What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-30 compared with 2024-10-30 · 115 added, 164 removed, 320 unchanged (47% of the section changed)

4 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

September 29, 2024 December 31, 2023

March 30, 2025 December 29, 2024

Current assets:

30 unchanged sentences

Common stock, $ 0.001 par value;

200,000,000 shares authorized, 100,039,217 shares issued and outstanding, September 29, 2024;

200,000,000 shares authorized, 98,187,882 shares issued and outstanding, March 30, 2025;

99,255,036 shares issued and outstanding, December 29, 2024

8 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Thirteen weeks ended Thirty-nine weeks ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Net sales $ 2,236,436 $ 1,883,808

20 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

For the thirteen and thirty-nine weeks ended September 29, 2024

Shares Common

Stock Additional

Capital Retained

Earnings Total

Stockholders’

Balances at June 30, 2024 100,214,345 $ 100 $ 791,364 $ 477,811 $ 1,269,275

Net income — — — 91,610 91,610

Issuance of shares under stock plans 89,007 — 1,464 — 1,464

Repurchase and retirement of common stock, including excise tax ( 264,135 ) — — ( 25,516 ) ( 25,516 )

Share-based compensation — — 6,659 — 6,659

Balances at September 29, 2024 100,039,217 $ 100 $ 799,487 $ 543,905 $ 1,343,492

For the thirteen weeks ended March 30, 2025

Shares Common

8 unchanged sentences

Share-based compensation — — 6,656 — 6,656

Balances at September 29, 2024 100,039,217 $ 100 $ 799,487 $ 543,905 $ 1,343,492

For the thirteen and thirty-nine weeks ended October 1, 2023

Shares Common

Stock Additional

Capital Retained

Earnings Total

Stockholders’

Balances at July 2, 2023 102,183,083 $ 102 $ 761,181 $ 313,870 $ 1,075,153

Net income — — — 65,313 65,313

Issuance of shares under stock plans 271,815 — 1,606 — 1,606

Repurchase and retirement of common stock, including excise tax ( 831,416 ) ( 1 ) — ( 32,332 ) ( 32,333 )

Share-based compensation — — 5,270 — 5,270

Balances at October 1, 2023 101,623,482 $ 101 $ 768,057 $ 346,851 $ 1,115,009

Balances at March 30, 2025 98,187,882 $ 98 $ 814,796 $ 473,088 $ 1,287,982

For the thirteen weeks ended March 31, 2024

Shares Common

3 unchanged sentences

Stockholders’

Balances at January 1, 2023 105,072,756 $ 105 $ 726,345 $ 320,012 $ 1,046,462

Balances at December 31, 2023 101,211,984 $ 101 $ 774,834 $ 373,612 $ 1,148,547

Net income — — — 114,100 114,100

2 unchanged sentences

Share-based compensation — — 6,477 — 6,477

Issuance of shares for acquisition 554,358 1 18,138 — 18,139

Balances at October 1, 2023 101,623,482 $ 101 $ 768,057 $ 346,851 $ 1,115,009

Balances at March 31, 2024 100,802,152 $ 101 $ 783,593 $ 427,333 $ 1,211,027

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(IN THOUSANDS)

Thirty-nine weeks ended

September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Operating activities

3 unchanged sentences

Operating lease asset amortization 34,689 32,303

Impairment of assets — 27,845

Share-based compensation 6,656 6,477

15 unchanged sentences

Purchases of property and equipment ( 59,479 ) ( 51,241 )

Payments for acquisition, net of cash acquired — ( 13,032 )

Cash flows used in investing activities ( 59,479 ) ( 51,241 )

Financing activities

Payments on revolving credit facilities ( 125,000 ) ( 100,000 )

Payments on finance lease liabilities ( 326 ) ( 253 )

2 unchanged sentences

Cash flows used in financing activities ( 219,088 ) ( 57,970 )

Increase/(decrease) in cash, cash equivalents, and restricted cash 107,855 ( 41,343 )

Increase in cash, cash equivalents, and restricted cash 20,522 110,484

Cash, cash equivalents, and restricted cash at beginning of the period 267,213 203,870

2 unchanged sentences

Cash paid for interest $ 807 $ 2,411

Cash paid for income taxes 71,290 64,569

Cash refunded for income taxes 102 151

Supplemental disclosure of non-cash activities

Property and equipment in accounts payable and accrued liabilities $ 19,224 $ 23,599

Issuance of shares for acquisition — 18,139

Excise tax accrued on repurchase of common stock 3,823 2,146

Leased assets obtained in exchange for new operating lease liabilities, net of lease terminations 69,736 72,791

Leased assets obtained in exchange for new finance lease liabilities — 809

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

The Company continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free.

As of September 29, 2024, the Company operated 428 stores in 23 states.

As of March 30, 2025, the Company operated 443 stores in 24 states.

For convenience, the “Company” is used to refer collectively to Sprouts Farmers Market, Inc.

21 unchanged sentences

A summary of the activity and balances in the gift card liability, net is as follows:

Thirty-nine weeks ended

September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Beginning Balance $ 11,071 $ 10,566

4 unchanged sentences

The nature of goods the Company transfers to customers at the point of sale are inventories, consisting of merchandise purchased for resale.

The Company does not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current period from performance obligations satisfied in previous periods, any contract performance obligations, or any material costs to obtain or fulfill a contract as of September 29, 2024.

Restricted Cash

Restricted cash relates to the Company's defined benefit plan forfeitures and the Company's healthcare, general liability and workers’ compensation plan benefits of $ 2.1 million as of September 29, 2024 and December 31, 2023.

These balances are included in prepaid expenses and other current assets in the consolidated balance sheets.

Recently Issued Accounting Pronouncements Not Yet Adopted

Segment Reporting – Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU no.

2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures." The amendments in this update increase required disclosures about a public entity's reportable segments, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Company’s chief operating decision maker (“CODM”).

In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM.

The guidance will be effective beginning with the Company's Annual Report on Form 10-K for its fiscal year 2024 and for interim periods starting in the first quarter of its fiscal year ending December 28, 2025 ("fiscal year 2025").

Early adoption is permitted, and the guidance is required to be applied retrospectively.

The Company expects this update to impact its segment disclosures but does not anticipate that this update will impact its results of operations, cash flows or financial condition.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes – Improvements to Income Tax Disclosures

4 unchanged sentences

The Company expects this update to impact its income tax disclosures but does not anticipate that this update will impact its results of operations, cash flows or financial condition.

No other new accounting pronouncements issued or effective during the thirteen weeks ended September 29, 2024 had, or are expected to have, a material impact on the Company’s consolidated financial statements.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU no.

2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses".

The standard requires public entities to disclose additional disaggregation of expense in the notes to the financial statements for interim and annual reporting periods.

The guidance is effective for the Company for its fiscal year 2027.

Early adoption is permitted, and the guidance should be applied prospectively, with an option to apply it retrospectively.

The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

No other new accounting pronouncements issued or effective during the thirteen weeks ended March 30, 2025 had, or are expected to have, a material impact on the Company’s consolidated financial statements.

Fair Value Measurements

7 unchanged sentences

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in the impairment analysis of goodwill, intangible assets and long-lived assets.

The Company did no t have any financial liabilities measured at fair value on a recurring basis as of September 29, 2024.

The following table presents the fair value hierarchy for the Company’s financial liabilities measured at fair value on a recurring basis as of December 31, 2023:

December 31, 2023 Level 1 Level 2 Level 3 Total

Long-term debt $ — $ 125,000 $ — $ 125,000

Total financial liabilities $ — $ 125,000 $ — $ 125,000

The Company did no t have any financial liabilities measured at fair value on a recurring basis as of March 30, 2025 and December 29, 2024.

The determination of fair values of certain tangible and intangible assets for purposes of the Company’s goodwill or long-lived asset impairment evaluation is based upon Level 3 inputs.

1 unchanged sentence

Cash, cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued salaries and benefits approximate fair value because of the short maturity of those instruments.

Based on comparable open market transactions, the fair value of the long-term debt approximated carrying value as of December 31, 2023.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Debt and Finance Lease Liabilities

A summary of long-term debt and finance lease liabilities is as follows:

Facility Maturity Interest Rate September 29, 2024 December 31, 2023

Facility Maturity Interest Rate March 30, 2025 December 29, 2024

Senior secured debt

3 unchanged sentences

Long-term debt and finance lease liabilities $ 6,913 $ 7,248

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Agreement

5 unchanged sentences

Letters of credit issued under the Credit Agreement reduce the capacity of Intermediate Holdings to borrow under the Revolving Credit Facility.

Letters of credit totaling $ 19.6 million have been issued as of September 29, 2024 under the Letter of Credit Sub-Facility, primarily to support the Company’s insurance programs.

Letters of credit totaling $ 21.6 million have been issued as of March 30, 2025 under the Letter of Credit Sub-Facility, primarily to support the Company’s insurance programs.

Obligations under the Credit Agreement are guaranteed by the Company and substantially all of its existing and future wholly-owned material domestic subsidiaries, and are secured by first-priority security interests in substantially all of the assets of the Company, Intermediate Holdings, and the subsidiary guarantors, including, without limitation, a pledge by the Company of its equity interest in Intermediate Holdings.

2 unchanged sentences

The interest rate margins are subject to upward adjustments pursuant to a pricing grid based on the Company’s total net leverage ratio as set forth in the Credit Agreement and to upward or downward adjustments of up to 0.05 % based upon the achievement of certain diversity and sustainability-linked metric thresholds, as set forth in the Credit Agreement.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the terms of the Credit Agreement, the Company is obligated to pay a commitment fee on the available unused amount of the commitments, which commitment fee ranges between 0.10 % to 0.225 % per annum, pursuant to a pricing grid based on the Company’s total net leverage ratio.

The commitment fees are subject to upward or downward adjustments of up to 0.01 % based upon the achievement of certain diversity and sustainability-linked metric thresholds, as set forth in the Credit Agreement.

As of September 29, 2024, loans outstanding under the Credit Agreement bore interest at Term SOFR (as defined in the Credit Agreement) plus a 0.10 % SOFR adjustment and 0.95 % per annum.

The Company had no loans outstanding under the Credit Agreement as of September 29, 2024.

As of September 29, 2024, outstanding letters of credit issued under the Credit Agreement were subject to a participation fee of 0.95 % per annum and an issuance fee of 0.125 % per annum.

As of March 30, 2025, loans outstanding under the Credit Agreement bore interest at Term SOFR (as defined in the Credit Agreement) plus a 0.10 % SOFR adjustment and 0.95 % per annum.

The Company had no loans outstanding under the Credit Agreement as of March 30, 2025.

As of March 30, 2025, outstanding letters of credit issued under the Credit Agreement were subject to a participation fee of 0.95 % per annum and an issuance fee of 0.125 % per annum.

Payments and Borrowings

The Credit Agreement is scheduled to mature, and the commitments thereunder will terminate on March 25, 2027, subject to extensions as set forth therein.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company may prepay loans and permanently reduce commitments under the Credit Agreement at any time in agreed-upon minimum principal amounts, without premium or penalty (except SOFR breakage costs, if applicable).

In connection with the execution of the Credit Agreement, the Company's obligations under the Former Credit Facility were prepaid and terminated.

During the thirteen and thirty-nine weeks ended September 29, 2024, the Company made no additional borrowings and made principal payments of $ 125.0 million, resulting in no outstanding debt under the Credit Agreement as of September 29, 2024.

During 2023, the Company made no additional borrowings and made principal payments of $ 125.0 million, resulting in total outstanding debt under the Credit Agreement of $ 125.0 million as of December 31, 2023.

During the thirteen weeks ended March 30, 2025, the Company made no additional borrowings and had no outstanding debt under the Credit Agreement as of March 30, 2025.

During 2024, the Company made no additional borrowings and made principal payments of $ 125.0 million, resulting in no outstanding debt under the Credit Agreement as of December 29, 2024.

The Credit Agreement contains financial, affirmative and negative covenants.

11 unchanged sentences

Each of these covenants is subject to customary and other agreed-upon exceptions.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, the Credit Agreement requires that the Company and its subsidiaries maintain a maximum total net leverage ratio not to exceed 3.75 to 1.00, which ratio may be increased from time to time in connection with certain permitted acquisitions pursuant to conditions as set forth in the Credit Agreement, and a minimum interest coverage ratio not to be less than 3.00 to 1.00.

Each of these covenants is tested as of the last day of each fiscal quarter.

The Company was in compliance with all applicable covenants under the Credit Agreement as of September 29, 2024.

The Company’s effective tax rate increased to 25.8 % for the thirteen weeks ended September 29, 2024, compared to 24.0 % for the thirteen weeks ended October 1, 2023.

The increase in the effective tax rate was primarily due to an increase in non-deductible executive compensation, an unfavorable current year return-to-provision true-up compared to the favorable prior year period true-up, and the increase in pre-tax income outpacing the increase to the benefit from enhanced inventory donations deductions.

The income tax effect resulting from excess tax benefits of share-based payment awards was $ 1.7 million and $ 1.1 million for the thirteen weeks ended September 29, 2024 and October 1, 2023, respectively.

The Company’s effective tax rate increased to 24.5 % for the thirty-nine weeks ended September 29, 2024, compared to 24.0 % for the thirty-nine weeks ended October 1, 2023.

The increase in the effective tax rate was primarily due to an unfavorable current year return-to-provision true-up compared to the favorable prior year period true-up, a prior period refund of interest from amended returns, and the increase in pre-tax income outpacing the increase to the benefit from enhanced inventory donations deductions, partially offset by an increase in excess tax benefits associated with share-based payment awards.

The income tax effect resulting from excess tax benefits of share-based payment awards was $ 6.8 million and $ 4.2 million for the thirty-nine weeks ended September 29, 2024 and October 1, 2023, respectively.

The Company was in compliance with all applicable covenants under the Credit Agreement as of March 30, 2025.

The Company’s effective tax rate decreased to 20.8 % for the thirteen weeks ended March 30, 2025, compared to 22.6 % for the thirteen weeks ended March 31, 2024.

The decrease in the effective tax rate was primarily due to an increase in benefit from current year stock-based compensation partially offset by an increase in non-deductible executive compensation.

The income tax effect resulting from excess tax benefits of share-based payment awards was $ 12.8 million and $ 4.5 million for the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively.

The Company files income tax returns for federal purposes and in many states.

The Company’s tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three years, following the tax year to which those filings relate.

The Company’s tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three years, with some exceptions, following the tax year to which those filings relate.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

2 unchanged sentences

Self-insurance liabilities require significant judgment and actual claim settlements and associated expenses may differ from the Company’s current provisions for loss.

In February 2025, the Company terminated its agreement with Harvest Sherwood Food Distributors, Inc.

(“Harvest Sherwood”) for the distribution of certain meat and seafood products to the Company due to, among other things, Harvest Sherwood’s failure to pay the Company’s vendors for these products.

Subsequently, on February 24, 2025, Harvest Sherwood filed a complaint against the Company in the Superior Court for the State of Delaware alleging breach of contract among other claims and seeking monetary damages.

On March 6, 2025, the Company filed an answer and counterclaims against Harvest Sherwood, asserting its defenses to the complaint and its claims against Harvest Sherwood for breach of contract, negligent misrepresentation and unjust enrichment, among others.

The court has set a trial date in February 2026.

At this stage of the proceedings, the Company is unable to predict or reasonably estimate any potential loss or effect on the Company.

Accordingly, no loss contingency was recorded for this matter.

Stockholders’ Equity

Share Repurchases

On May 22, 2024, the Company's board of directors authorized a new $ 600 million share repurchase program for its common stock.

This authorization replaced the Company's then-existing share repurchase authorization of $ 600 million that was due to expire on December 31, 2024, of which $ 119.3 million remained available upon its replacement, and under which no further shares may be repurchased.

The following table outlines the common stock share repurchase programs authorized by the Company’s board of directors and the related repurchase activity and available authorization as of September 29, 2024:

On May 22, 2024, the Company's board of directors authorized a $ 600 million share repurchase program for its common stock.

The new authorization replaced the Company's then-existing share repurchase authorization of $ 600 million that was due to expire on December 31, 2024, of which $ 119.3 million remained available upon its replacement, and under which no further shares may be repurchased.

Effective date Expiration date Amount

3 unchanged sentences

May 22, 2024 May 22, 2027 $ 600,000 $ 368,238 $ 231,762

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The shares under the Company’s repurchase programs may be purchased on a discretionary basis from time to time through the applicable expiration date, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans.

1 unchanged sentence

Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows (total cost in thousands):

Thirteen weeks ended Thirty-nine weeks ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Number of common shares acquired 1,568,017 957,780

3 unchanged sentences

The cost of common shares repurchased included the 1% excise tax imposed as part of the Inflation Reduction Act of 2022.

Subsequent to September 29, 2024 and through the date of this filing, the Company repurchased an additional 0.1 million shares of common stock for $ 5.6 million, excluding excise tax.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to March 30, 2025 and through April 28, 2025, the Company repurchased an additional 0.3 million shares of common stock for $ 53.0 million, excluding excise tax.

Net Income Per Share

2 unchanged sentences

Performance share awards ("PSAs") are included in the computation of diluted net income per share only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be satisfied if the end of the reporting period were the end of the related performance period, and if the effect would be dilutive.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share amounts):

Thirteen weeks ended Thirty-nine weeks ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Basic net income per share:

7 unchanged sentences

Assumed exercise of options to purchase shares 575 404

RSUs 392 505 449 511

PSAs — — — 58

Weighted average shares and equivalent shares outstanding - diluted 99,719 102,024

Diluted net income per share $ 1.81 $ 1.12

For the thirteen weeks ended September 29, 2024, the Company had 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirteen weeks ended October 1, 2023, the Company had 0.2 million options and 0.5 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirty-nine weeks ended September 29, 2024, the Company had 0.1 million options and 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirty-nine weeks ended October 1, 2023, the Company had 0.4 million options and 0.5 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirteen weeks ended March 30, 2025, the Company had 0.1 million options and 0.3 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirteen weeks ended March 31, 2024, the Company had 0.1 million options, 0.3 million RSUs and 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

The Company has one operating segment and, therefore, one reportable segment:

healthy grocery stores.

The Company categorizes the varieties of products it sells as perishable and non-perishable.

Perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives.

Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

The Company derives all its revenues from the sale of products at its various store locations across the United States.

The accounting policies of the segment are the same as described in the summary of significant accounting policies.

The Company’s chief operating decision maker (“CODM”) is the chief executive officer.

The CODM assesses performance and allocates resources based on consolidated net income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

In accordance with ASC 280, the following table represents the significant expense and key metrics reviewed by the CODM:

SPROUTS FARMERS MARKET, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In accordance with ASC 606, the following table represents a disaggregation of revenue for the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023:

Thirteen weeks ended

September 29, 2024 October 1, 2023

Perishables $ 1,128,272 58.0 % $ 985,760 57.5 %

Non-Perishables 817,463 42.0 % 727,522 42.5 %

March 30, 2025 March 31, 2024

Net Sales $ 2,236,436 $ 1,883,808

Thirty-nine weeks ended

September 29, 2024 October 1, 2023

Cost of sales 1,350,073 1,161,495

Direct store expenses 534,797 466,379

Other segment items (1)

125,234 107,668

Interest (income) expense, net ( 924 ) 818

Income tax provision 47,230 33,348

Net income $ 180,026 $ 114,100

(1) Other segment items include non-store selling, general, and administrative expenses, depreciation and amortization, store closure costs, and other overhead expenses.

The Company categorizes the varieties of products it sells as perishable and non-perishable.

Perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives.

Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

In accordance with ASC 606, the following table represents a disaggregation of revenue for the thirteen weeks ended March 30, 2025 and March 31, 2024:

Thirteen weeks ended

March 30, 2025 March 31, 2024

Perishables $ 1,269,732 56.8 % $ 1,069,730 56.8 %

8 unchanged sentences

Awards Granted under the 2022 Incentive Plan

During the thirty-nine weeks ended September 29, 2024, the Company granted the following share-based compensation awards under the 2022 Incentive Plan:

During the thirteen weeks ended March 30, 2025, the Company granted the following share-based compensation awards under the 2022 Incentive Plan:

Grant Date RSUs PSAs Options

March 18, 2025 185,228 58,805 61,079

June 4, 2024 1,538 — —

September 4, 2024 15,024 — —

Total 185,228 58,805 61,079

1 unchanged sentence

Weighted-average exercise price $ — $ — $ 137.81

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The aggregate number of shares of common stock that may be issued to team members and directors under the 2022 Incentive Plan may not exceed 6,600,000 , subject to the following adjustments.

2 unchanged sentences

2013 Incentive Plan (the “2013 Incentive Plan”) that terminate, expire, are paid in cash, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid in shares under the 2013 Incentive Plan after the effective date of the 2022 Incentive Plan will be available for issuance under the 2022 Incentive Plan.

As of September 29, 2024, there were 1,071,109 stock awards outstanding and 5,585,223 shares remaining available for issuance under the 2022 Incentive Plan.

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 30, 2025, there were 1,151,016 stock awards outstanding and 5,286,442 shares remaining available for issuance under the 2022 Incentive Plan.

2013 Incentive Plan

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RSUs generally vest annually over a period of two or three years from the grant date.

PSAs granted in 2020 were subject to the Company achieving certain earnings before taxes (“EBT”) performance targets for the 2022 fiscal year.

The criteria was based on a range of performance targets in which grantees may earn 0 % to 200 % of the base number of awards granted.

The performance conditions with respect to fiscal year 2022 EBT were deemed to have been met, and the PSAs vested at the maximum pay out level on the third anniversary of the grant date (March 2023).

There were no outstanding 2020 PSAs as of September 29, 2024.

PSAs granted in 2021 were subject to the Company achieving certain earnings before interest and taxes ("EBIT") performance targets for the 2023 fiscal year.

The criteria was based on a range of performance targets in which grantees may earn 0 % to 200 % of the base number of awards granted.

The performance conditions with respect to fiscal year 2023 EBIT were deemed not to have been met.

Accordingly, no PSAs vested on the third anniversary of the grant date (March 2024).

There were no outstanding 2021 PSAs as of September 29, 2024.

PSAs granted in 2022 are subject to the Company achieving certain EBIT performance targets for the 2024 fiscal year.

The criteria is based on a range of performance targets in which grantees may earn 0 % to 200 % of the base number of awards granted.

The performance conditions with respect to fiscal year 2024 EBIT were deemed to have been met, and PSAs vested at 148 % pay out level on the third anniversary of the grant date (March 2025).

During the thirteen weeks ended March 30, 2025, 182,560 of the PSAs vested.

There were no outstanding 2022 PSAs as of March 30, 2025.

PSAs granted in 2023 are subject to the Company achieving certain EBIT performance targets for the 2025 fiscal year.

The criteria is based on a range of performance targets in which grantees may earn 0 % to 200 % of the base number of awards granted.

If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2026).

11 unchanged sentences

The amount recognized was as follows:

Thirteen weeks ended Thirty-nine weeks ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Thirteen weeks ended

March 30, 2025 March 31, 2024

Share-based compensation expense $ 6,656 $ 6,477

The following share-based awards were outstanding under the 2022 and 2013 Incentive Plans as of September 29, 2024 and October 1, 2023:

September 29, 2024 October 1, 2023

The following share-based awards were outstanding under the 2022 and 2013 Incentive Plans as of March 30, 2025 and March 31, 2024:

March 30, 2025 March 31, 2024

(in thousands)

1 unchanged sentence

Unvested 213 338

As of September 29, 2024, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:

As of March 30, 2025, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:

expense Remaining

2 unchanged sentences

PSAs 19,341 1.7

Total unrecognized compensation expense at September 29, 2024 $ 35,698

During the thirty-nine weeks ended September 29, 2024 and October 1, 2023, the Company received $ 4.7 million and $ 8.8 million, respectively, in cash proceeds from the exercise of options.

The Company’s goodwill balance was $ 381.8 million and $ 381.7 million as of September 29, 2024 and December 31, 2023, respectively.

As of September 29, 2024 and December 31, 2023, the Company had no accumulated goodwill impairment losses.

The goodwill was related to the acquisitions of Henry’s Farmers Market and Sunflower Farmers Market in 2011 and 2012, respectively, and the acquisition of Ronald Cohn, Inc.

For further details, see Note 13, "Business Combination".

SPROUTS FARMERS MARKET, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total unrecognized compensation expense at March 30, 2025 $ 64,189

During the thirteen weeks ended March 30, 2025 no options were exercised.

During the thirteen weeks ended March 31, 2024, the Company received $ 2.3 million in cash proceeds from the exercise of options.

The Company’s goodwill balance was $ 381.8 million as of March 30, 2025 and December 29, 2024.

As of March 30, 2025 and December 29, 2024, the Company had no accumulated goodwill impairment losses.

The goodwill is related to the acquisitions of Henry’s Farmers Market and Sunflower Farmers Market in 2011 and 2012, respectively, and the acquisition of Ronald Cohn, Inc.

Store Closures

In February 2023, the Company's board of directors approved the closing of 11 stores, all of which were closed during 2023.

These stores, on average, were approximately 30 % larger than the Company's current prototype format and were underperforming financially.

The closure of these stores resulted in a charge of $ 27.8 million during the thirty-nine weeks ended October 1, 2023 related to the impairment of leasehold improvements and right-of-use assets and was reflected in Store closure and other costs, net on the consolidated statements of income.

The impairment charge represented the excess of the carrying value over the estimated fair value of each store's asset group.

Accelerated depreciation on the closed stores' assets during 2023 was $ 5.9 million, and was reflected in Depreciation and amortization on the consolidated statements of income.

Severance expense during 2023 was immaterial.

Business Combination

On March 20, 2023, the Company completed its acquisition of Ronald Cohn, Inc., a corporation that owned two stores located in California operating under the ‘Sprouts Farmers Market’ name pursuant to a legacy trademark license arrangement.

The aggregate consideration paid in the transaction consisted of 0.6 million of the Company’s common shares valued at $ 18.1 million using the closing price of the Company's common stock on March 20, 2023 and cash consideration of $ 13.0 million.

The Company accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires that the purchase price be allocated to the assets and liabilities acquired based on their estimated fair values as of the acquisition date.

Acquisition-related costs were immaterial and were expensed as incurred.

The financial results of the acquired stores have been included in the Company’s consolidated financial statements from the date of acquisition.

The acquired stores' results of operations were not material to the Company's consolidated results.

The net purchase price was allocated to the net tangible assets of ($ 4.9 ) million and a reacquired right intangible asset of $ 23.1 million based on their fair values on the acquisition date.

The remaining unallocated net purchase price of $ 12.9 million was recorded as goodwill.

Goodwill represents the future economic benefits to the Company from the acquisition, which include the Company's ability to fully control the Sprouts Farmers Market brand by termination of the legacy trademark license agreement and allowing further expansion opportunities in Southern California.

The goodwill is not expected to be deductible for tax purposes.

The final allocation of the purchase price consideration to the assets acquired and liabilities assumed has been completed and included an immaterial amount of measurement period adjustments.

No stores were closed during the thirteen weeks ended March 30, 2025 and all lease costs associated with our closed store locations, for which a lease remains in effect are included within Store closure and other cost, net.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements