Sprouts Farmers Q4 Earnings & Sales Beat Estimates, Comp Sales Rise

Sprouts Farmers Market, Inc. SFM delivered impressive fourth-quarter 2024 results, with both top and bottom-lines increasing year over year. The metrics also beat their respective Zacks Consensus Estimate.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.In the fourth quarter, Sprouts Farmers focused on product innovation, expanding its selection of attribute-driven offerings, including new Sprouts Brand items. It piloted a loyalty program to enhance customer engagement and invested in supply-chain improvements, transitioning to self-distribution for meat and seafood. Moreover, marketing efforts emphasized storytelling and targeted media to differentiate the brand and attract health-conscious consumers.Shares of this Zacks Rank #2 (Buy) company have surged 15.4% in the past three months compared with the industry’s growth of 9.6%.Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise Sprouts Farmers Market, Inc. price-consensus-eps-surprise-chart | Sprouts Farmers Market, Inc. QuoteSFM’s Quarterly Performance: Key Metrics and InsightsThe renowned grocery retailer delivered quarterly earnings of 79 cents per share, which beat the Zacks Consensus Estimate of 73 cents. The bottom line increased 61.2% from 49 cents reported in the year-ago period.Net sales of this Phoenix, AZ-based company were $1,996.2 million, which beat the Zacks Consensus Estimate of $1,957 million. The metric rose 17.5% on a year-over-year basis. The growth was driven by sales at the new stores and a jump in comparable store sales.Comparable store sales increased 11.5% during the quarter under review, better than our estimate of a 9% jump. We note that e-commerce sales grew 37% and represented 14.5% of total sales in the quarter. Also, Sprouts Brand contributed 23% to the company’s total sales for the quarter under review.Sneak Peek Into SFM’s MarginsThe adjusted gross profit rose 22.5% year over year to $759.9 million, while the adjusted gross margin expanded 160 basis points to 38.1%. This improvement was largely driven by enhanced inventory management. Moreover, strong sales performance contributed to supply-chain efficiencies, while supply constraints helped further reduce shrink. We had expected the gross margin to be 37.5% for the quarter under discussion.Sprouts Farmers reported an adjusted EBITDA of $142.7 million, up 37.8% from $103.6 million reported in the year-ago period. The adjusted EBITDA margin expanded 110 basis points to 7.2%. We envisioned the adjusted EBITDA margin to be 6.8% for the quarter under discussion.SG&A expenses increased 19.7% year over year to $614.9 million. As a percentage of net sales, the metric deleveraged 60 basis points to 30.8%. We also anticipated a deleverage of 60 basis points in SG&A expenses. The deleverage was driven by higher incentive compensation for its teams, planned spending of $15 million on strategic investments and increased e-commerce fees. However, these impacts were partially offset by leverage from higher sales.Sprouts Farmers Store UpdateDuring the quarter, Sprouts Farmers opened 12 stores, taking the total count to 440 stores in 24 states as of Dec. 29, 2024. It now plans to open about 35 stores in 2025.SFM’s Financial Health SnapshotSprouts Farmers ended the quarter with cash and cash equivalents of $265.2 million, long-term debt and finance lease liabilities of roughly $7.2 million and stockholders’ equity of $1.32 billion. In 2024, the company approved a new $600 million share repurchase program and bought back 2.7 million shares of common stock, investing a total of $238 million, excluding excise tax. Additionally, it generated $645 million in operating cash flow and allocated $200 million toward capital expenditures, net of landlord reimbursements.Management anticipates capital expenditures (net of landlord reimbursements) in the range of $230-$250 million for 2025.SFM Stock Past Three-Month PerformanceImage Source: Zacks Investment ResearchWhat to Expect From Sprouts Farmers in 2025?For the first quarter of 2025, the company expects comparable store sales growth in the band of 10-11% and adjusted earnings per share in the range of $1.51 to $1.55. The company expects a year-over-year gross margin improvement of approximately 50 basis points, along with an SG&A margin improvement of about 75 basis points, driven by leverage from higher sales.For 2025, the company anticipates net sales growth of 10.5% to 12.5% and comparable store sales growth between 4.5% and 6.5%. Adjusted earnings before interest and taxes are anticipated to be between $590 million and $610 million. Adjusted earnings per share are expected to be in the range of $4.52 to $4.68, which implies an increase from $2.84 reported in 2024.Other Stocks to ConsiderDollar Tree Inc. DLTR is an operator of discount variety stores offering merchandise and other assortments. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.DLTR delivered a negative trailing four-quarter earnings surprise of 8.7%, on average. The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales implies growth of around 0.7% from the year-ago reported numbers.Ross Stores Inc. ROST operates as an off-price retailer of apparel and home accessories, primarily in the United States. It currently carries a Zacks Rank #2. ROST delivered a trailing four-quarter earnings surprise of nearly 8.5%, on average.The Zacks Consensus Estimate for Ross Stores’ current quarter’s sales and earnings indicates growth of 3.7% and 11%, respectively, from the year-ago reported numbers.Costco Wholesale Corporation COST, which is engaged in the operation of membership warehouses, currently carries a Zacks Rank #2. COST delivered a trailing four-quarter earnings surprise of nearly 2%, on average.The Zacks Consensus Estimate for Costco’s current financial year’s sales and earnings implies growth of 7.4% and 11.9%, respectively, from the year-ago reported numbers.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks