Sprouts Farmers Market, Inc. Reports Third Quarter 2022 Results

PHOENIX, Ariz., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week third quarter ended October 2, 2022.

"We are encouraged by our performance in the third quarter, including total sales growth of 5%, comparable store sales growth of 2.4% and earnings per share growth of 9%," said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "I thank the team for their collaboration and commitment in delivering these results and most importantly, their dedication to helping our customers discover better, healthier eating. We are excited about bringing the holiday season to life in our stores and are well-positioned to benefit from the ongoing health and wellness trends."

Third Quarter Highlights:

  • Net sales totaled $1.6 billion; a 5% increase from the same period in 2021
  • Comparable store sales growth of 2.4%
  • Diluted earnings per share of $0.61; compared to diluted earnings per share of $0.56 in the same period in 2021
  • Opened 1 new store, resulting in 379 stores in 23 states as of October 2, 2022

Leverage and Liquidity in Third Quarter 2022

  • Ended the quarter with $316 million in cash and cash equivalents and a $250 million balance on its $700 million revolving credit facility
  • Repurchased 1.6 million shares of common stock for a total investment of $44 million
  • Generated cash from operations of $307 million and invested $71 million in capital expenditures, net of landlord reimbursement, year-to-date thru October 2, 2022

Fourth Quarter and Full-Year 2022 Outlook

"Due to our strong performance to date, we are raising our full-year outlook," said Chip Molloy, chief financial officer of Sprouts Farmers Market. "We remain focused on controlling the controllable to deliver strong results and create sustainable shareholder value for the long-term.”

The following provides information on our full-year 2022 outlook:

  • Net sales growth: 4.5% - 5.0%
  • Comparable store sales growth: approximately 2%
  • Adjusted diluted earnings per share: $2.32 to $2.36
  • Unit growth: 16 new stores
  • Capital expenditures (net of landlord reimbursements): $120M to $135M

The following provides information on our fourth quarter 2022 outlook:

  • Comparable store sales growth: approximately 2.0%
  • Adjusted diluted earnings per share: $0.35 to $0.39

Third Quarter 2022 Conference Call

Sprouts will hold a conference call at 5 p.m. Eastern Standard Time on Tuesday, November 8, 2022, during which Sprouts executives will further discuss third quarter 2022 financial results.

A webcast of the conference call will be available through Sprouts’ investor relations webpage located at investors.sprouts.com. Participants should register on the website approximately ten minutes prior to the start of the webcast.

A webcast replay will be available at approximately 8:00 p.m. Eastern Standard Time on November 8, 2022. This can be accessed with the following link.

Important Information Regarding Outlook

There is no guarantee that Sprouts will achieve its projected financial expectations, which are based on management estimates, currently available information and assumptions that management believes to be reasonable. These expectations are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. See “Forward-Looking Statements” below.

Forward-Looking Statements

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, the company’s ability to execute on its long-term strategy; the company’s ability to successfully compete in its competitive industry; the company’s ability to successfully open new stores; the company’s ability to manage its growth; the company’s ability to maintain or improve its operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; equipment supply disruptions; general economic conditions that impact consumer spending or result in competitive responses; accounting standard changes; the current inflationary environment and future potential inflationary and/or deflationary trends; the impact of the COVID-19 pandemic; and other factors as set forth from time to time in the company’s Securities and Exchange Commission filings, including, without limitation, the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

Corporate Profile

Sprouts is the place where goodness grows. True to its farm-stand heritage, Sprouts offers a unique 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. The healthy grocer continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. Headquartered in Phoenix, and one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States, Sprouts employs approximately 31,000 team members and operates approximately 380 stores in 23 states nationwide. This year, Sprouts celebrates its 20th year anniversary. To learn more about Sprouts, and the good it brings communities, visit about.sprouts.com.



  Thirteen weeks ended  Thirty-nine weeks ended 
  October 2, 2022  October 3, 2021  October 2, 2022  October 3, 2021 
Net sales $1,591,026  $1,509,633  $4,827,669  $4,607,073 
Cost of sales  1,007,376   969,904   3,051,914   2,931,089 
Gross profit  583,650   539,729   1,775,755   1,675,984 
Selling, general and administrative expenses  460,834   423,416   1,382,854   1,299,498 
Depreciation and amortization (exclusive
of depreciation included in cost of
  30,313   30,377   93,377   92,036 
Store closure and other costs, net  2,164   128   3,034   1,757 
Income from operations  90,339   85,808   296,490   282,693 
Interest expense, net  1,951   2,911   7,648   8,840 
Income before income taxes  88,388   82,897   288,842   273,853 
Income tax provision  22,648   19,030   72,798   65,924 
Net income $65,740  $63,867  $216,044  $207,929 
Net income per share:            
Basic $0.61  $0.56  $1.98  $1.78 
Diluted $0.61  $0.56  $1.97  $1.77 
Weighted average shares outstanding:            
Basic  107,229   114,201   109,066   116,497 
Diluted  108,095   114,818   109,888   117,252 




  October 2, 2022  January 2, 2022 
Current assets:      
Cash and cash equivalents $316,042  $245,287 
Accounts receivable, net  11,455   21,574 
Inventories  301,667   265,387 
Prepaid expenses and other current assets  43,867   35,468 
Total current assets  673,031   567,716 
Property and equipment, net of accumulated depreciation  694,098   716,029 
Operating lease assets, net  1,081,514   1,072,019 
Intangible assets, net of accumulated amortization  184,960   184,960 
Goodwill  368,878   368,878 
Other assets  15,036   13,513 
Total assets $3,017,517  $2,923,115 
Current liabilities:      
Accounts payable $166,968  $145,901 
Accrued liabilities  144,935   155,996 
Accrued salaries and benefits  53,875   58,743 
Current portion of operating lease liabilities  158,219   151,755 
Current portion of finance lease liabilities  1,141   1,078 
Total current liabilities  525,138   513,473 
Long-term operating lease liabilities  1,095,154   1,095,909 
Long-term debt and finance lease liabilities  258,992   259,656 
Other long-term liabilities  38,486   36,306 
Deferred income tax liability  58,919   57,895 
Total liabilities  1,976,689   1,963,239 
Commitments and contingencies      
Stockholders' equity:      
Undesignated preferred stock; $0.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding
Common stock, $0.001 par value; 200,000,000 shares authorized,
106,491,322 shares issued and outstanding, October 2, 2022;
111,114,374 shares issued and outstanding, January 2, 2022
  106   111 
Additional paid-in capital  720,447   704,701 
Accumulated other comprehensive income (loss)  498   (3,758)
Retained earnings  319,777   258,822 
Total stockholders' equity  1,040,828   959,876 
Total liabilities and stockholders' equity $3,017,517  $2,923,115 



  Thirty-nine weeks
  Thirty-nine weeks
  October 2, 2022  October 3, 2021 
Operating activities      
Net income $216,044  $207,929 
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense  96,057   94,422 
Operating lease asset amortization  87,316   80,295 
Store closure and other costs, net  171    
Share-based compensation  11,672   11,304 
Deferred income taxes  1,025   2,085 
Other non-cash items  404   883 
Changes in operating assets and liabilities:      
Accounts receivable  16,491   12,999 
Inventories  (36,280)  (16,860)
Prepaid expenses and other current assets  (7,880)  (6,001)
Other assets  1,678   (2,834)
Accounts payable  23,121   29,479 
Accrued liabilities  2,482   1,046 
Accrued salaries and benefits  (4,868)  (30,544)
Operating lease liabilities  (99,055)  (88,664)
Other long-term liabilities  (1,588)  1,120 
Cash flows from operating activities  306,790   296,659 
Investing activities      
Purchases of property and equipment  (80,749)  (70,010)
Cash flows used in investing activities  (80,749)  (70,010)
Financing activities      
Payments on finance lease liabilities  (600)  (507)
Payments of deferred financing costs  (3,373)   
Repurchase of common stock  (155,094)  (137,484)
Proceeds from exercise of stock options  4,074   1,918 
Cash flows used in financing activities  (154,993)  (136,073)
Increase in cash, cash equivalents, and restricted cash  71,048   90,576 
Cash, cash equivalents, and restricted cash at beginning of the period  247,004   171,441 
Cash, cash equivalents, and restricted cash at the end of the period $318,052  $262,017 

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), the company presents EBITDA and EBIT. These measures are not in accordance with, and are not intended as alternatives to, GAAP. The company's management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the company, and certain of these measures may be used as components of incentive compensation.

The company defines EBITDA as net income before interest expense, provision for income tax, and depreciation, amortization and accretion.

Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the company’s business, or as a measure of cash that will be available to meet the company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and they should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP.

The following table shows a reconciliation of EBITDA to net income for the thirteen and thirty-nine weeks ended October 2, 2022 and October 3, 2021:



Weeks Ended
Weeks Ended
Weeks Ended
Weeks Ended
  October 2, 2022  October 3, 2021  October 2, 2022  October 3, 2021 
Net income $65,740  $63,867  $216,044  $207,929 
Income tax provision  22,648   19,030   72,798   65,924 
Interest expense, net  1,951   2,911   7,648   8,840 
Earnings before interest and taxes (EBIT)  90,339   85,808   296,490   282,693 
Depreciation, amortization and accretion  31,201   31,270   96,057   94,422 
EBITDA $121,540  $117,078  $392,547  $377,115 

Investor Contact: Media Contact:
Susannah Livingstonmedia@sprouts.com
(602) 682-1584