 2025 it opened 112 new stores, including 33 in fiscal 2024 and 37 in fiscal 2025 3.

In fiscal 2025 net sales rose 14 percent to $8.8 billion, driven by new stores and a 7.3 percent rise in comparable store sales 3. Gross margin, the share of sales left after the cost of goods, rose to 38.8 percent from 38.1 percent on improved shrink and inventory management 3. Net income rose 38 percent to $523.7 million 3.

Also in 2025 the company launched its Sprouts Rewards loyalty program nationwide and began moving meat and seafood to self-distribution 3. On 13 August 2025 its board authorized a new $1 billion share repurchase program 2.

In 2026 growth continued from new stores while sales at existing stores slipped 2. For the first nine months net sales rose 5 percent to $7.0 billion, with comparable store sales down 1.2 percent 2.

What Sprouts sells

Sprouts runs specialty grocery stores with an open layout and fresh produce at the center, offering better-for-you foods such as organic, plant-based and gluten-free products 3. Its departments include packaged groceries, meat, seafood, deli, vitamins and supplements, dairy, bulk items, baked goods, frozen foods, body care, and beer and wine 3.

Perishable foods made up 57.0 percent of 2025 sales and non-perishables 43.0 percent 3.

Sprouts Brand

Sprouts Brand products, available only in its stores, were just over 25 percent of revenue in fiscal 2025 3. The company says its redesign of all Sprouts Brand packaging is substantially complete 3.

Stores, supply chain and people

The company operated 504 stores in 25 states on 27 September 2026, after a record 15 openings in the quarter 1.

At the end of 2025 California had 156 of its 477 stores, with Texas at 60, Florida at 58 and Arizona at 48 3. It leases all of its stores from unaffiliated third parties, usually on an initial term of 10 to 15 years 3.

Six distribution centers served the stores at the end of 2025, and about 80 percent of stores were within 250 miles of one 3. The company had more than 36,000 team members, none under collective bargaining agreements 3.

Suppliers and rivals

KeHE Distributors is the primary supplier of dry grocery and frozen food, about 52 percent of 2025 purchases, and United Natural Foods was a secondary supplier at 12 percent 3. The KeHE relationship continues through 31 July 2035 3.

Its rivals include conventional supermarket chains, warehouse clubs, independent grocers, and natural and organic, specialty, mass and discount food retailers 3.

Current problems

The cyclospora outbreak disrupted produce supply in the third quarter and took 0.6 percent off comparable sales 2. The annual report warns that moving meat and seafood to self-distribution brought short-term challenges, including possible supply disruptions and lost sales 3.

The umbrella, in words

The store brand is Sprouts Brand, and the stores run under the Sprouts Farmers Market name 3. Exhibit 21.1 lists wholly owned subsidiaries, each 100 percent owned, among them Sprouts Farmers Markets Holdings, LLC, SFM Logistics, LLC, Sunflower Farmers Markets, LLC, Henry’s Holdings LLC, Ronald Cohn, Inc. and Greenfield Insurance, LLC 6.

FMR LLC reported owning about 14.1 million (computed) common shares, or 15.0 percent of the class, in its latest Schedule 13G/A 7.

The annual report said more than 40 store openings were planned for fiscal 2026 3. The October outlook calls for 42 net new stores 1. The company also sees a long runway of about 10 percent annual unit growth 3.

For fiscal 2026, leaving out the extra week, the company expects net sales growth of about 4.3 percent, comparable store sales of about negative 1.7 percent and EBIT of about $605 million 1. It expects diluted earnings per share of about $4.80 and capital expenditures, net of landlord reimbursements, of about $310 million 1.

Fiscal 2026 is a 53-week year, and the company estimates the extra week adds about $190 million in sales and $20 million in income before interest and taxes 1. For the fourth quarter it expects diluted earnings per share of $0.47 to $0.51 on a 13-week basis 1.

In the fourth quarter and into fiscal 2027 the company expects to increase and accelerate affordability investments, and it says it may adjust their scale and pace 2. Of the August 2025 repurchase program, $536.8 million remained available on 27 September 2026 2.

Past

Sprouts Farmers Market's revenue grew from $4.0 billion in fiscal 2017 to $8.8 billion in fiscal 2025, up 9% a year, rising in 8 of 9 years with the deepest fall a 6% drop from fiscal 2021 to fiscal 2022; net income was positive in all 10 of those years. Over the three fiscal years to 2025-12-28, the company's diluted share count shrank about 3.3% a year, and dividends and buybacks returned about 49% of its operating cash flow over those three years. Officers and directors filed 66 sales (12 under scheduled 10b5-1 plans) and 2 purchases of their own stock on the open market in the year to 2026-10-05, buying about $440 thousand. The company's filings since 2017 show no warning events: no bankruptcy notice, no debt default notice, no exchange listing notice, no restatement warning, no auditor change, no material cyber incident and no late-report notice. 1

Present

For the fiscal year ended 2025-12-28, Sprouts Farmers Market reported revenue of $8.8 billion and a profit of $524 million. Return on equity was 37 cents of profit for every dollar of shareholders' money; gross profitability was 82 cents per dollar of everything the company owns; leverage was 66 cents owed per dollar of assets; and the share count shrank 2.6% over the year. The company's revenue of $8.8 billion in fiscal 2025 ranks in the top 25% by size among its industry family; a net margin of 5.9% ranks in the top 5%; revenue growth of 11.2% a year over the last three filed years ranks in the top 32%. Chief executive Jack Sinclair has held that title since 2019-06-26, or 7.4 years; the 22 officers and directors filing in the last fifteen months have been on the record a median of 5 years; four officer or director changes were reported on Form 8-K since 2023-11-05, against the 22 people in charge now. 21

Future

The annual report (Form 10-K) for the fiscal year ending 2026-12-28 is due by 2027-02-26. The quarterly report (Form 10-Q) for the quarter ending 2027-03-31 is due by 2027-05-10. Cash of $257 million against no long-term debt tagged leaves 6.2% of its assets as net cash, in the top 14% of its family; cash from operations less capital spending is 5.3% of revenue, in the top 5%; a gross margin of 38.8% places it in the top 15%. Revenue grew 11.2% a year over the last three filed years against 9% over all ten, speeding up in the top 5% of its family; the newest year grew 14.1%; capital spending grew 26.1% a year, in the top 23%. 31

How the company operates

Sprouts Farmers Market is a retail grocery business, classed by the SEC under Retail-Grocery Stores (SIC 5411). In fiscal 2025, revenue came from Perishables at 57% and Non Perishables at 43%. Both product lines grew against the year before. 21

New moves

On 2026-10-28, the company filed a current report (Form 8-K) disclosing results released and investor disclosure under Regulation FD. On 2026-10-14, the company filed a Form 8-K. 4