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Shares of Sprouts Farmers Market, Inc. (SFM - Free Report) advanced 15.2% during the after-market trading session on Jul 29, 2024. The stock gained following the company’s better-than-expected second-quarter performance and an upbeat outlook for 2024.
Both the top and bottom lines not only increased year over year but also beat their respective Zacks Consensus Estimate. The company's results were favorably impacted by decent comparable sales, positive traffic trends, accelerating unit growth and increasing customer engagement.
Shares of this Zacks Rank #3 (Hold) company have surged 68.1% in the past six months compared with the industry’s growth of 14.7%.
Q2 in Details
The renowned grocery retailer delivered quarterly earnings of 94 cents a share, which beat the Zacks Consensus Estimate of 77 cents. The bottom line increased 32.4% from 71 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company came in at $1,893.5 million, which beat the Zacks Consensus Estimate of $1,828 million. The metric increased 12% on a year-over-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 6.7% during the quarter under review, better than our estimate of a 3.5% jump. We note that e-commerce sales grew 30% and represented 14% of total sales in the quarter.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
The adjusted gross profit rose 14.5% year over year to $718.4 million in the quarter, while the gross margin expanded 80 basis points to 37.9% from the prior-year quarter. We had expected the gross margin to be 37.3% for the quarter under discussion.
Sprouts Farmers reported an adjusted operating income of $127.3 million, up from $99.7 million reported in the year-ago period. The adjusted operating margin expanded 80 basis points to 6.7%.
SG&A expenses increased 11.7% year over year to $556.4 million. As a percentage of net sales, the metric remained flat at 29.4%. We had anticipated a deleverage of 20 basis points in SG&A expenses.
Store Update
During the quarter, Sprouts Farmers opened five new stores, thereby taking the total count to 419 stores in 23 states as of Jun 30, 2024. It plans to open about 35 new stores in 2024, with the majority of openings in the fourth quarter.
Other Financial Aspects
Sprouts Farmers ended the quarter with cash and cash equivalents of $177.3 million, long-term debt and finance lease liabilities of roughly $8.1 million and stockholders’ equity of $1,269.3 million. The company approved a fresh $600 million share repurchase plan and bought back 640 thousand shares, investing a total of $44 million during the quarter.
Sprouts Farmers generated cash from operations of $311.3 million and spent $89 million on capital expenditures, net of landlord reimbursement, year to date through Jun 30, 2024.
Management anticipates capital expenditures (net of landlord reimbursements) in the range of $225-$245 million for 2024.
Outlook
For the third quarter of 2024, Sprouts Farmers expects comparable store sales growth between 3.5% and 4.5% and adjusted earnings in the band of 71-75 cents a share compared with 65 cents reported in the year-ago period.
Sprouts Farmers expects net sales growth of 9-10% and comparable store sales growth of 4% to 5% in 2024.
Sprouts Farmers guided adjusted earnings before interest and taxes between $445 million and $455 million for 2024.
While the company anticipates the gross margin to improve in the second half, in line with the first half margin expansion, it foresees pressure on SG&A due to ongoing wage and benefits as well as strategic investments. Despite this, it expects full-year adjusted earnings in the range of $3.29-$3.37 per share, which implies an increase from the $2.84 reported in 2023.
3 Stocks Looking Red Hot
Ollie's Bargain (OLLI - Free Report) , the extreme-value retailer of brand-name merchandise, currently sports a Zacks Rank #1 (Strong Buy). OLLI has a trailing four-quarter earnings surprise of 10.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings implies growth of around 8.1% and 12.4%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers pasture-raised products in the United States. It currently sports a Zacks Rank #1. VITL has a trailing four-quarter earnings surprise of 102.1%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of around 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Walmart (WMT - Free Report) , which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). WMT has a trailing four-quarter earnings surprise of 8.3%, on average.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings calls for growth of around 4.3% and 9.5%, respectively, from the year-ago reported numbers.
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Sprouts Farmers (SFM) Gains as Q2 Earnings Beat & Comps Impress
Shares of Sprouts Farmers Market, Inc. (SFM - Free Report) advanced 15.2% during the after-market trading session on Jul 29, 2024. The stock gained following the company’s better-than-expected second-quarter performance and an upbeat outlook for 2024.
Both the top and bottom lines not only increased year over year but also beat their respective Zacks Consensus Estimate. The company's results were favorably impacted by decent comparable sales, positive traffic trends, accelerating unit growth and increasing customer engagement.
Shares of this Zacks Rank #3 (Hold) company have surged 68.1% in the past six months compared with the industry’s growth of 14.7%.
Q2 in Details
The renowned grocery retailer delivered quarterly earnings of 94 cents a share, which beat the Zacks Consensus Estimate of 77 cents. The bottom line increased 32.4% from 71 cents reported in the year-ago period.
Net sales of this Phoenix, AZ-based company came in at $1,893.5 million, which beat the Zacks Consensus Estimate of $1,828 million. The metric increased 12% on a year-over-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 6.7% during the quarter under review, better than our estimate of a 3.5% jump. We note that e-commerce sales grew 30% and represented 14% 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
Margins
The adjusted gross profit rose 14.5% year over year to $718.4 million in the quarter, while the gross margin expanded 80 basis points to 37.9% from the prior-year quarter. We had expected the gross margin to be 37.3% for the quarter under discussion.
Sprouts Farmers reported an adjusted operating income of $127.3 million, up from $99.7 million reported in the year-ago period. The adjusted operating margin expanded 80 basis points to 6.7%.
SG&A expenses increased 11.7% year over year to $556.4 million. As a percentage of net sales, the metric remained flat at 29.4%. We had anticipated a deleverage of 20 basis points in SG&A expenses.
Store Update
During the quarter, Sprouts Farmers opened five new stores, thereby taking the total count to 419 stores in 23 states as of Jun 30, 2024. It plans to open about 35 new stores in 2024, with the majority of openings in the fourth quarter.
Other Financial Aspects
Sprouts Farmers ended the quarter with cash and cash equivalents of $177.3 million, long-term debt and finance lease liabilities of roughly $8.1 million and stockholders’ equity of $1,269.3 million. The company approved a fresh $600 million share repurchase plan and bought back 640 thousand shares, investing a total of $44 million during the quarter.
Sprouts Farmers generated cash from operations of $311.3 million and spent $89 million on capital expenditures, net of landlord reimbursement, year to date through Jun 30, 2024.
Management anticipates capital expenditures (net of landlord reimbursements) in the range of $225-$245 million for 2024.
Outlook
For the third quarter of 2024, Sprouts Farmers expects comparable store sales growth between 3.5% and 4.5% and adjusted earnings in the band of 71-75 cents a share compared with 65 cents reported in the year-ago period.
Sprouts Farmers expects net sales growth of 9-10% and comparable store sales growth of 4% to 5% in 2024.
Sprouts Farmers guided adjusted earnings before interest and taxes between $445 million and $455 million for 2024.
While the company anticipates the gross margin to improve in the second half, in line with the first half margin expansion, it foresees pressure on SG&A due to ongoing wage and benefits as well as strategic investments. Despite this, it expects full-year adjusted earnings in the range of $3.29-$3.37 per share, which implies an increase from the $2.84 reported in 2023.
3 Stocks Looking Red Hot
Ollie's Bargain (OLLI - Free Report) , the extreme-value retailer of brand-name merchandise, currently sports a Zacks Rank #1 (Strong Buy). OLLI has a trailing four-quarter earnings surprise of 10.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings implies growth of around 8.1% and 12.4%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers pasture-raised products in the United States. It currently sports a Zacks Rank #1. VITL has a trailing four-quarter earnings surprise of 102.1%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of around 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Walmart (WMT - Free Report) , which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). WMT has a trailing four-quarter earnings surprise of 8.3%, on average.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings calls for growth of around 4.3% and 9.5%, respectively, from the year-ago reported numbers.