Grocery store chain Sprouts Farmers Market (NASDAQ:SFM) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 4.7% year on year to $2.33 billion. Its GAAP profit of $1.37 per share was 1.9% above analysts’ consensus estimates.
Is now the time to buy SFM? Find out in our full research report (it’s free for active Edge members).
Sprouts (SFM) Q2 CY2026 Highlights:
- Revenue: $2.33 billion vs analyst estimates of $2.32 billion (4.7% year-on-year growth, in line)
- EPS (GAAP): $1.37 vs analyst estimates of $1.34 (1.9% beat)
- Adjusted EBITDA: $219.8 million vs analyst estimates of $213 million (9.5% margin, 3.2% beat)
- EPS (GAAP) guidance for the full year is $5.36 at the midpoint, missing analyst estimates by 3.4%
- Operating Margin: 7.5%, in line with the same quarter last year
- Locations: 490 at quarter end, up from 455 in the same quarter last year
- Same-Store Sales fell 1% year on year (10.2% in the same quarter last year)
- Market Capitalization: $7.44 billion
StockStory’s Take
Sprouts’ second quarter results reflected a balance between strong new store performance and ongoing challenges in core store traffic. While total sales grew in line with expectations, management highlighted that new locations and a differentiated product assortment drove most of the growth. CEO Jack Sinclair emphasized that “our differentiated and attribute-based assortment continues to resonate,” though the consumer environment remained difficult with customers making more selective healthy grocery purchases. Chief Financial Officer Curtis Valentine noted that e-commerce momentum and Sprouts brand products were key contributors, while lower comparable store sales and fixed cost deleverage weighed on margins.
Looking ahead, Sprouts’ guidance is shaped by ongoing investments in affordability, loyalty, and personalization, as well as the expectation that easier year-over-year comparisons will emerge in the back half of the year. Management plans to refine their pricing and promotion strategies, targeting the products and categories most important to their core customers. Sinclair stated, “We are responding in a way that is consistent with who we are by bringing together innovation, quality, and targeted value in the areas that matter most.” Efforts to deepen first-party data capabilities and expand supply chain control are also expected to support longer-term growth.
Key Insights from Management’s Remarks
Management attributed quarterly growth to strong new store openings, product innovation, and robust e-commerce performance, while ongoing affordability investments and a challenging macro backdrop tempered traffic and same-store sales.
-
New store momentum: The company’s newest locations across multiple states continued to perform well, contributing significantly to total sales growth as established stores faced flat or declining traffic. Management reported that newer store vintages are comping positively, even as the core base remains challenged.
-
Assortment innovation: Sprouts launched approximately 1,300 new items in the quarter, focusing on attributes such as organic, seed oil-free, and gut health. These products are outperforming the broader assortment, with exclusive partnerships like Pasturebird chicken and new Sprouts brand offerings driving incremental customer interest.
-
Affordability initiatives: Management’s affordability tests produced mixed results. While targeted price reductions and promotions led to higher unit sales in certain categories, a broader traffic response developed more slowly. The company is now refining its strategy to focus affordability efforts on items most valued by its core health-conscious customer.
-
E-commerce and omni-channel growth: Online sales increased more than 12% and now represent 16% of total revenue. Management highlighted that omni-channel customers—those who shop both online and in-store—are the most valuable segment, with e-commerce baskets resembling in-store purchases in both size and mix.
-
Supply chain and self-distribution progress: The rollout of Sprouts’ Northern California distribution center and expansion of self-distribution for fresh meat and select Sprouts brand items enhanced operational control and supported both freshness and cost savings. Management cited these supply chain improvements as key to supporting future affordability and efficiency.
Drivers of Future Performance
Sprouts’ outlook is driven by ongoing investments in affordability and personalization, balanced against macroeconomic pressures and the ramp-up of new store openings.
-
Affordability and pricing strategy: Management intends to intensify focus on targeted price investments in high-priority categories, especially healthy essentials. The company is refining promotions to better engage customers, acknowledging that prior efforts yielded mixed results, particularly among less engaged and lower-income shoppers.
-
Loyalty and personalization initiatives: Ongoing development of first-party data and loyalty programs is expected to support more tailored marketing and improve customer retention. Management sees potential for these tools to gradually lift both traffic and units per basket as engagement deepens over time.
-
New store expansion and supply chain: With 42 net new stores planned for the year and continued enhancements to self-distribution, Sprouts anticipates increased market presence and operational leverage. Management remains cautious about fixed cost deleverage, noting that store ramp-up and supply chain investments will pressure margins in the near term.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be watching (1) the pace and success of new store openings, particularly in less-penetrated markets; (2) the effectiveness of targeted affordability and loyalty initiatives in driving sustained increases in traffic and basket size; and (3) continued progress in supply chain and self-distribution efforts, which are critical for supporting operational efficiency and margin stability. Broader macroeconomic factors and consumer behavior shifts will also be key signposts.
Sprouts currently trades at $82.50, up from $79.16 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free).
Our Favorite Stocks Right Now
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.