Sprouts Farmers Market reported second-quarter net sales of $2.3 billion, up 5% from a year earlier, as the specialty grocer navigated difficult prior-year comparisons and continued refining its strategy to reach value-conscious shoppers.
Comparable store sales declined 1% during the quarter, reflecting a reversal from the outsized growth Sprouts experienced through much of 2025. The Phoenix, Arizona-based retailer reported quarterly net income of $129 million and opened seven stores, bringing its footprint to 490 locations across 25 states.
“Our second quarter results were in line with our expectations, and the core elements of our strategy remain strong,” CEO and Board Director Jack Sinclair said during the company’s quarterly earnings call. “New stores continue to perform well. Our differentiated and attribute-based assortment continues to resonate, and our teams are moving with urgency to sharpen value, improve communication and support customers in the areas that matter most.”
Sinclair said customers continue to make “thoughtful choices around the healthy grocery spend,” while Sprouts faces difficult year-over-year comparisons. “With that said, our most difficult prior-year comparisons are behind us and become more manageable as the year progresses,” he said.
Comps improved sequentially through May before weakening in June, when Sprouts lapped a particularly strong year-ago period. In June 2025, a disruption in the natural and organic supply chain drove additional shoppers to Sprouts, while the retailer also benefited from a strong produce season, CFO Curtis Valentine said. July returned to slightly negative comparable sales results in line with company guidance, and Valentine said the second half faces no comparable year-ago supply disruptions, which should make comparisons easier as the year progresses.
Another recent challenge has been a cyclospora outbreak affecting lettuce and salad items, which Sprouts said has altered shopping behavior over the past several weeks, including shifting some customers from fresh to frozen products. The company said its stores have not been affected by product recalls related to the outbreak.
Against that backdrop, Sprouts is applying lessons from a first-half affordability test that produced mixed results. Most of the initiatives generated stronger unit movement, while the broader traffic response developed more gradually than expected.
“Our acceleration efforts have identified new tactics to drive sales that should benefit us in the second half, and the data we are building is increasingly useful across the business with more in-depth customer behavior and preferences,” Sinclair said.
The grocer’s affordability strategy centers on three areas: assortment, price and promotion, and personalization. Assortment has shown the strongest momentum so far. Sprouts is expanding healthy, attribute-driven meal solutions, including family meals priced at $29.99 and fresh-made salads priced under $9. The retailer is also using its private-label assortment to introduce more value-oriented healthy essentials, including $4 organic sourdough and seed oil-free frozen potatoes, which President and COO Nick Konat said have become a top seller in the category.
Sprouts launched approximately 1,300 new items during the quarter, with an emphasis on attributes including organic, seed oil-free, fiber, gut health and protein. The company said its recent product innovation is significantly outperforming the overall store. Price and promotion have proven more challenging. While some efforts have generated favorable basket and unit velocities, executives said Sprouts still has work to do in determining which offers resonate with customers and how best to communicate them.
The company needs to learn more about “how we price and how we message,” Konat said. Personalization, the third pillar of the strategy, remains in an earlier stage, with vendor participation in the program just beginning.
“We’re certainly ramping, but it’s in its early stages,” Konat said. “As we build out the capability, as we continue to invest in technology, that will be something we continue to push over the next number of years.”
The efforts come as Sprouts executives describe an increasingly difficult-to-read economic environment. Grocery and fuel costs continue to pressure consumers, Sinclair said, complicating the company’s efforts to anticipate how customers will respond.
“Clearly, grocery prices are going up,” Sinclair said. “Gas prices have gone up and down and they’re clearly putting pressure on. So, we’re trying to second-guess exactly where this is going to play out.”
Valentine said strategies that generated results a year ago have become more difficult to replicate. “It’s just a little bit harder,” he said. The pressure has been particularly evident among less-engaged and lower-income shoppers, who executives said are spreading out their trips and visiting Sprouts less frequently. Some of those customers initially came to Sprouts during unusual market conditions last year but have not maintained the same shopping frequency, while the grocer’s core customer has remained comparatively resilient.
Produce, Sprouts’ largest unit category in the average basket, has felt the biggest impact as shoppers manage the final items they add to their carts. Management expects traffic and units to improve sequentially during the second half but does not expect average unit retail to drive that improvement. Other areas of the business continued to post growth. E-commerce sales increased more than 12 percent and represented approximately 16 percent of quarterly sales, exceeding the company’s expectations. Sprouts brand products continued to outperform the rest of the business and accounted for 26% of sales, while organic products now represent more than 30 percent of total sales, including more than half of dairy and produce sales.
Gross margin was 38.7%, down 12 basis points from a year earlier, as loyalty investments and higher fuel costs were partially offset by self-distribution benefits and vendor participation. Sprouts also continues to accelerate its physical expansion. The company raised its 2026 plan to 42 net new stores, reflecting 43 openings and the planned closure of one underperforming location with an expiring lease. At least 15 stores are expected to open during the third quarter, which would mark the company’s largest quarterly opening cadence to date.
The retailer has more than 110 executed leases and 155 approved sites in its development pipeline. Recent store vintages continue to outperform, with the last four groups of new stores posting positive comparable sales even as the core store base faces pressure. Sprouts is also expanding into newer Northeast and Midwest markets, including Long Island and, beginning in 2027, Chicago. The company plans to build density quickly in Chicago, targeting 10 stores within 12 to 18 months of entering the market.
On the supply chain side, Sprouts completed its meat self-distribution rollout with the opening of its Northern California distribution center. The network now supports fresh meat distribution to nearly 85% of stores, and the company has begun bringing select Sprouts brand products into its self-distribution network.
For the third quarter, Sprouts expects comparable store sales ranging from negative 0.5% to positive 1.5%. For the full year on a 52-week basis, the company expects net sales growth of 5.5% to 6.5% and comparable store sales ranging from negative 0.5% to positive 0.5%.
Fiscal 2026 includes a 53rd week in the fourth quarter, which Sprouts estimates will contribute approximately $200 million in additional sales.
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