Sprouts Farmers Market (NASDAQ:SFM) executives told investors the company delivered strong full-year 2025 results but acknowledged a meaningful slowdown in momentum to end the year, setting up what management described as a challenging 2026 as the grocer laps tougher comparisons and responds to a more value-focused customer.
Full-year 2025 results: strong comps and earnings growth
Chief Executive Officer Jack Sinclair said Sprouts delivered “over 7% comp sales growth” in 2025 and “more than 40% earnings per share growth,” citing the strength of its strategy and positioning in health and wellness. He highlighted progress across several initiatives, including new stores that exceeded expectations, the launch of the loyalty program, and an expansion of self-distribution that supported service levels and freshness.
For the year, SG&A totaled $2.6 billion, rising $283 million but delivering 45 basis points of leverage, which management tied mainly to sales leverage from strong comps earlier in the year. Net income was $524 million and diluted EPS was $5.31, up 42% from the prior year.
Q4: sales up 8%, but traffic slightly negative
In the fourth quarter, total sales were $2.1 billion, up 8% year over year, driven by a 1.6% comparable-store sales increase and “strong results from new stores,” Valentine said. He noted that “basket drove our comp,” while “traffic ending slightly negative after a disappointing holiday season and finish to the quarter.”
Sprouts’ differentiated assortment continued to stand out in management’s comments. Valentine said “attribute forward products” grew faster than the core business. E-commerce sales grew 15% and represented about 15.5% of total quarterly sales. Sprouts Brand penetration rose to nearly 26% of Q4 sales.
Quarterly gross margin was 38.0%, down 10 basis points year over year, primarily due to shrink, partly offset by benefits from moving meat to self-distribution. Valentine also said rapid loyalty adoption pressured gross margin in the quarter. SG&A in Q4 was $653 million, up $38 million, and the company posted Q4 net income of $90 million and diluted EPS of $0.92, up 16% year over year.
Customer behavior: value focus, weaker “lower-engaged” shoppers
Sinclair said the macro environment remains “uneven” and consumers are increasingly value-focused. Management framed the current challenge as both a tough comparison and a customer engagement issue, particularly among less frequent shoppers.
Valentine said lapping growth has been “more difficult than we anticipated,” especially among “lower-engaged customers, who are visiting less often and purchasing fewer items as they navigate economic challenges.” In contrast, he said loyalty members are increasing frequency and spend, though Sprouts is still “learning how we can shape customer behavior through loyalty and personalization.”
In response to questions about current trends, Sinclair and Valentine pointed to difficult lapping in the first quarter of 2026 and customer pressures tied to affordability. Valentine noted that year-to-date results were “right at the midpoint of the guide” a little over halfway through the quarter.
President and COO Nick Konat said share of wallet has held “pretty flat,” with only “a little tiny bit of a loss in Q4,” and management said it was not seeing a dramatic shift in the competitive landscape. Instead, the company emphasized the need to support customers through a combination of assortment balance, pricing and promotions, and personalization.
2026 outlook: 53rd week benefit, but muted comps and margin pressure early
Sprouts guided to a 53-week fiscal 2026, with the extra week in Q4. Valentine estimated the 53rd week would add about $200 million in sales, $28 million in EBIT, and $0.21 in diluted EPS.
On a 52-week basis, management expects total sales growth of 4.5% to 6.5% and comparable-store sales between -1% and +1%. For Q1, Sprouts guided comps of -3% to -1% and EPS of $1.66 to $1.70, with Valentine noting year-over-year tax-rate impacts tied to stock-based compensation. Sprouts expects roughly 85 basis points of EBIT margin pressure in Q1 from fixed-cost deleverage and the loyalty program.
For full-year 2026, Sprouts guided EBIT of $675 million to $695 million and EPS of $5.28 to $5.44, including anticipated share repurchases. Valentine said the first half will be challenging as Sprouts laps double-digit comps, with sequential comp improvement expected later in the year.
Strategy updates: stores, loyalty, self-distribution, and affordability
Sprouts ended 2025 with 477 stores in 24 states. Valentine said the pipeline includes more than 140 approved new stores and over 95 executed leases. The company plans to open at least 40 stores in 2026, with openings backloaded: Valentine cited six stores in Q1 and nine in Q2, with the remainder weighted to the second half. Sinclair also noted Sprouts entered a new state “earlier this year” with its first New York store.
On supply chain, Sinclair said the transition to self-distribution for fresh meat is progressing well, with 75% of stores currently serviced from distribution centers. He said the Northern California facility is on track to be fully operational by early Q2, completing the rollout.
Management also discussed ongoing product innovation, including Sprouts’ “foraging” efforts and growth in organic. Sinclair said organic sales mix exceeded 30% of total sales by the end of 2025, and he cited trend areas such as “no seed oils,” gut health, and longevity. Executives said Sprouts Brand has surpassed $2 billion in sales and continues to outperform overall company performance.
Affordability emerged as a central theme in the Q&A. Sinclair said customers are asking Sprouts to “help us a little bit on this affordability,” and he said the company has more capacity than in past years to invest, if needed. Konat said Sprouts does not expect to make a “massive investment,” but will use multiple levers, including adjusting assortment to ensure “access at every price point,” staying “sharp” on produce pricing, ensuring competitiveness on select overlapping items, and using personalization and loyalty to deliver value.
Sprouts also highlighted shareholder returns and investment plans. In 2025, the company generated $716 million in operating cash flow, spent $224 million in net capex, and returned $472 million through repurchases of 4 million shares. Sprouts ended the year with $257 million in cash and said $836 million remained under its $1 billion repurchase authorization. For 2026, Valentine said the company expects to spend at least $300 million on repurchases and has already deployed $100 million year to date.
About Sprouts Farmers Market (NASDAQ:SFM)
Sprouts Farmers Market, Inc (NASDAQ: SFM) is a specialty grocery retailer focused on fresh, natural and organic foods. Headquartered in Phoenix, Arizona, the company operates stores designed to offer an open-market shopping experience, emphasizing quality produce sourced from regional farmers alongside organic pantry staples, dairy, meat and seafood. Sprouts’ product assortment also includes bulk foods, vitamins and supplements, a deli and prepared foods, reflecting its commitment to wellness and affordable healthy living.
Founded in 2002 by members of the Boney family, Sprouts began as a single farmers market in Chandler, Arizona.
