Sprouts Board Approves $600 Million Share Repurchase Program

Sprouts Farmers Market board of directors authorized a new $600 million stock buyback program, replacing a previous authorization that had nearly $120 million remaining. In May, Sprouts reported a 50% increase in net income for the first quarter, reaching $114.1 million, and a 9% rise in sales, amounting to nearly $1.9 billion. The company also projected a 7% to 8% sales growth for the full year and plans to open 35 new stores. 

This decision for Sprouts aligns with a broader trend of increased stock buybacks in the first quarter, driven by growing optimism that the economy will avoid a recession, as reported by the Wall Street Journal. According to the Journal, stock buybacks decreased by 14% in 2023, influenced by economic uncertainty and a new 1% tax on stock buybacks introduced last year. So far this year, 443 companies have announced buyback plans, up from 378 the previous year, based on data from Birinyi Associates. 

“The extension of our ongoing share repurchase program demonstrates not only our strong cash flow generation, but also the Board’s confidence in the company’s strategy and potential. We will continue to balance the deployment of capital to spur our growth and drive long-term value for our investors,” said CFO of Sprouts, Curtis Valentine. 

Stock buybacks are a strategy companies use to reduce the number of shares on the market, thereby increasing the price of remaining shares and providing value to shareholders. Among other food retailers, Kroger paused its stock buyback program last year to focus on reducing debt in preparation for its proposed merger with Albertsons. Nevertheless, Kroger has reiterated its commitment to rewarding shareholders through dividends and share repurchases.