Sprouts shares fall to $48 after 5% revenue growth and decline in comparable sales
Key Facts
Sprouts Farmers Market shares closed at $48 on October 29, compared with a close of $62 in the previous session, after the company reported quarterly results below analyst expectations. Net sales were $2.3 billion in the third quarter, up 5% from the same period in 2025, but comparable-store sales fell 0.9%. Diluted earnings per share were $1.21, versus $1.22 a year earlier, while net income declined to $113.421 million from $120.116 million. Investing.com estimated sales of $2.34 billion and earnings per share of $1.23, compared with actual results of $2.3 billion and $1.21. Chief Executive Jack Sinclair said, "A challenging consumer environment and cyclospora disruption affected the quarter."
The figures show a divergence between growth in total sales and weak performance at established stores: annual revenue growth did not prevent comparable-store sales from falling. Comparable-store sales, which measure performance at stores eligible for comparison, had declined 1.0% in the second quarter of 2026, while diluted earnings per share rose to $1.37 from $1.35 in the same quarter of 2025. In the third quarter, comparable-store transactions fell 3.3% and the average basket rose 2.5%, according to the earnings call transcript. The company said cyclospora disruption reduced comparable-store sales by about 60 basis points. Sinclair cited the consumer environment and the health disruption as factors that affected the quarter, while performance details showed the decline in transactions was partly offset by higher spending per purchase.
Company officials said on the earnings call that customer traffic, unit volumes and visit frequency "are not recovering," as shoppers become more price-sensitive. Management said competition is intensifying and affordability has become a bigger factor in customer choice, announcing plans to expand price investments. Sinclair also said the company is increasing investments to improve affordability and deepen customer engagement. These steps are paired with a program to rebuild its pricing strategy, which the company plans to launch nationwide in January. That puts recovering customer traffic among management's stated goals, alongside its push to make prices more attractive.
Sprouts expects comparable-store sales to decline between 2% and 4% in the fourth quarter, and diluted earnings per share to range from $0.47 to $0.51. The company said price investments will pressure margins, while the outlook points to continued declines at established stores after a 0.9% drop in the third quarter. For fiscal 2026, the company expects sales growth of about 4.3%, a decline in comparable-store sales of about 1.7%, and diluted earnings per share of about $4.80. The fiscal year includes a 53rd week, which the company said will add about $190 million to sales and $0.16 to diluted earnings per share. The new pricing plan is scheduled for a nationwide test in January, as the company heads toward year-end with an annual outlook combining total sales growth and lower comparable sales.
The company continued its geographic expansion during the quarter, opening 15 new stores and bringing its total to 504 across 25 states as of September 27, 2026. The new locations add a source of overall sales growth alongside weak sales at existing stores in the third quarter. Management, in turn, is putting price investments and a restructuring of its pricing strategy at the center of its efforts to address consumer pressures and competition. Sinclair said the company is working to improve execution and attract visits, while increasing investment in affordability. The effects of these measures will become clearer in fourth-quarter results and then with the nationwide launch of the new strategy in January.