Sprouts Farmers Q4 Earnings Beat, Soft Start to 2026 Flagged

Sprouts Farmers Market, Inc. SFM reported fourth-quarter 2025 results, with the top line falling short of the Zacks Consensus Estimate while the bottom line beating the same. Decent comparable-store sales, accelerating unit growth and strong e-commerce performance positively impacted the quarter. SFM benefited from continued new-store productivity and disciplined cost management.

SFM’s Quarterly Performance: Key Metrics and Insights

The well-known grocery retailer reported quarterly earnings of 92 cents a share, surpassing the Zacks Consensus Estimate of 89 cents. The bottom line rose from 79 cents in the same period last year. 

Net sales of this Phoenix, AZ-based company reached $2,148.7 million, falling short of the Zacks Consensus Estimate of $2,160 million. The figure increased 8% year over year. The growth was driven by sales from new stores and a jump in comparable store sales.

Comparable store sales rose 1.6% during the quarter under review, compared with 11.5% in the year-ago period and fared better than our estimate of 1.1% increase. Moreover, the growth rate has decelerated from 5.9%, 10.2% and 11.7% increases registered in the third, second and first quarters, respectively. Basket growth supported comps, while traffic was slightly negative amid a softer holiday finish and ongoing macro pressures.

E-commerce sales grew 15% and represented 15.5% of total sales in the quarter. Sprouts brand sales also continued to gain traction, representing nearly 26% of total sales in the quarter.

Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise

Sprouts Farmers Market, Inc. price-consensus-eps-surprise-chart | Sprouts Farmers Market, Inc. Quote

Taking a Sneak Peek Into SFM’s Margins

Gross profit increased to $816.4 million from $759.9 million a year ago. Gross margin was 38%, down 10 basis points year over year, pressured by shrink and loyalty program impacts, partly offset by benefits from self-distribution in meat. We had expected gross margin expansion of 20 basis points.

Sprouts Farmers reported operating income of $123.1 million, up from $106.5 million reported in the year-ago period. The operating margin expanded 40 basis points to 5.7%. We had envisioned the operating margin to be flat year over year.

SG&A expenses increased 6.2% year over year to $653 million. As a percentage of net sales, the metric leveraged 41 basis points to 30.4% owing to lower incentive compensation expense and cost discipline.

Sprouts Farmers’ Store Update

During the quarter, Sprouts Farmers opened 13 new stores, taking the total count to 477 stores in 24 states as of Dec. 28, 2025. Management continued to highlight strong new store performance and a sizable pipeline of more than 140 approved new stores and over 95 executed leases. SFM plans to open more than 40 new stores in 2026.

SFM’s Financial Health Snapshot

Sprouts Farmers ended the quarter with cash and cash equivalents of $257.3 million, long-term debt and other finance obligations of roughly $81.6 million and stockholders’ equity of $1,403.1 million. During 2025, the company repurchased 4 million shares for a total investment of $472 million. SFM has no outstanding borrowings on its $600 million revolving credit facility. 

This Zacks Rank #2 (Buy) company generated cash from operations of $716 million and spent $224 million in capital expenditures, net of landlord reimbursement, in 2025. Management anticipates capital expenditures (net of landlord reimbursements) in the range of $280-$310 million for 2026.

What to Expect From Sprouts Farmers in 2026?

For first-quarter 2026, Sprouts Farmers expects comparable store sales to decline between 1% and 3%, as against 11.7% growth registered in the first quarter of 2025. SFM foresees EBIT (earnings before interest and taxes) margin pressure of about 85 basis points, mainly due to fixed-cost deleverage along with the impact of its loyalty program. Management guided earnings in the band of $1.66 to $1.70 per share, down from $1.81 reported in the prior-year quarter. 

For 2026 (on a 52-week basis), Sprouts expects net sales growth of 4.5% to 6.5% and comparable store sales to be in the range of down 1% to up 1%. Management has guided EBIT between $675 million and $695 million for 2026. The company now foresees full-year earnings between $5.28 and $5.44 per share compared with $5.31 reported in 2025. 

Management also noted 2026 will be a 53-week year, with the extra week expected to add about $200 million in sales and 21 cents to earnings per share.

Sprouts Farmers indicated that 2026 is likely to start on a soft note, as its cycles double-digit comparable-sales gains from last year, particularly in the first half. It expects comparable store sales to improve sequentially as the year progresses. 

The company anticipates near-term EBIT margin pressure in the early part of 2026. However, management expects these pressures to ease in the back half, supported by benefits from self-distribution initiatives and the anniversary of the loyalty rollout, though it still sees some modest margin drag from new-store growth, as the store-opening pipeline is more heavily weighted to the third and fourth quarters.

Shares of Sprouts Farmers have fallen 17.1% over the past three months compared with the industry’s decline of 5%.

Other Stocks Looking Red Hot

Dollar General Corporation DG, a discount retailer, currently carries a Zacks Rank #2. DG has a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Dollar General’s current financial-year sales and EPS calls for growth of 4.8% and 9.6%, respectively, from the year-ago reported numbers.

The TJX Companies, Inc. TJX, the leading off-price apparel and home fashion retailer in the United States and worldwide, currently carries a Zacks Rank #2. TJX has a trailing four-quarter earnings surprise of 5.5%, on average. 

The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and EPS calls for growth of 6.5% and 9.6%, respectively, from the year-ago reported numbers.

Ollie's Bargain Outlet Holdings, Inc. OLLI, a leading off-price retailer of brand-name household products, currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 5.2%, on average. 

The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and EPS indicates growth of 16.7% and 17.7%, respectively, from the year-ago reported numbers.

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