Sprouts Farmers Market misses Q3 profit and sales estimates

Sprouts Farmers Market, Inc. (SFM) said on Oct. 28 that third-quarter diluted earnings per share were $1.21, down from $1.22 a year earlier and below the $1.24 adjusted consensus estimate compiled by Finnhub.

Net sales rose 5% from $2.20 billion a year earlier to $2.30 billion, but fell short of the $2.36 billion estimate.

The company said in a regulatory filing that the results cover the 13-week quarter ended Sept. 27, 2026. Comparable store sales fell 0.9%, and the company opened 15 new stores, bringing its total to 504 stores in 25 states.

CEO Jack Sinclair said in the release: “While a challenging consumer environment and the cyclospora disruption affected the quarter, we recognize the need to improve our performance and are taking action to strengthen execution and drive traffic.”

“We are increasing investments to enhance affordability and deepen customer engagement,” Sinclair said.

Here's how the company did:

• Adjusted EPS: $1.21 vs. $1.22 a year earlier and $1.24 expected, according to Finnhub
• Revenue: $2.30 billion vs. $2.20 billion a year earlier and $2.36 billion expected
• Net income: $113.4 million vs. $120.1 million a year earlier
• Comparable store sales: down 0.9%
• Gross margin: 38.2% vs. 38.7% a year earlier
• EBITDA: $200.5 million vs. $198.1 million a year earlier

Guidance

For the fourth quarter, on a 13-week basis, the company expects comparable store sales of (2.0)% to (4.0)% and diluted EPS of 47 cents to 51 cents.

Fiscal 2026 is a 53-week year, with the extra week falling in the fourth quarter. The company estimates the extra week will add about $190 million in sales, $20 million in income before interest and taxes, and 16 cents in diluted EPS.

On a 52-week basis, the company expects net sales growth of about 4.3%, comparable store sales of about (1.7)%, EBIT of about $605 million and diluted EPS of about $4.80. It plans 42 net new stores and capital expenditures of about $310 million, net of landlord reimbursements.

Margins and cash

Income from operations was $152.8 million, compared with $157.4 million a year earlier. Gross margin was 38.2%, down from 38.7%.

Through Sept. 27, the company generated $555 million in cash from operations and invested $275 million in capital expenditures, net of landlord reimbursement. It ended the quarter with $229 million in cash and cash equivalents and no balance on its $600 million revolving credit facility.

Share repurchases

The company repurchased 1.1 million shares of common stock for a total of $89 million in the quarter, excluding excise tax. Year to date, repurchases totaled $299 million, excluding excise tax.

The company will hold a conference call at 5 p.m. Eastern Time on Oct. 28 to discuss the results further.