Sprouts Farmers Market, Inc. Reports Fourth Quarter and Full Year 2022 Results

PHOENIX, Ariz., March 02, 2023 (GLOBE NEWSWIRE) -- Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week fourth quarter and 52-week year ending January 1, 2023.

"We are pleased with our strong fourth-quarter results, closing out the year with double-digit earnings per share growth," said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "These solid trends reflect the resilience of healthy, natural and organic food, and give us confidence in our future business. I want to thank the entire team for driving these results in the face of a challenging year, and for living our values daily."

Fourth Quarter Highlights:

  • Net sales totaled $1.6 billion; a 6% increase from the same period in 2021
  • Comparable store sales growth of 2.9%
  • Diluted earnings per share of $0.42; compared to diluted earnings per share of $0.32 in the same period in 2021
  • Opened 7 new stores

Fiscal Year 2022 Highlights:

  • Net sales totaled $6.4 billion; a 5% increase from 2021
  • Comparable store sales growth of 2.2%
  • Diluted earnings per share of $2.39; compared to diluted earnings per share of $2.10 in 2021
  • Opened 16 new stores, resulting in 386 stores in 23 states as of January 1, 2023

Leverage and Liquidity in 2022:

  • Ended the quarter with $293 million in cash and cash equivalents and a $250 million balance on its $700 million revolving credit facility
  • Repurchased 6.9 million shares of common stock for a total investment of $200 million
  • Generated cash from operations of $371 million and invested $112 million in capital expenditures, net of landlord reimbursement

First Quarter and Full Year 2023 Outlook:
"While we recognize the near-term economic environment is difficult to predict, the stability of our recent sales is encouraging," said Chip Molloy, chief financial officer of Sprouts Farmers Market. "We are optimistic about our ongoing cash generation and our ability to invest in our business for growth. During 2023, we expect to open 30 new stores. Additionally, as part of a recent real estate portfolio review, we expect to close 11 stores. The closing stores, on average, are approximately 30% larger than our current prototype and are underperforming financially.”

The following provides information on our full-year 2023 outlook:

  • Net sales growth: 4% to 6%
  • Comparable store sales growth: low single digits
  • Adjusted EBIT: $355M to $370M
  • Effective Tax rate: approximately 26%
  • Adjusted diluted earnings per share: $2.41 to $2.53
  • Unit growth: 30 new stores, closing 11 stores
  • Capital expenditures (net of landlord reimbursements):$210M to $230M

The following provides information on our first quarter 2023 outlook:

  • Comparable store sales growth: 1.5%-2.5%
  • Adjusted diluted earnings per share: $0.83 to $0.87

Fourth Quarter and Full Year 2022 Conference Call

Sprouts will hold a conference call at 10 a.m. Eastern Standard Time on Thursday, March 2, 2023, during which Sprouts executives will further discuss fourth quarter and fiscal year 2022 financial results.

A webcast of the conference call will be available through Sprouts’ investor relations webpage located at investors.sprouts.com. Participants should register on the website approximately ten minutes prior to the start of the webcast.

A webcast replay will be available at approximately 2:00 p.m. Eastern Standard Time on March 2, 2023. This can be accessed with the following link.

Important Information Regarding Outlook

There is no guarantee that Sprouts will achieve its projected financial expectations, which are based on management estimates, currently available information and assumptions that management believes to be reasonable. These expectations are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. See “Forward-Looking Statements” below.

Forward-Looking Statements

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, the company’s ability to execute on its long-term strategy; the company’s ability to successfully compete in its competitive industry; the company’s ability to successfully open new stores; the company’s ability to manage its growth; the company’s ability to maintain or improve its operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; equipment supply disruptions; general economic conditions that impact consumer spending or result in competitive responses; the current inflationary environment and future potential inflationary and/or deflationary trends; the impact of the COVID-19 pandemic; and other factors as set forth from time to time in the company’s Securities and Exchange Commission filings, including, without limitation, the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

Corporate Profile
True to its farm-stand heritage, Sprouts offers a unique grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. The healthy grocer continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. Headquartered in Phoenix, and one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States, Sprouts employs approximately 31,000 team members and operates approximately 380 stores in 23 states nationwide. To learn more about Sprouts, and the good it brings communities, visit about.sprouts.com.


  Thirteen Weeks Ended  Fifty-Two Weeks Ended 
  January 1, 2023  January 2, 2022  January 1, 2023  January 2, 2022 
Net sales $1,576,554  $1,492,796  $6,404,223  $6,099,869 
Cost of sales  1,003,745   959,568   4,055,659   3,890,657 
Gross profit  572,809   533,228   2,348,564   2,209,212 
Selling, general and administrative expenses  472,795   448,707   1,855,649   1,748,205 
Depreciation and amortization (exclusive of depreciation included in cost of sales)  30,153   30,222   123,530   122,258 
Store closure and other costs, net  7,991   2,916   11,025   4,673 
Income from operations  61,870   51,383   358,360   334,076 
Interest expense, net  1,399   2,844   9,047   11,684 
Income before income taxes  60,471   48,539   349,313   322,392 
Income tax provision  15,351   12,311   88,149   78,235 
Net income $45,120  $36,228  $261,164  $244,157 
Net income per share:            
Basic $0.43  $0.32  $2.41  $2.12 
Diluted $0.42  $0.32  $2.39  $2.10 
Weighted average shares outstanding:            
Basic  105,730   112,019   108,232   115,377 
Diluted  106,832   112,786   109,139   116,077 


  January 1, 2023  January 2, 2022 
Current assets:      
Cash and cash equivalents $293,233  $245,287 
Accounts receivable, net  16,108   21,574 
Inventories  310,545   265,387 
Prepaid expenses and other current assets  53,918   35,468 
Total current assets  673,804   567,716 
Property and equipment, net of accumulated depreciation  722,241   716,029 
Operating lease assets, net  1,106,524   1,072,019 
Intangible assets, net of accumulated amortization  184,960   184,960 
Goodwill  368,878   368,878 
Other assets  13,973   13,513 
Total assets $3,070,380  $2,923,115 
Current liabilities:      
Accounts payable $172,904  $145,901 
Accrued liabilities  151,306   155,996 
Accrued salaries and benefits  61,574   58,743 
Current portion of operating lease liabilities  135,584   151,755 
Current portion of finance lease liabilities  1,012   1,078 
Total current liabilities  522,380   513,473 
Long-term operating lease liabilities  1,145,173   1,095,909 
Long-term debt and finance lease liabilities  258,902   259,656 
Other long-term liabilities  36,340   36,306 
Deferred income tax liability  61,123   57,895 
Total liabilities  2,023,918   1,963,239 
Commitments and contingencies      
Stockholders' equity:      
Undesignated preferred stock; $0.001 par value; 10,000,000 shares
authorized, no shares issued and outstanding
Common stock, $0.001 par value; 200,000,000 shares authorized,
105,072,756 shares issued and outstanding, January 1, 2023;
111,114,374 shares issued and outstanding, January 2, 2022
  105   111 
Additional paid-in capital  726,345   704,701 
Accumulated other comprehensive income (loss)     (3,758)
Retained earnings  320,012   258,822 
Total stockholders' equity  1,046,462   959,876 
Total liabilities and stockholders' equity $3,070,380  $2,923,115 


  Fifty-Two Weeks Ended 
  January 1, 2023  January 2, 2022 
Operating activities      
Net income $261,164  $244,157 
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense  127,067   125,541 
Operating lease asset amortization  117,315   108,517 
Store closure and other costs, net  8,066   4,762 
Share-based compensation  16,603   15,883 
Deferred income taxes  3,228   (178)
Other non-cash items  672   1,167 
Changes in operating assets and liabilities:      
Accounts receivable  13,381   16,928 
Inventories  (45,158)  (11,417)
Prepaid expenses and other current assets  (18,467)  (5,879)
Other assets  2,039   (1,782)
Accounts payable  13,362   4,523 
Accrued liabilities  5,416   610 
Accrued salaries and benefits  2,831   (17,951)
Operating lease liabilities  (132,889)  (120,483)
Other long-term liabilities  (3,301)  401 
Cash flows from operating activities  371,329   364,799 
Investing activities      
Purchases of property and equipment  (124,010)  (102,378)
Cash flows used in investing activities  (124,010)  (102,378)
Financing activities      
Proceeds from revolving credit facilities  62,500    
Payments on revolving credit facilities  (62,500)   
Payments on finance lease liabilities  (819)  (685)
Payments of deferred financing costs  (3,373)   
Repurchase of common stock  (199,980)  (188,343)
Proceeds from exercise of stock options  5,041   2,170 
Cash flows used in financing activities  (199,131)  (186,858)
Increase in cash, cash equivalents, and restricted cash  48,188   75,563 
Cash, cash equivalents, and restricted cash at beginning of the period  247,004   171,441 
Cash, cash equivalents, and restricted cash at the end of the period $295,192  $247,004 

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), the company presents EBITDA and EBIT. These measures are not in accordance with, and are not intended as alternatives to, GAAP. The company's management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the company, and certain of these measures may be used as components of incentive compensation.

The company defines EBITDA as net income before interest expense, provision for income tax, and depreciation, amortization and accretion.

Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the company’s business, or as a measure of cash that will be available to meet the company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and they should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP.

The following table shows a reconciliation of EBITDA to net income for the thirteen and fifty-two weeks ended January 1, 2023 and January 2, 2022:


  Thirteen Weeks Ended  Fifty-Two Weeks Ended 
  January 1, 2023  January 2, 2022  January 1, 2023  January 2, 2022 
Net income $45,120  $36,228  $261,164  $244,157 
Income tax provision  15,351   12,311   88,149   78,235 
Interest expense, net  1,399   2,844   9,047   11,684 
Earnings before interest and taxes (EBIT)  61,870   51,383   358,360   334,076 
Depreciation, amortization and accretion  31,010   31,119   127,067   125,541 
EBITDA $92,880  $82,502  $485,427  $459,617 

Source: Sprouts Farmers Market, Inc
Phoenix, AZ

Investor Contact: Media Contact: 
Susannah Livingstonmedia@sprouts.com  
(602) 682-1584