Dive Brief:
- Sprouts Farmers Market is “not happy with how [2025] finished,” CEO Jack Sinclair told investors Thursday during an earnings call, particularly because comparable store sales growth slowed to less than 2% in Q4. Net sales increased 8% year-over-year during the quarter to $2.1 billion.
- The specialty grocer is also “disappointed with transactions” and will focus on bringing more personalization and value to its customers grappling with affordability challenges, Sinclair said.
- Despite anticipating a challenging year ahead, the grocer is plowing ahead with store growth, with plans to debut at least 40 new locations in 2026. The retailer is also pleased with its investments in self-distribution and gaining deeper customer insights from its loyalty program.
Dive Insight:
Price-conscious customers continue to weigh on Sprouts’ performance as the specialty grocer pushes ahead with its expansion agenda.
Sprouts had strong full-year fiscal 2025 results — 7% comp sales growth, a 14% year-over-year increase in net sales to $8.8 billion and more than 40% diluted earnings per share growth — from progress made on store expansion, the launch of its loyalty program and growth of its self-distribution network. But the specialty grocer saw its comp sales growth percentage drop throughout the year.
Sprouts comparable-store sales growth continues downward trend
Less-engaged customers are a main challenge for Sprouts, executives told investors during the earnings call. Sinclair noted that as health and wellness trends continue to evolve, consumers are still up against an “uneven” macroeconomic environment and increasingly seeking innovation, quality and transparency within natural and fresh offerings.
“We have been encouraged by our strong sales and customer growth in recent years. However, the challenge of lapping this growth has been more difficult than we anticipated, particularly with our lower engaged customers who are visiting less often and purchasing fewer items as they navigate economic challenges,” Sprouts CFO Curtis Valentine said.
Sprouts is still undergoing a learning curve with its loyalty program, Sinclair said, and plans to invest in capabilities needed to “fully exploit our loyalty data.” Sprouts Rewards has already exceeded sign-up expectations, and Sinclair expects the program to “deliver a behavioral shift over time.”
Sinclair is confident that Sprouts can continue to focus on its differentiated offerings, from assortment to customer experience, as well as ongoing store growth and supply chain initiatives to reinforce the grocer’s value proposition.
As it has been for the past few years, store growth is a priority for the grocer in 2026. Sprouts’ goal is to open more than 40 new locations in 2026. The grocer also has plans for more than 140 additional stores, Valentine said, noting that the grocer has more than 95 executed leases in its pipeline.
Sprouts kicked off the year by making its entrance in New York with the opening of a store on Long Island. However, nearly all of the stores Sprouts intends to open in 2026 will be within its existing footprint, Sinclair said.
Further expansion in the Northeast and the Midwest is expected for 2027, a year that will also have a “more balanced quarterly spread of new store openings,” Nicholas Konat, Sprouts’ president and chief operating officer, said during the call. Sprouts’ executives did not provide an update on the company’s goal of reaching 10% unit growth in 2027, which the grocer said last quarter it was on track with.
In fiscal 2025, Sprouts added more than 600 new products under its name brand.
Sinclair said Sprouts’ transition to self-distribution for fresh meat is “progressing very well” and strengthening the grocer’s control over fresh categories. Currently, 75% of Sprouts stores are serviced with fresh meat from its own distribution centers.
The company’s Northern California facility is slated to be fully operational by early in its second quarter, completing Sprouts’ self-distribution rollout, Sinclair said.
Sprouts’ full-year outlook for 2026 includes a 4.5% to 6.5% increase in net sales and between -1% to 1% comp sales growth, according to the earnings press release.
“We have had two great years of growth. We had two really strong years of sequential improvement prior to that, too, and so we feel like those are the building blocks for how we will get back to where we need to go,” Valentine said. “As we mentioned earlier, we need to do a little bit more for the customer in this moment.”
