Sprouts delivered first quarter results that exceeded Wall Street expectations, with management crediting the performance to strong same-store sales growth and the successful execution of its differentiated product strategy. CEO Jack Sinclair emphasized that the company's focus on health-oriented, attribute-driven products continues to resonate with consumers seeking wellness-focused grocery options. Additionally, new stores performed well and contributed meaningfully to top-line growth, while improved inventory and category management supported margin expansion. Management also noted that certain one-time factors, such as increased vitamin sales due to a severe cold and flu season and a competitor's labor disruption in Colorado, provided a modest sales boost.
Is now the time to buy SFM? Find out in our full research report (it’s free).
Sprouts (SFM) Q1 CY2025 Highlights:
- Revenue: $2.24 billion vs analyst estimates of $2.21 billion (18.7% year-on-year growth, 1.4% beat)
- Adjusted EPS: $1.81 vs analyst estimates of $1.55 (16.8% beat)
- Adjusted EBITDA: $263.2 million vs analyst estimates of $242.5 million (11.8% margin, 8.5% beat)
- Management raised its full-year Adjusted EPS guidance to $5.02 at the midpoint, a 9.1% increase
- Operating Margin: 10.1%, up from 7.9% in the same quarter last year
- Locations: 443 at quarter end, up from 414 in the same quarter last year
- Same-Store Sales rose 11.7% year on year (4% in the same quarter last year)
- Market Capitalization: $16.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Sprouts’s Q1 Earnings Call
- Leah Jordan (Goldman Sachs) asked about reinvestment plans as comps moderate. CFO Curtis Valentine explained investments will focus on loyalty, supply chain, and IT to support sustainable earnings growth.
- Rupesh Parikh (Oppenheimer) inquired about new store performance. CEO Jack Sinclair confirmed that recent store vintages are outperforming company averages and driving overall business growth.
- Ken Goldman (JP Morgan) questioned household additions and customer retention. President Nick Konat noted healthy growth in new households and increased engagement among both new and existing customers.
- Edward Kelly (Wells Fargo) asked about potential changes in consumer behavior and private label trends. Sinclair stated there has been no significant shift in consumer confidence or private label share so far.
- Krisztina Katai (Deutsche Bank) sought clarity on gross margin sustainability. Valentine responded that while there is still room for improvement, margin expansion will likely moderate as the year progresses.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch for (1) the national rollout and customer adoption rates of the new loyalty program, (2) execution of self-distribution initiatives and their impact on margins and freshness, and (3) the pace and productivity of new store openings, especially in untapped markets. Progress in these areas will be central to tracking Sprouts’ ability to sustain growth and differentiate itself in a competitive grocery landscape.
Sprouts currently trades at $167, down from $170.59 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
The Best Stocks for High-Quality Investors
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.