Sprouts Farmers Market, Inc.

Second-quarter total sales were $2.3 billion, up $105 million or 5% year over year. Gross margin was 38.7%, down 12 basis points, and SG&A was $683 million, up $38 million and 30 basis points of deleverage. EBIT was $174 million, net income was $129 million, and diluted EPS was $1.37, up 1% year over year. The company opened seven new stores and ended the quarter with 490 stores across 25 states. For the full year on a 52-week basis, Sprouts expects total sales growth of 5.5% to 6.5%, comp sales of -0.5% to +0.5%, EBIT of $675 million to $685 million, a tax rate of about 25.5%, capex net of landlord reimbursements of about $310 million, and EPS of $5.32 to $5.40 assuming at least $300 million in buybacks. For Q3, it expects comp sales of -0.5% to +1.5% and EPS of $1.20 to $1.24, with about 50 bps of EBIT margin pressure.

Jack Sinclair said the quarter was in line with expectations and emphasized that the company is focused on controllable levers: sharpening value, improving communication, strengthening customer engagement, and executing its store pipeline. His tone was constructive but cautious, repeatedly noting that the consumer backdrop remains uneven and that lower-engaged customers are harder to move in the current macro environment. He highlighted that the company is using data, loyalty, marketing, and supply chain investments to support both near-term affordability and long-term growth.

Curtis Valentine said Q2 sales reached $2.3 billion, with 38.7% gross margin, $683 million of SG&A, $174 million of EBIT, and $1.37 diluted EPS. He pointed to loyalty investment and elevated fuel costs as the main gross-margin headwinds, partially offset by self-distribution and vendor participation, and said SG&A deleverage reflected lower comps and investments in the business. On capital allocation, he noted $369 million of year-to-date operating cash flow, $186 million of capex net of landlord reimbursements, $210 million returned via buybacks, $626 million remaining under authorization, and $224 million in cash plus $22 million of letters of credit.

Analysts pressed management on the weaker comp outlook, July trends, Cyclospora, affordability tests, customer cohorts, price gaps, new-store execution, cannibalization, inflation, and gross margin pressure. Management said July was slightly negative but within guidance, Cyclospora has had only a limited recent impact so far and no recall issue, and the year-over-year comp comparisons get easier as the year progresses. They also said affordability tests have produced mixed results, with units improving more than traffic, and that the lower-engaged, lower-income customer remains the hardest to move.