- 2025 Total Sales Growth Achieved $8.8 billion in sales (+14% YoY), driven by 7.3% comparable store sales growth and new store performance.
- Gross Margin & Earnings Gross margin rose to 38.8% (+70 bps), with diluted EPS of $5.31 (+42% YoY), reflecting operational efficiency and profitability gains.
- Q4 Performance & Store Growth Fourth-quarter sales reached $2.1 billion (+8% YoY), ending 2025 with 477 stores and $716 million in operating cash flow.
- 2026 Guidance Projects 4.5–6.5% sales growth, 20–30 bps EBIT margin contraction, and EPS of $5.28–$5.44, with $300 million allocated to share repurchases.
- Loyalty Program & Market Position Loyalty program exceeded sign-up expectations, serving 14 million quarterly customers, with a $290 billion total addressable health and wellness market.
Guidance for 2026
For 2026, Sprouts expects total sales growth to range between 4.5% and 6.5%, with comparable store sales between -1% and 1%. The company plans to open at least 40 new stores and anticipates earnings before interest and taxes to be between $675 million and $695 million. Earnings per share are expected to be between $5.28 and $5.44. The company's guidance implies a relatively flat earnings outlook, with EPS potentially up low single digits. Analysts estimate revenue growth at 7.5% for the next year, indicating a potential upside.
Operational Strengths and Growth Initiatives
Sprouts is focused on leveraging its operational strengths and advancing customer engagement, real estate, and supply chain initiatives. The company has made significant investments in talent, technology, and affordability to reinforce its unique value proposition. The loyalty program, launched last year, has exceeded sign-up expectations and significantly broadened customer insights. The company is enhancing the program to provide more value and investing in personalization capabilities to increase program effectiveness.
Challenges and Opportunities
The company is facing challenges, including a slowdown in the holiday season and into Q1, attributed to an uncertain macro environment, tough lapping, and an affordability issue. However, Sprouts is taking steps to address these challenges, including evaluating pricing and promotions. The company has the capacity to invest in supporting customers and plans to take action. With a strong balance sheet and a proven track record of growth, Sprouts is well-positioned to navigate the challenges and capitalize on the opportunities in the health and wellness market.
Valuation and Outlook
Based on the current valuation metrics, including a P/S Ratio of 0.75 and an EV/EBITDA of 8.29, the company's stock appears to be reasonably valued. The actual EPS for the quarter came out at $0.92, beating estimates of $0.89, indicating a positive surprise. With a robust financial performance, a solid growth strategy, and a reasonable valuation, Sprouts Farmers Market is an attractive investment opportunity in the retail sector.