Can Sprouts Farmers Sustain Its 28% E-Commerce Sales Growth?

Sprouts Farmers Market, Inc. SFM reported 28% growth in e-commerce sales for the first quarter of 2025, with digital channels now accounting for 15% of total sales. Management indicated that this performance was broad-based, with strong contributions from all three e-commerce partners — Instacart, DoorDash and Uber Eats. 

While e-commerce remains a key pillar, the key question is: Can this level of performance be sustained? In the fourth quarter of 2024, e-commerce sales grew even faster, approximately 37%, contributing 14.5% to overall revenues. The trend indicates that customers are drawn to Sprouts Farmers for its distinct product offerings, with demand driven more by quality and value rather than price.

The planned rollout of the loyalty program in the second half of 2025 may provide another catalyst for digital growth. By enhancing personalization and streamlining the omnichannel experience, the program aims to increase both customer frequency and basket size. Early tests across 35 stores have shown promising results, with higher scan rates and strong customer signups.

Still, future growth comparisons may get tougher. Management acknowledged that a strike at a conventional grocer and seasonal vitamin demand provided a temporary boost to sales in the first quarter. Moreover, SFM faces stiff competition from larger retailers that are continually advancing delivery speed, expanding product assortment and adopting aggressive pricing strategies.

Sprouts Farmers has made impressive digital gains, but whether it can consistently replicate such a solid growth rate in future quarters will depend on continued innovation and scale.

How SFM’s E-Commerce Growth Compares to Costco & Walmart

Costco Wholesale Corporation COST continues to show digital momentum, with e-commerce comparable sales rising 14.8% in the third quarter of fiscal 2025 and 11.6% in May. Costco is boosting its digital reach through efforts like Costco Logistics and a new Buy Now Pay Later option. Costco Logistics saw a 31% year-over-year increase in big and bulky e-commerce deliveries in the last reported quarter. 

Walmart Inc. WMT reported a 22% year-over-year increase in global e-commerce sales in the first quarter of fiscal 2026. Walmart continues to scale its digital business through faster delivery, improved fulfillment and marketplace expansion. With growing customer adoption, Walmart is firmly positioning itself as a strong digital retail competitor.

SFM’s Price Performance, Valuation and Estimates

Sprouts Farmers stock has been a standout performer, with shares rallying 24.3% year to date, outpacing the industry’s growth of 11.5%. 

From a valuation standpoint, SFM's forward 12-month price-to-sales ratio stands at 1.68, higher than the industry’s ratio of 0.25. SFM carries a Value Score of C.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings per share implies year-over-year growth of 13.7% and 35.5%, respectively. 

Sprouts Farmers Market currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research