Why Sprouts Farmers Market Stock Rebounded This Week

Shares of Sprouts Farmers Market (SFM 0.81%) rallied this past week after the supermarket chain lifted its full-year profit outlook.

Image source: The Motley Fool.

Store count growth drives free cash flow production

Sprouts’ net sales rose 4% year over year to $2.3 billion in its fiscal first quarter, which ended on March 29. The organic grocer opened 6 new locations during the quarter, bringing its total to 483 stores across 25 states.

Today’s Change

(-0.81%) $-0.66

Current Price

$81.19

Key Data Points

Market Cap

$7.7B

Day’s Range

$80.03 – $83.06

52wk Range

$64.75 – $182.00

Volume

2.8M

Avg Vol

2.7M

Gross Margin

36.98%

However, sales at established locations fell. Comparable sales at stores open for at least 15 months declined by 1.7%.

Sprouts is reducing prices to make its offerings more affordable for budget-strained consumers facing higher energy and other costs. The retailer also lapped some difficult comparisons. The prior-year quarter’s sales benefited from a strike at a rival’s stores.

All told, Sprouts generated $137 million in free cash flow. That, combined with its more than $250 million in cash reserves, enabled Sprouts to return $140 million to shareholders via stock buybacks.

Plenty of room for further expansion

Sprouts expects full-year net sales growth of 4.5% to 6.5% in 2026, driven by at least 40 store openings. The company also projects operating income of $675 million to $695 million and earnings per share of $5.32 to $5.48.

Looking further ahead, management sees the opportunity to more than double Sprouts’ store count to over 1,000 locations.

“We remain confident in our long-term potential and expect sequential improvement in the business throughout 2026 as we reaccelerate growth,” CEO Jack Sinclair said.