Sprouts Farmers Market (SFM) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 increased 12% year-over-year to $1.9 billion, with comparable store sales up 6.7% and 5 new stores opened, totaling 419 stores in 23 states as of June 30, 2024.

• Diluted EPS was $0.94, up 32%–45% year-over-year, reflecting higher gross profit and share repurchases.

• Gross margin improved to 37.9% from 37.0%–37.1%, driven by inventory management and supply chain leverage.

• Strong performance attributed to differentiated product assortment, unique shopping experience, and effective execution of long-term strategy.

• Growth in both new and existing customers, with increased frequency and strong results across all geographies.

Financial highlights

• Q2 2024 net sales: $1.89B–$1.9B (+12% YoY); gross profit: $718M (+15% YoY); gross margin: 37.9% (+0.8–0.9pp YoY).

• Net income for Q2 2024 was $95.3M, up 42% YoY; diluted EPS: $0.94 (+32%–45% YoY).

• Operating cash flow YTD was $311M, funding $89M in capital expenditures net of landlord reimbursement.

• E-commerce sales grew 30% and now represent 14% of total sales.

• SG&A was $556M, up $63M, with slight deleverage due to strategic investments and new store openings.

Outlook and guidance

• Full-year 2024 net sales growth expected at 9%–10%, with comparable store sales growth of 4%–5%.

• Plan to open about 35 new stores, mostly in Q4.

• Adjusted EBIT forecasted at $445M–$455M; adjusted EPS at $3.29–$3.37.

• Gross margin expected to remain elevated in the second half; continued SG&A pressure from wages, new stores, and investments.

• Q3 comp sales expected at 3.5%–4.5%, with adjusted EPS of $0.71–$0.75.