What changed in this filing

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Item 1. Business

2026-02-19 compared with 2025-02-20 · 112 added, 123 removed, 243 unchanged (49% of the section changed)

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Our Growth Strategy

We continue to execute on our long-term growth strategy that we believe is transforming our company and driving profitable growth, focusing on the following areas:

We continue to execute on our long-term growth strategy that we believe is driving profitable growth, focusing on the following areas:

• Win with Target Customers .

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To further deliver on our fresh commitment and reputation, as well as to increase our local offerings and improve financial results, we aspire to ultimately position fresh distribution centers within a 250-mile radius of stores.

Following the opening of two fresh distribution centers in fiscal 2021 and the relocation of our Southern California distribution center, closure of our Georgia distribution center and partnership with a third-party fresh distribution center in the Northeast in fiscal 2023, we are better leveraging our existing distribution center capacity, and approximately 80% of our stores were within 250 miles of a distribution center as of December 29, 2024.

As a step to improve our fresh supply chain, in 2025 we began the transition to a self-distribution model for meat and seafood through our fresh distribution centers.

As a result, we are better leveraging our existing distribution center capacity, and approximately 80% of our stores were within 250 miles of a distribution center as of December 28, 2025.

• Customer Engagement and Personalization.

We believe we are elevating our national brand recognition and positioning by telling our unique brand story rooted in product innovation and differentiation.

We are increasing our use of data analytics and insights.

We are increasing our use of data analytics and insights, including through the nationwide launch of our Sprouts Rewards loyalty program in 2025.

We believe this data-driven intelligence will increase customer engagement through personalization efforts with digital and social connections to drive additional sales growth and loyalty.

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Currently, our stores average approximately 28,000 square feet, which we believe is smaller than many of our peers’ average stores.

expensive to build, reduce non-selling space, reduce occupancy and operating costs and leverage the strengths of our older, highly productive stores.

Under our long-term growth strategy, our updated format stores feature a smaller box size, generally between 21,000 and 25,000 square feet, that stay true to our fresh-focused, farmers market heritage but are generally less expensive to build, reduce non-selling space, reduce occupancy and operating costs and leverage the strengths of

our older, highly productive stores.

Our stores are located in a variety of mid-sized and larger shopping centers, lifestyle centers and in certain cases, independent single-unit, stand-alone developments.

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Our stores are typically staffed with 75 to 100 full and part-time team members.

We strive to create a strong and unified company culture, rooted in our purpose, with a dedication to developing team members throughout the entire organization.

We are intentional about our company culture, rooted in our purpose, with a dedication to developing team members throughout the organization.

We take pride in caring for and assisting our store teams through our store support office and regional teams.

We have prioritized making investments in training development that we believe enhances our team members’ knowledge, particularly with respect to our expanded and evolving product offerings, so our team members can continue to engage and assist our customers.

We have prioritized making investments in training and team member development that we believe enhances our team members’ knowledge, particularly with respect to our expanded and evolving product offerings, so our team members can continue to engage and assist our customers.

We also support leadership and career opportunities for our team members at Sprouts.

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Our departments reflect our unique selling proposition featuring intentional curation of responsibly and locally sourced products.

We believe each of our departments provides high-quality,

differentiated and value-oriented offerings for our customers which we continuously refine with our customers' preferences in mind.

We believe each of our departments provides high-quality, differentiated and value-oriented offerings for our customers which we continuously refine with our customers' preferences in mind.

Sprouts Brand

We continue to expand the breadth of our Sprouts branded products with a dedicated product development team focused on continuing this growth.

We sell a broad assortment of products that are differentiated, attribute focused and fun to explore, offer incredible taste, quality, value and experience, and are only available at Sprouts.

Our program to update and redesign all Sprouts branded products is over 90% complete, and we expect to complete the refresh and redesign of our Vitamins and Supplements in 2025.

We have experienced and expect to continue to see positive impact in terms of sales and recognition from our new food and beverage design.

The Sprouts Brand program accounted for just over 23% of our revenue in fiscal 2024.

We believe our Sprouts Brand products build and enhance the overall Sprouts brand and allow us to distinguish ourselves from our competitors, promoting customer loyalty and creating a destination shopping experience for products only available at our stores.

We continue to expand the breadth of our Sprouts‑branded products through a dedicated product development team committed to driving growth with a focus on innovation and quality.

Our broad assortment features differentiated, attribute‑driven products that create an engaging and exploratory shopping experience for our customers.

This curated selection—available exclusively at Sprouts—delivers exceptional taste and quality while offering strong value.

Our initiative to update and redesign all Sprouts‑branded products is now substantially complete, with a focus in 2025 on updating the vitamins and supplements assortment, enhancing consistency across the assortment and elevating the overall customer experience.

We believe the refreshed design is contributing to increased sales and improved brand recognition.

In fiscal 2025, Sprouts Brand products represented just over 25% of our revenue.

We believe this portfolio strengthens and elevates the overall Sprouts shopping experience, differentiates us within the marketplace, fosters customer loyalty, and reinforces Sprouts as a destination for unique products available only in our stores.

Product Innovation

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Led by our dedicated foraging team, we embrace product innovation, and we believe our stores serve as an incubator for growth across the natural foods industry, highlighting new and differentiated items in our innovation center merchandising displays.

In 2024, we launched approximately 7,100 new products.

In 2025, we launched more than 7,000 new products.

We feature thousands of responsibly sourced products with certifications and attributes that are desired by our target customer base, including organic, paleo, keto, plant-based, non-GMO, fair trade, gluten-free, vegan, grass-fed, raw and humane certified.

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We are committed to sourcing products in a manner that respects people, our communities and the environment, and we seek to partner with suppliers and service providers that share this commitment, as included in our Supplier Code of Conduct, which details our expectations regarding workplace standards and supplier best practices, and our Commitment to Human Rights, which details our commitment to respecting human rights in our operations and supply chain.

We work closely with our supply chain partners to improve animal welfare standards, responsible seafood sourcing, support for organic and regenerative agriculture and the ethical treatment of people.

For an overview of our product sourcing policies and programs, please visit:

https://www.sprouts.com/about/sustainability/.

We believe, based on our industry experience, that our strong relationships in the produce business provide us a competitive advantage and enable us to offer high-quality produce at prices we believe are generally below those of conventional food retailers and even further below high-end natural and organic food retailers.

We believe, based on our industry experience, that our strong relationships in the produce business provide us a competitive advantage and enable us to offer differentiated varieties of high-quality produce.

Our centralized buyers are supported by dedicated regional procurement teams that provide us flexibility to procure produce on local, regional and national levels.

Our regional produce buying teams allow us to form meaningful relationships with farmers to build a path to growing with them as we grow, and our flexibility allows us to react to produce markets quickly in order to help us bring new and innovative varietals to our customers at favorable pricing.

These products become treasure hunt items found at our stores.

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As a pillar of our long-term growth strategy, we expect to create an advantaged supply chain and aspire to locate our distribution centers within 250 miles of the majority of our stores.

We currently have six produce distribution centers, with two located in California and one located in each of Arizona, Texas, Colorado and Florida.

In 2023, we entered into a partnership with a third-party produce distributor in Pennsylvania to supply fresh produce to our Mid-Atlantic stores.

We currently have six fresh distribution centers, with two located in California and one located in each of Arizona, Texas, Colorado and Florida.

In 2025, we extended our partnership with a third-party produce distributor in Pennsylvania to supply fresh produce to our Mid-Atlantic stores.

As of December 28, 2025, approximately 80% of our stores were within 250 miles of a distribution center.

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We believe our scale, together with this decentralized purchasing structure and flexibility generates cost savings, which we frequently pass on to our customers.

Distributors and farmers recognize the volume of goods we sell through our stores and our flexible purchasing and supply chain model allows us to opportunistically acquire produce at great value which we will frequently pass along to our customers.

For all non-produce products, we use third-party distributors and vendors to distribute products directly to our stores following specifications and ingredient and quality control standards that are set by us.

Distributors and farmers recognize the volume of goods we sell through our stores and our flexible purchasing and supply chain model allows us to opportunistically acquire produce at great value.

As a step to improve our fresh supply chain, in 2025 we began the transition to a self-distribution model for meat and seafood through our fresh distribution centers.

During this process, we experienced third-party supply disruptions that led to availability challenges and customer disruption.

However, as of December 28, 2025, we have transitioned meat and seafood distribution through four of our distribution centers, servicing approximately 70% of our stores and resulting in increased delivery frequency of fresh product and improved fill rates.

We expect to transition our remaining distribution centers in 2026, resulting in approximately 95% of our stores to be serviced through our for meat and seafood self-distribution model.

For all non-produce products and the remaining meat and seafood products in geographies that have not yet transitioned to self-distribution, we use third-party distributors and vendors to distribute products directly to our stores following specifications and ingredient and quality control standards that are set by us.

KeHE Distributors, LLC (“KeHE”), is our primary supplier of dry grocery and frozen food products, accounting for approximately 52%, 50% and 47% of our total purchases in fiscal 2025, 2024 and 2023, respectively.

Another 3% of our total purchases in each of fiscal 2024, 2023 and 2022 were made through our secondary supplier, United Natural Foods, Inc.

Our primary meat and seafood distributor accounted for approximately 14% of our total purchases in each of fiscal 2024 and 2023 and 13% of our total purchases in fiscal 2022.

As a step to improve our fresh supply chain, we are currently in the process of transitioning from our primary meat and seafood distributor.

We expect to initially transition to an intermediary third-party distributor and ultimately to a self-distribution model under which we will deal directly with our suppliers.

As with complex transitions of this magnitude, there are associated short-term risks, including in particular, potential product supply disruptions resulting in lost sales at our stores and transition-related expenses that exceed our expectations.

See “Risk Factors—Disruption of significant supplier relationships could negatively affect our business.”

Another 12% of our total purchases in fiscal 2025 and 3% of our total purchases in each of fiscal 2024 and 2023 were made through our secondary supplier, United Natural Foods, Inc.

We work closely with our supply chain partners to improve animal welfare standards, responsible seafood sourcing, support for organic and regenerative agriculture and the ethical treatment of people.

For an overview of our product sourcing policies and programs, please visit:

sprouts.com/about/sustainability/ .

Our Pricing, Marketing and Advertising

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This allows us to respond to local competitive activity and to better connect with customers in both our established and emerging markets.

Connecting with our customers via owned CRM channels like email and text messages continues to be a significant priority.

Connecting with our customers via owned customer relationship management ("CRM") channels like email and text messages continues to be a significant priority.

We focus our efforts on personalizing content that is relevant to our customers.

We experienced an 8.6% increase in email subscribers in 2024 compared to 2023.

During 2024, we garnered 17 million weekly digital flyer views, demonstrating that our leverage of digital media to reach customers and share what is new and unique at Sprouts resonates with the habits of today’s shoppers.

In 2025, we launched our Sprouts Rewards loyalty program nationwide which we believe will allow us to enhance our customer engagement.

Additionally, we experienced a 10% increase in email subscribers in 2025 compared to 2024.

During 2025, our CRM platforms and weekly digital flyers generated over 17 million views, demonstrating that our leverage of digital media to reach customers and share what is new and unique at Sprouts resonates with the habits of today’s shoppers.

We have developed and maintain the Sprouts app on which we include digital coupons and in-store scan features, and our website, www.sprouts.com , on which we display our weekly sales flyers and highlight our unique and differentiated product offerings.

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We offer home deliveries from our stores through delivery service providers, including Instacart, DoorDash and Uber Eats, in all of our markets nationwide.

In 2024, we also piloted our Sprouts Rewards loyalty program in select markets.

We will continue to explore mobile and digital opportunities to further connect with our customers and leverage data for better customer insights.

Sprouts continues to educate and reach shoppers through social partnerships, special content and sponsorships.

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• We continued our long-term commitment to and investment in collegiate women’s athletics through partnerships with the Big 12 and SEC conferences.

In conjunction these partnerships as well as individual agreements with Arizona State University, University of Southern California and University of Texas, we expanded our NIL portfolio and partnered with over 150 female collegiate athletes.

• Sprouts also became the title partner of the ESPN Sprouts Farmers Market Collegiate Quad which features schools from top 25 collegiate gymnastics programs, All-Americans, and current and future Olympians.

Through our PowHERed by Sprouts program, we expanded our NIL portfolio and partnered with over 175 female collegiate athletes.

• For the second year, Sprouts was the title partner of the ESPN Sprouts Farmers Market Collegiate Quad which features schools from top 25 collegiate gymnastics programs, All-Americans, and current and future Olympians.

In 2025, this Collegiate Quad became the most watched NCAA gymnastics meet in ESPN history.

• Sprouts continued its back-of-jersey sponsorship with the Angel City Football Club in 2024, leading to almost 65 million impressions across multiple platforms.

• Sprouts continued its back-of-jersey sponsorship with the Angel City Football Club in 2025.

As a portion of this partnership, funds are allocated to support local causes that provide fresh food access and further children’s nutrition education throughout Los Angeles.

In 2024, Sprouts and Angel City held 9 garden work days and contributed over 1,400 collective service hours into the local Los Angeles community.

In 2025, Sprouts and Angel City held garden work days and contributed service hours into the local Los Angeles community.

Our Customers

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We work collaboratively with our supply chain partners, community organizations, and industry experts to understand our material impacts and prioritize our efforts to maximize our positive influence on the people and communities that we serve.

Our sustainability initiatives emphasize responsible sourcing, food waste diversion, and carbon emissions reduction.

In 2024, these efforts delivered measurable progress:

• 30% of total sales from organic products;

• Sales of plant-based products, a less carbon-intensive option, grew by 27% from 2023;

• 18% of total sales were from fresh produce;

• Advanced regenerative and local agriculture through intentional supplier partnerships;

• Rescued over 35 million pounds of food, providing the equivalent of over 29 million meals to local food banks.

Based on our sustainability impacts, we received a rating of AAA in the 2024 MSCI ESG Ratings assessment.

The AAA rating represents the highest rating on the scale and signifies a company leading its industry in managing the most significant risks and opportunities.

During 2025, we continued to advance our sustainability strategy through policy implementation, responsible sourcing standards, and operational improvements across our value chain.

• Organic products remained a core component of our differentiated offering.

During 2025, organic sales represented more than 30% of total company sales and more than 50% of fresh produce sales, reflecting sustained customer demand and our long-standing commitment to organic agriculture.

• In 2025, we released a formal Pollinator Health commitment, reinforcing our approach to responsible sourcing and agricultural practices that support ecosystem health and biodiversity.

• We also finalized the transition to group-housed pork in our meat department, eliminating the use of gestation crates during pregnancy.

This milestone reflects our commitment to continuous improvement in animal welfare standards.

• Carbon emissions reduction and energy efficiency remain important components of our operational sustainability efforts.

In 2025, we completed the transition to LED lighting across our store fleet and continued to invest in store commissioning and optimization efforts designed to improve building performance and reduce electricity demand.

• We continued advancing our resource management efforts to ensure surplus food is directed to its highest use while strengthening the communities we serve.

In 2025, we rescued 36 million pounds of food, providing the equivalent of approximately 30 million meals through our Food Rescue partners.

For more information on our efforts and reporting, including our most recent Impact reports, please visit:

sprouts.com/about/sustainability/.

The information contained on or accessible through our website and in our impact reports is not incorporated by reference into this Annual Report on Form 10-K.

The Sprouts Healthy Communities Foundation

In 2015, we formed the Sprouts Healthy Communities Foundation (referred to as our “Foundation”), a registered 501(c)(3) organization focused on advancing nutrition education, fresh food access and improved health outcomes for children and adults in the communities where Sprouts operates.

Since its inception, our Foundation has awarded more than $35 million in donations to nonprofits and schools with programs that bring its mission to life.

Since its inception, our Foundation

has awarded more than $50 million in donations to nonprofits and schools with programs that bring its mission to life.

Our Foundation's 2025 highlights included:

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• Awarded $10 million in high-impact capacity grants to empower nonprofit organizations to expand their program operations;

• Contributed $1 million to the Florida Disaster Relief Fund to aid in relief and recovery efforts following Hurricane Milton;

• Hosted the second national Growing School Gardens Summit, uniting over 450 educators and organizations responsible for educating an estimated 5 million students nationwide.

• Contributed $0.8 million to the California Wildfire Relief Fund and $0.2 million to California Fire Foundation to aid in relief and recovery efforts following the Palisades and Eaton Fires;

• Hosted over 50 volunteer projects coast-to-coast for Annual Day of Service.

For more information on our Foundation, please visit:

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Customer engagement is critical to our culture and growth plans, and we place great importance on recruiting candidates and retaining team members that have a love of food, pride themselves on service excellence, and share our purpose driven culture.

We build on our targeted recruitment efforts with robust training on customer engagement and product knowledge to ensure there is friendly, knowledgeable staff in every store.

As of December 29, 2024, we had approximately 35,000 team members.

We build on our targeted recruitment efforts with robust training on customer engagement and product knowledge to ensure there is friendly, approachable and knowledgeable staff in every store.

As of December 28, 2025, we had more than 36,000 team members.

None of our team members are subject to collective bargaining agreements.

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We are proud of the following achievements during the year:

• We solidified our purpose statement and rolled it out across the organization.

We engaged in activities connecting each team member’s role to our purpose statement.

• We have reinforced our purpose statement and values across the organization.

We continue to engage in activities connecting each team member’s role to our purpose statement.

• We continue to cascade our three core values to intentionally shape our culture and act as a lens to guide the decisions we make.

We reinforced the critical behaviors and actions to create a sense of inclusion and belonging.

We reinforced the critical behaviors and actions to create a sense of belonging.

• We engaged in leadership development sessions across the organization, including a focus on coaching and feedback to develop and grow our team members.

• As one of the fastest growing specialty retailers of fresh, natural and organic food in the country, we created approximately 3,700 new jobs in 2025 through new store openings.

• Additionally, we promoted over 6,100 team members and filled 54% of store manager positions with internal candidates.

• Additionally, we promoted approximately 6,000 team members and filled 61% of store manager positions with internal candidates.

• Team members saved approximately $26.0 million through store discounts.

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• We offer a paid sick time policy for all team members and offer generous leave programs.

• All hourly team members are eligible for semi-annual reviews and merit increases.

• All hourly team members are eligible for merit increases.

• We have enhanced our benefits to support mental well-being and counseling services for all team members.

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During 2025, 44 Sprouts team members enrolled in this program.

• We participated in the McKinsey Connected Leaders Academy, for the fourth year, engaging high performing leaders in programs designed to develop diverse leaders at Sprouts.

We had 70 participants in 2024, which included leaders participating in Hispanic, Black & Asian Executive level and Manager level programs.

• We offer The Henry Boney Memorial Scholarship, which is designed to offer team members or their dependents a $2,000 scholarship to achieve their college dreams.

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• All Sprouts team members can save at our stores, with a 15% Work Perk Discount.

This year we offered a 30% discount to all team members over the course of fourteen days aligned with our holiday celebrations.

This year we offered a 30% discount to all team members over the course of five days aligned with our holiday celebrations.

We also offered team members an additional three days with a 25% discount.

• We provided special bonuses to team members in honor of winning Progressive Grocers Retailer of the Year.

Education, Training and Safety.

We believe Sprouts is an attractive place to work with significant growth opportunities for our approximately 35,000 team members.

To grow the next generation of leaders at Sprouts, we have developed a Leadership Training Model to on-board store managers new to Sprouts.

We believe Sprouts is an attractive place to work with significant growth opportunities for our more than 36,000 team members.

To grow the next generation of leaders at Sprouts, we have developed Leadership Training Programs to on-board store managers and assistant store managers new to Sprouts.

In 2025, we had 116 Leadership graduates totaling more than 42,800 hours in training.

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We are committed to maintaining a safe environment for our team members and customers.

Our stores implement various programs to reduce and eliminate hazards, resulting in a safer workplace and improved shopping experience.

In 2024, our stores reported a 10% reduction in worker compensation claim frequency rate and a 9% reduction in general liability claim frequency rate over the prior year.

Our stores employ a variety of safety programs and operational controls designed to reduce and mitigate workplace hazards, supporting a safer work environment and enhanced shopping experience.

In 2025, our stores reported workers’ compensation claim frequency consistent with the prior year and an 8% reduction in general liability claim frequency compared to 2024.

Team Member Resource Groups .

We pride ourselves on supporting an inclusive, respectful, and caring culture throughout our organization.

We have five team member resource groups that provide input on our recruiting efforts and insight into team member sentiment and culture survey data to better inform our business and people planning efforts.

We pride ourselves on supporting a respectful and caring culture throughout our organization.

We have five team member resource groups that provide input on our recruiting efforts, community involvement, career development, and insight into team member sentiment and culture survey data to better inform our business and people planning efforts, and enhance our sense of belonging at Sprouts.

These groups consist of "Inspiring Women at Sprouts" our women's resource group, “Sabor” our Hispanic and Latin resource group, “Soul” our Black/African American resource group, “Rainbow Alliance” our LBGTQIA+ resource group and “Honored to Serve” our veteran’s resource group.

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We have opened 37, 33 and 30 new stores in fiscal 2025, 2024 and 2023, respectively.

We expect to continue to expand our store base with at least 35 store openings planned for fiscal 2025, all of which will be in our updated format.

We expect to continue to expand our store base with more than 40 store openings planned for fiscal 2026.

Properties” for additional information with respect to our store closures in 2023.

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As we implement our long-term growth strategy, our stores will continue to deliver a unique and friendly shopping experience that stays true to our farmers market heritage by featuring a smaller box size than our recent vintages, generally between 21,000 and 25,000 square feet.

By reducing our store square footage, our newer stores generally have a lower cost to build and decreased occupancy and operating costs, while reducing non-selling space that results in generally flat sales compared to our larger

We expect these cost reductions will allow us to deliver higher returns than our larger stores and continue to accelerate our growth.

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Our competitors within the overall grocery industry primarily include other specialty food retailers such as Whole Foods, Trader Joe’s, and smaller local or regional operators, conventional supermarkets such as Kroger, Albertsons, Safeway, H-E-B and Publix, as well as mass or discount retailers such as Target and Walmart, warehouse membership clubs, online retailers such as Amazon, specialty stores, restaurants, home delivery and meal solution companies, and any other outlets offering food and similar products as those found in our stores.

We believe Sprouts offers consumers a compelling value and differentiated products relative to our competitors and will continue to benefit from increasing consumer focus on health, wellness and value, as well as their emphasis on an enhanced shopping experience featuring a broad selection of attribute-driven products along with exceptional customer engagement.

Although many retailers have significantly increased their health and wellness offerings, we believe Sprouts offers consumers a compelling value and differentiated products relative to our competitors and will continue to benefit from increasing consumer focus on health, wellness and value, as well as their emphasis on an enhanced shopping experience featuring a broad selection of attribute-driven products along with exceptional customer engagement.

Insurance and Risk Management

We use a combination of insurance and self-insurance to manage potential liabilities related to workers’ compensation, general liability, product liability, cybersecurity, directors' and officers' liability, team member healthcare benefits, and other casualty and property risks.

Various factors, including changes in legal trends and interpretations, inflation rate fluctuations, changes in claims settlement practices, changes in applicable laws affecting benefit levels, insolvency of insurance carriers, risk transfer management, and fluctuations in discount rates, could impact the ultimate settlements of claims and the overall cost of our insurance program.

As such, there is no guarantee that our insurance coverage will fully mitigate all potential risks or claims.

We continuously evaluate our insurance program to ensure that our coverage levels are appropriate considering evolving risks, claims experience, and the regulatory environment.

We also assess the financial strength of our insurance carriers to minimize the risk of insolvency and ensure stability in our coverage.

We use a combination of insurance and self‑insurance to manage potential liabilities associated with workers’ compensation, general liability, product liability, cybersecurity, directors’ and officers’ liability, team member healthcare benefits, and other casualty and property risks.

The ultimate cost of our insurance program can be influenced by several factors, including changes in legal trends and interpretations, inflation, claim frequency and severity, settlement practices, evolving regulations affecting benefit levels, the solvency and creditworthiness of insurance carriers, the effectiveness of risk‑transfer strategies, and fluctuations in discount rates.

As a result, there can be no assurance that our insurance coverage will fully mitigate all potential risks or claims.

We continually evaluate the structure and adequacy of our coverage to ensure it appropriately reflects our risk profile, historical claims experience, and the external regulatory environment.

We also monitor the financial strength and stability of our insurance carriers to minimize counterparty risk and support continuity of coverage.

Trademarks and Other Intellectual Property

We believe that our intellectual property has substantial value and has contributed to the success of our business.

In particular, our trademarks, including our registered SPROUTS FARMERS MARKET ® and SPROUTS ® trademarks, are valuable assets that we believe reinforce our customers’ favorable perception of

In addition to our trademarks, we believe that our trade dress, which includes the human-scale design, arrangement, color scheme and other physical characteristics of our stores and product displays, is a large part of the farmers market atmosphere we create in our stores and enables customers to distinguish our stores and products from those of our competitors.

In particular, our trademarks, including our registered SPROUTS FARMERS MARKET ® and SPROUTS ® trademarks, are valuable assets that we believe reinforce our customers’ favorable perception of our stores.

market atmosphere we create in our stores and enables customers to distinguish our stores and products from those of our competitors.

From time to time, third parties have used names similar to ours, have applied to register trademarks similar to ours and, we believe, have infringed or misappropriated our intellectual property rights.

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Information Technology Systems

We have made significant investments in IT infrastructure and business systems to enhance efficiency, scalability, and customer experience to support our long-term growth and operational resilience.

These investments include enterprise data management, labor and shrink optimization, store replenishment, demand forecasting, and in-store technologies, all aimed at streamlining operations and improving decision-making.

Our IT initiatives focus on maintaining high in-stock availability, optimizing demand forecasting, automating supply chain processes, enhancing the customer experience, and increasing workforce productivity.

These enhancements drive greater operational efficiency, cost control, and business agility.

To further strengthen our capabilities, we continue to integrate emerging technologies such as artificial intelligence, machine learning, and cloud computing to advance automation, generate real-time insights, and improve scalability.

We operate on an integrated IT platform that provides the agility and scalability necessary to support business growth and evolving market demands.

This platform ensures operational consistency across our business, enabling seamless adaptation to changing conditions while positioning us for future expansion.

To mitigate risks such as cybersecurity threats, system disruptions, and data breaches, we have implemented a multi-layered security strategy, including advanced threat detection, continuous monitoring, third-party security audits, employee cybersecurity training, and robust disaster recovery and incident response protocols.

Our cybersecurity program aligns with industry standards such as the NIST Cybersecurity Framework (CSF), while our data protection practices comply with privacy regulations, including the California Privacy Rights Act (CPRA).

For payment security, we adhere to the Payment Card Industry Data Security Standard (PCI DSS) to ensure the protection of cardholder data and transaction integrity.

We have continued to invest in IT infrastructure and business systems designed to support operating efficiency, scalability, and customer experience to support our long-term growth and operational resilience.

These investments include enterprise data management, labor and shrink optimization, store replenishment, demand forecasting, and in-store technologies, which are intended to streamline operations and support improved decision-making.

Our IT initiatives are focused on supporting high in-stock availability, optimizing demand forecasting, automating elements of our supply chain processes, enhancing the customer experience, and increasing workforce productivity.

These initiatives are intended to contribute to greater operational efficiency, cost management, and business agility.

To further develop our capabilities, we continue to evaluate and integrate emerging technologies such as artificial intelligence, machine learning, and cloud computing to support automation, generate more timely insights, and enhance scalability.

We operate on an integrated IT platform intended to support business growth and evolving market demands.

This platform is designed to promote operational consistency across our business and intended to support our ability to respond to changing conditions, while supporting our longer-term expansion objectives.

We rely on third-party service providers and technologies, including cloud-based services, to support certain information technology capabilities and business processes.

As a result, our operations may be affected by disruptions, security incidents, performance issues, or other failures at these providers, as well as by changes to their products, services, or contractual terms.

We seek to manage these risks through vendor oversight, contractual safeguards, and business continuity planning, but we cannot eliminate the possibility of adverse impacts.

To address risks such as cybersecurity threats, system disruptions, and data breaches, we have implemented a multi-layered security program that includes threat detection tools, monitoring processes, third-party security assessments, employee cybersecurity training, and disaster recovery and incident response protocols.

Our cybersecurity program is informed by recognized industry frameworks, including the NIST Cybersecurity Framework (CSF), and our data protection practices are designed to address applicable privacy requirements, including the California Privacy Rights Act (CPRA).

With respect to payment security, we maintain practices intended to be consistent with the Payment Card Industry Data Security Standard (PCI DSS) to support the protection of cardholder data and transaction processing.

Regulatory Compliance

Our stores and online retail operations are subject to various local, state and federal laws, regulations and administrative practices affecting our business.

We must comply with provisions regulating health, sanitation and food safety standards, food labeling, equal employment, minimum wages, data privacy, environmental protection, licensing for the manufacture, preparation and sale of food and, in many stores, licensing for beer and wine or other alcoholic beverages, and cannabidiol (“CBD”) products.

Our operations, including the manufacturing, processing, formulating, packaging, labeling and advertising of products by us and our vendors are subject to regulation by various state and federal agencies, including the Food and Drug Administration (“FDA”), the Federal Trade Commission (“FTC”), the U.S.

Department of Agriculture (“USDA”), the Consumer Product Safety Commission (“CPSC”) and the Environmental Protection Agency (“EPA”).

Our operations, including the manufacturing, processing, formulating, packaging, labeling, transportation and storage, and advertising of products by us and our vendors are subject to regulation by various state and federal agencies, including the Food and Drug Administration (“FDA”), the Federal Trade Commission (“FTC”), the U.S.

Department of Agriculture (“USDA”), the Consumer Product Safety Commission (“CPSC”), the Environmental Protection Agency (“EPA”) and comparable state authorities.

The FDA has comprehensive authority to regulate the manufacture, labeling, distribution, sale, marketing and safety of food and food ingredients for humans and pets (other than meat, poultry, catfish and certain egg products), as well as dietary supplements under the Federal Food, Drug, and Cosmetic Act (“FDCA”).

Similarly, the USDA’s Food Safety Inspection Service (“FSIS”) is the public health agency responsible for ensuring that the nation’s commercial supply of meat, poultry, catfish and certain egg products is safe, wholesome and correctly labeled and packaged under the Federal Meat Inspection Act and the Poultry Products Inspection Act.

Congress amended the FDCA through passage of the Food Safety Modernization Act (“FSMA”), which greatly expanded FDA’s regulatory oversight over all actors in the food product supply chain.

FDA regulations mandate participation in USDA's Hazard Analysis and Critical Control Points (“HACCP”) program or FDA's Hazard Analysis and Risk-Based Prevention Controls (“HARPC”) program, as applicable, which require that risk-based preventive controls be observed by the majority of food producers.

This authority applies to all domestic food facilities and, by way of imported food supplier verification requirements, to all foreign facilities that supply food products.

The FDA and FSIS also exercise broad jurisdiction over the labeling and promotion of food and meat products.

Labeling is a broad concept that, under certain circumstances, extends even to product-related claims and representations made on a company’s website, in-store or similar printed or graphic medium.

All foods, including dietary supplements, must bear labeling that provides consumers with essential information with respect to standards of identity, net quantity, nutrition facts labeling, ingredient statement, and allergen disclosures.

The agencies also regulate the use of structure/function claims, health claims and nutrient content claims for food and dietary supplement products.

Additional in-store labeling requirements, such as disclosure of calories and other nutrient information for frequently sold items are now in effect.

In addition, various nutrition initiatives that will impact many actors in our supply chain, such as the elimination of certain partially hydrogenated oils and brominated vegetable oil went into effect in 2023.

The Food Safety Modernization Act (“FSMA”) and related FDA regulations govern the control and quality of food manufacturing and distribution.

This authority applies to all domestic food facilities and to all foreign facilities that supply food products under the Foreign Supplier Verification Program.

The FDA and FSIS highly regulate ingredients used in and labeling and promotion of food and meat products.

USDA’s Agricultural Marketing Service (“AMS”) oversees compliance with the National Organic Standards Program and related labeling activity.

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Entities that buy and sell perishable commodities require a PACA license and disputes about sales of produce are subject to rules and regulations under PACA.

Dietary Supplements.

The FDA has comprehensive authority to regulate the safety of dietary supplements, dietary ingredients, labeling and current good manufacturing practices.

Congress amended the FDCA in 1994 through passage of the Dietary Supplement Health and Education Act (“DSHEA”), which greatly expanded FDA’s regulatory authority over dietary supplements.

Through DSHEA, dietary supplements became a separately defined FDA-regulated product that is also subject to the general food regulations.

Dietary supplements are allowed to carry structure/function claims which relate to support of healthy functioning.

However, no statement on a dietary supplement may expressly or implicitly represent that it will diagnose, cure, mitigate, treat or prevent a disease.

The FDA has comprehensive authority to regulate cosmetics under the FDCA and the Fair Packaging and Labeling Act (“FPLA”).

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Homeopathic Products .

The FDA has the authority to regulate homeopathic products.

Under the FDCA, homeopathic products are subject to the same requirements related to approval, adulteration and misbranding as other drug products.

There are no FDA-approved products labeled as homeopathic.

Any product labeled as homeopathic is being marketed in the U.S.

The FDA has the authority to regulate homeopathic products as drug products.

There are no FDA-approved products labeled as homeopathic, and as such, any product labeled as homeopathic is being marketed in the U.S.

without FDA evaluation for safety or effectiveness.

CBD Products.

The 2018 Farm Bill legalized the production of hemp and products made from hemp, hemp derivatives including CBD oil and extracts, and established that these products are no longer controlled substances, as long as the cannabis plant and products derived from the plant contain no more than 0.3% THC.

Under the FDCA, it is unlawful to introduce into interstate commerce a food to which has been added a substance that is an active ingredient in an approved drug product or a substance for which substantial clinical investigations have been instituted, and the existence of such investigations has been made public.

FDA has approved one drug product containing CBD as an active ingredient.

Consequently, because CBD has been

approved as a drug active ingredient, FDA’s current legal position is that CBD cannot be legally contained in a dietary supplement or food product.

This restriction only applies to dietary supplements and foods.

In 2025, Congress enacted significant changes to the federal regulation of finished products containing hemp and CBD, narrowing the definition of federally legal products to those containing no more than 0.4 mg of total THC per package (versus the former .3% delta-9 THC).

The new standard will likely remove from the retail market most CBD-containing edibles, beverages, oils, and extracts because they will exceed the new standard.

The new law also bans the use of synthetic CBD.

The effective date of the new law is November 2026.

Products on the market until November 2026 will continue to be subject to the current FDA enforcement policies, which prohibits the sale of food or dietary supplements containing CBD because it has been approved as a drug product by the FDA.

To date, FDA has limited its enforcement actions to those ingestible, topical, and cosmetic CBD products that make therapeutic or drug claims.

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This enforcement authority extends to states that have legalized and regulated the distribution of ingestible CBD products.

Food, Cosmetics, Homeopathic and CBD Products, and Dietary Supplement Advertising.

The FTC exercises jurisdiction over the advertising of foods, cosmetics, homeopathic and CBD products, and dietary supplements.

Numerous states have enacted laws authorizing the sale of certain CBD products, notwithstanding federal laws and policies, and some states may amend their laws based upon the new federal law changes.

Food, Cosmetics, Homeopathic and CBD and THC Products, and Dietary Supplement Advertising.

The FTC exercises jurisdiction over the advertising of foods, cosmetics, homeopathic and CBD and THC products, and dietary supplements.

The FTC has the power to institute monetary sanctions and the imposition of consent decrees and penalties that can severely limit a company’s business practices.

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As is common in our industry, we rely on our suppliers and contract manufacturers to ensure that the products they manufacture and sell to us comply with all applicable regulatory and legislative requirements.

In general, we seek certifications of compliance, representations and warranties, indemnification and/or insurance from our suppliers and contract manufacturers.

However, even with adequate insurance and indemnification, any claims of non-compliance could significantly damage our reputation and consumer confidence in products we sell.

In general, we seek certifications of compliance, representations and warranties, guaranties, indemnification and/or insurance from our suppliers and contract manufacturers.

However, even with adequate

insurance and indemnification, any claims of non-compliance could significantly damage our reputation and consumer confidence in products we sell.

In addition, the failure of such products to comply with applicable regulatory and legislative requirements could prevent us from marketing the products or require us to recall or remove such products from our stores.

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Our website address is www.sprouts.com .

The information on or accessible through our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the Securities and Exchange Commission (“SEC”).

Available Information

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Our corporate governance documents, code of ethics and Board committee charters and policies are also posted on http://investors.sprouts.com/ .

The contents of the websites mentioned above and elsewhere in this report are not incorporated into and should not be considered a part of this Annual Report on Form 10-K or in any other report or document we file with the Securities and Exchange Commission (“SEC”).

The references to the URLs for these websites are intended to be inactive textual references only.

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-K

Item 1. Business