Sprouts Farmers Market disclosed its second-quarter financial outcomes for 2026, revealing a 5% surge in net sales to $2.3 billion, largely attributable to the success of its newly established stores. Concurrently, comparable store sales experienced a 1% dip, which the company linked to demanding comparisons from the previous year and disruptions within the supply chain. Despite these fluctuations, Sprouts reported significant growth in e-commerce, with online sales contributing 16% to the total, and its proprietary brand demonstrating superior growth, accounting for 26% of overall sales. The company's future projections for 2026 have been revised to account for an extra week in the fiscal year, coupled with anticipated cost pressures from escalating fuel prices and ongoing investments in customer loyalty and value initiatives.
On Wednesday, July 29, 2026, at 5 p.m. ET, Sprouts Farmers Market's leadership team, including CEO Jack Sinclair, CFO Curtis Valentine, President and COO Nicholas Konat, and Investor Relations representative Susannah Livingston, convened for the second-quarter earnings call. The discussion centered on the company's financial performance and strategic direction. Jack Sinclair emphasized the resilience of Sprouts' core strategy, particularly the strong performance of new stores and the appeal of its attribute-based product range, even as consumers became more selective with their healthy grocery expenditures. Curtis Valentine detailed the financial specifics, noting that total sales climbed to $2.3 billion, a 5% increase year-over-year, despite a 1% decrease in comparable store sales. This decline was primarily due to high prior-year comparisons, especially in produce, and supply chain disruptions. E-commerce sales notably grew by over 12%, making up 16% of total quarterly sales, while Sprouts' private label brand sales accounted for 26% of total revenue.
The company's gross margin was reported at 38.7%, a slight reduction of 12 basis points year-over-year, mainly due to loyalty program investments and increased fuel costs. Selling, General, and Administrative (SG&A) expenses rose by $38 million to $683 million, indicating a 30 basis point deleverage, influenced by lower comparable store sales and business investments. Diluted earnings per share increased by 1% to $1.37. Sprouts added seven new stores, bringing its total to 490 across 25 states, with a robust pipeline of over 110 executed leases and 155 approved new locations. Year-to-date operating cash flow was $369 million, funding $186 million in capital expenditures. Share repurchases amounted to $210 million, returning capital to shareholders.
Looking ahead, Sprouts adjusted its full-year 2026 guidance, anticipating 5.5% to 6.5% total sales growth and comparable store sales ranging from negative 0.5% to positive 0.5% on a 52-week basis. The company plans to open 42 net new stores, slightly surpassing original projections. Earnings Before Interest and Taxes (EBIT) are projected between $675 million and $685 million, with diluted EPS expected to be $5.32 to $5.40, assuming at least $300 million in share repurchases. For the third quarter, comparable store sales are expected to be between negative 0.5% and positive 1.5%, with an approximate 50 basis point pressure on EBIT margin and diluted EPS between $1.20 and $1.24. The impact of Cyclospora on consumer behavior and persistent fuel costs were identified as key risks affecting these forecasts.
Sprouts continues to prioritize affordability and innovation, launching about 1,300 new items in Q2 focusing on attributes like organic, seed oil-free, fiber, and gut health. Organic product sales now exceed 30% of total sales. The company is also enhancing its loyalty and personalization programs using first-party data to better engage customers. Supply chain improvements, including the operational Northern California distribution center and expanded internal distribution for fresh meat, are expected to bolster efficiency and support affordability initiatives. New store performance remains a key strength, with construction processes showing improved efficiency, allowing for a record 15 store openings in Q3. The company’s emphasis on fostering internal talent, known as 'Sprouties,' underscores its commitment to employee development and maintaining a unique customer experience.
Sprouts Farmers Market continues to navigate a complex retail landscape by focusing on controllable factors such as enhancing value, fostering innovation, and refining customer engagement strategies. Despite external pressures like inflation and volatile fuel costs, the company's commitment to its health-focused customer base remains steadfast. The ongoing expansion, robust e-commerce performance, and strategic supply chain investments are poised to support sustained growth and reinforce Sprouts' distinct market position, ensuring accessibility to healthy, high-quality products for an evolving consumer demographic.