Sprouts Forecasts 1.7% Comparable Sales Decline in 2026, Bets on New Pricing Strategy

Key Facts

Sprouts Farmers Market expects comparable sales to decline about 1.7% in fiscal 2026 on a 52-week basis, despite projected net sales growth of about 4.3%, according to its third-quarter earnings release. The forecast follows a 0.9% decline in comparable store sales in the third quarter, while net sales rose 5% year over year to $2.3 billion. Jack Sinclair, the outgoing chief executive, said the quarter was affected by a challenging consumer environment and disruption related to “Cyclospora.” The company is therefore facing a decline in established-store sales while continuing to grow overall revenue by opening new stores. Diluted earnings per share were $1.21, compared with $1.22 in the same period a year earlier.

Quarterly details showed that lower transactions were the main factor behind weaker comparable sales: transactions fell 3.3%, while the average basket rose 2.5%, management said on the earnings call. The company estimated that Cyclospora disruption reduced comparable sales by about 60 basis points during the quarter. It added that comparable sales weakened in August and September and did not improve as year-over-year comparisons became easier late in the quarter. Management said competition is increasing and affordability has become a bigger factor in customers’ choices. It also said that some softness among less engaged customers had begun to appear among core customers, prompting it to increase investment in pricing and consumer engagement.

Sprouts expects comparable sales to decline between 2% and 4% in the fourth quarter, with diluted earnings per share of $0.47 to $0.51. Management said deeper investments in affordability would reduce gross-margin leverage by about 90 basis points in the quarter. It also expects selling, general and administrative expense leverage to decline by about 170 basis points, driven by lower comparable sales and higher store labor and benefit costs. For fiscal 2026, the company is targeting about $605 million in earnings before interest and taxes and diluted earnings per share of about $4.80, on a 52-week basis. The company’s fiscal calendar has 53 weeks, and it estimates that the additional week will add $190 million to sales, $20 million to earnings before interest and taxes and $0.16 to diluted earnings per share.

The company is rebuilding its pricing strategy and plans to roll it out across the United States in January 2027. Incoming chief executive Nick Conat said the plan “is not a move to broad-based discounting,” signaling that the company is not seeking to compete on price alone. Instead, the strategy includes expanding the role of the Sprouts brand and offering products at different price points, alongside value in healthy staples, meal solutions and a personalized shopping experience. Examples cited by management include family meals for four priced at $29.99 and freshly baked organic sourdough bread at $4. Ahead of the national launch, the company plans to lower prices on healthy and staple items tied to the holidays across the country during the holiday season.

The pricing plan comes as the business continues to expand: Sprouts expects to open 42 net new stores in 2026 and had 504 stores in 25 states at the end of the third quarter. E-commerce sales grew 12% in the quarter and accounted for more than 16% of total sales, while Sprouts-brand products made up about 26%. The company is also preparing for a management transition announced in September: Conat will become chief executive and join the board on January 4, 2027, while Sinclair will become executive chairman. In the market, the stock closed at $62 on October 28 after falling in every listed session since closing at $68.86 on October 22. The stock fell about 15% in after-hours trading on October 28 following the earnings release and fourth-quarter outlook; one report said quarterly earnings per share and revenue came in below analysts’ estimates.

Management said it would monitor customer response to its pricing investments, and that the holiday season would let it track the effect of lower prices on healthy and staple items before expanding the strategy. The chief financial officer said this monitoring would give the company greater clarity in February on its 2027 guidance. The company’s 2027 fiscal year is scheduled to begin on January 4, when Conat is to become chief executive and Sinclair is to become executive chairman. These steps put the new pricing plan at the start of a new management era, as the company continues to address declines in transactions and comparable sales. The fourth-quarter outlook, including an expected decline in comparable sales and pressure on margins, is the first near-term test of the plan.