[10-Q] Sprouts Farmers Market, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Sprouts Farmers Market (SFM) reported stronger Q3 results. Net sales were $2,200,430,000, up 13% year over year, with comparable store sales growth of 5.9%. Gross margin improved to 38.7%, lifting operating income to $157,398,000 and net income to $120,116,000. Diluted EPS rose to $1.22 from $0.91.

For the year-to-date period, net sales reached $6,657,468,000 and net income was $433,845,000, driving diluted EPS of $4.38. Cash from operations was $577,471,000 and cash and equivalents stood at $322,415,000 at quarter-end. The company authorized a new $1,000,000,000 share repurchase program and spent $344,911,000 year-to-date on buybacks, while ending the quarter with no outstanding borrowings and an undrawn $600,000,000 credit facility. Sprouts operated 464 stores in 24 states and recorded 9.3% year-to-date comparable sales growth.

Insights

Retail equity analyst

Solid quarter: higher sales, margin gains, new $1B buyback.

SFM delivered Q3 net sales of $2,200,430,000 (+13% YoY) with comparable sales up 5.9%. Gross margin rose to 38.7% (up 60 bps), supporting operating income of $157,398,000 and diluted EPS of $1.22.

Year-to-date, revenue reached $6,657,468,000, net income $433,845,000, and EPS $4.38. Cash from operations of $577,471,000 and no debt, alongside an undrawn $600,000,000 revolver, indicate balance sheet flexibility.

The board authorized a $1,000,000,000 repurchase; buybacks totaled $344,911,000 year-to-date. A new 10-year distribution agreement with KeHE was signed on September 3, 2025. Actual impact will depend on sustained comp growth and cost discipline.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2025

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36029

Sprouts Farmers Market, Inc.

(Exact name of registrant as specified in its charter)

Delaware			32-0331600
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

5455 East High Street, Suite 111

Phoenix, Arizona 85054

(Address of principal executive offices and zip code)

(480) 814-8016

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class			Trading Symbol(s)			Name of Each Exchange on Which Registered
Common Stock, $0.001 par value			SFM			Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

x

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

o

Emerging growth company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 27, 2025, the registrant had 97,369,439 shares of common stock, $0.001 par value per share, outstanding.

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2025

TABLE OF CONTENTS

						Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.						4
			Consolidated Balance Sheets as of September 28, 2025 (unaudited) and December 29, 2024			4
			Consolidated Statements of Income for the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024 (unaudited)			5
			Consolidated Statements of Stockholders' Equity for the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024 (unaudited)			6
			Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 28, 2025 and September 29, 2024 (unaudited)			7
			Notes to Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.						21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.						33
Item 4. Controls and Procedures.						33
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.						35
Item 1A. Risk Factors.						35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.						35
Item 5. Other Information.						36
Item 6. Exhibits.						36
Signatures						37

Table of Contents

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (referred to as the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (referred to as the “Exchange Act”), including, but not limited to, statements regarding our expectations, beliefs, intentions, strategies, future operations, future financial position, future revenue, projected expenses, and plans and objectives of management. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “continue,” “objective,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements reflect our current views about future events and involve known risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievement to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, and our other filings with the Securities and Exchange Commission. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the “Company,” “Sprouts,” “Sprouts Farmers Market,” “we,” “us” and “our” refer to Sprouts Farmers Market, Inc. and, where appropriate, its subsidiaries.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

			September 28, 2025						December 29, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	322,415					$	265,159
Accounts receivable, net			64,848						30,901
Inventories			399,938						343,329
Prepaid expenses and other current assets			30,344						36,131
Total current assets			817,545						675,520
Property and equipment, net of accumulated depreciation			989,587						895,189
Operating lease assets, net			1,596,100						1,466,903
Intangible assets			208,215						208,094
Goodwill			381,750						381,750
Other assets			19,925						13,243
Total assets			$	4,013,122					$	3,640,699
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	268,330					$	213,414
Accrued liabilities			239,836						216,842
Accrued salaries and benefits			89,595						97,991
Accrued income tax			11,522						—
Current portion of operating lease liabilities			170,614						150,400
Current portion of finance lease and other finance obligations			1,597						1,321
Total current liabilities			781,494						679,968
Long-term operating lease liabilities			1,633,293						1,520,272
Long-term debt and other finance obligations			53,423						7,248
Other long-term liabilities			37,783						38,259
Deferred income tax liability			72,571						73,059
Total liabilities			2,578,564						2,318,806
Commitments and contingencies (Note 6)
Stockholders’ equity:
Undesignated preferred stock; $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding			—						—
Common stock, $0.001 par value; 200,000,000 shares authorized, 97,451,026 shares issued and outstanding, September 28, 2025; 99,255,036 shares issued and outstanding, December 29, 2024			98						99
Additional paid-in capital			831,870						808,140
Retained earnings			602,590						513,654
Total stockholders’ equity			1,434,558						1,321,893
Total liabilities and stockholders’ equity			$	4,013,122					$	3,640,699

The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Net sales			$	2,200,430					$	1,945,735					$	6,657,468					$	5,723,062
Cost of sales			1,349,379						1,204,812						4,057,454						3,541,461
Gross profit			851,051						740,923						2,600,014						2,181,601
Selling, general and administrative expenses			653,329						580,332						1,921,682						1,676,470
Depreciation and amortization (exclusive of depreciation included in cost of sales)			38,862						34,408						110,567						98,129
Store closure and other costs, net			1,462						3,732						4,679						8,968
Income from operations			157,398						122,451						563,086						398,034
Interest income, net			(690)						(1,061)						(2,045)						(382)
Income before income taxes			158,088						123,512						565,131						398,416
Income tax provision			37,972						31,902						131,286						97,417
Net income			$	120,116					$	91,610					$	433,845					$	300,999
Net income per share:
Basic			$	1.23					$	0.91					$	4.43					$	2.99
Diluted			$	1.22					$	0.91					$	4.38					$	2.97
Weighted average shares outstanding:
Basic			97,672						100,148						98,023						100,560
Diluted			98,715						101,025						99,086						101,469

The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

For the thirteen and thirty-nine weeks ended September 28, 2025

			Shares						Common Stock						Additional Paid In Capital						Retained Earnings						Total Stockholders’ Equity
Balances at June 29, 2025			97,768,860						$	98					$	823,766					$	532,636					$	1,356,500
Net income			—						—						—						120,116						120,116
Issuance of shares under stock plans			47,018						—						462						—						462
Repurchase and retirement of common stock, including excise tax			(364,852)						—						—						(50,162)						(50,162)
Share-based compensation			—						—						7,642						—						7,642
Balances at September 28, 2025			97,451,026						$	98					$	831,870					$	602,590					$	1,434,558
			Shares						Common Stock						Additional Paid In Capital						Retained Earnings						Total Stockholders’ Equity
Balances at December 29, 2024			99,255,036						$	99					$	808,140					$	513,654					$	1,321,893
Net income			—						—						—						433,845						433,845
Issuance of shares under stock plans			595,279						1						1,685						—						1,686
Repurchase and retirement of common stock, including excise tax			(2,399,289)						(2)						—						(344,909)						(344,911)
Share-based compensation			—						—						22,045						—						22,045
Balances at September 28, 2025			97,451,026						$	98					$	831,870					$	602,590					$	1,434,558

For the thirteen and thirty-nine weeks ended September 29, 2024

			Shares						Common Stock						Additional Paid In Capital						Retained Earnings												Total Stockholders’ Equity
Balances at June 30, 2024			100,214,345						$	100					$	791,364					$	477,811											$	1,269,275
Net income			—						—						—						91,610												91,610
Issuance of shares under stock plans			89,007						—						1,464						—												1,464
Repurchase and retirement of common stock, including excise tax			(264,135)						—						—						(25,516)												(25,516)
Share-based compensation			—						—						6,659						—												6,659
Balances at September 29, 2024			100,039,217						$	100					$	799,487					$	543,905											$	1,343,492
			Shares						Common Stock						Additional Paid In Capital						Retained Earnings												Total Stockholders’ Equity
Balances at December 31, 2023			101,211,984						$	101					$	774,834					$	373,612											$	1,148,547
Net income			—						—						—						300,999												300,999
Issuance of shares under stock plans			688,686						1						4,728						—												4,729
Repurchase and retirement of common stock, including excise tax			(1,861,453)						(2)						—						(130,706)												(130,708)
Share-based compensation			—						—						19,925						—												19,925
Balances at September 29, 2024			100,039,217						$	100					$	799,487					$	543,905											$	1,343,492

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Operating activities
Net income			$	433,845					$	300,999
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense			116,003						103,881
Operating lease asset amortization			107,866						99,278
Share-based compensation			22,045						19,925
Deferred income taxes			(488)						1,170
Other non-cash items			1,643						3,116
Changes in operating assets and liabilities:
Accounts receivable			24,688						30,273
Inventories			(56,608)						(6,275)
Prepaid expenses and other current assets			5,310						18,595
Other assets			(3,928)						219
Accounts payable			23,231						25,556
Accrued liabilities			23,496						37,877
Accrued salaries and benefits			(8,397)						6,777
Accrued income tax			11,522						1,392
Operating lease liabilities			(123,680)						(122,646)
Other long-term liabilities			923						214
Cash flows from operating activities			577,471						520,351
Investing activities
Purchases of property and equipment			(176,081)						(161,687)
Cash flows used in investing activities			(176,081)						(161,687)
Financing activities
Payments on revolving credit facilities			—						(125,000)
Payments on finance lease liabilities			(793)						(840)
Repurchase of common stock			(341,925)						(129,698)
Payments of excise tax on repurchases of common stock			(2,091)						—
Proceeds from exercise of stock options			1,686						4,729
Cash flows used in financing activities			(343,123)						(250,809)
Increase in cash, cash equivalents, and restricted cash			58,267						107,855
Cash, cash equivalents, and restricted cash at beginning of the period			267,213						203,870
Cash, cash equivalents, and restricted cash at the end of the period			$	325,480					$	311,725
Supplemental disclosure of cash flow information
Cash paid for interest			$	1,293					$	4,613
Cash paid for income taxes			111,438						71,290
Supplemental disclosure of non-cash activities
Property and equipment in accounts payable and accrued liabilities			$	26,025					$	24,972
Excise tax accrued on repurchase of common stock			2,884						2,777
Leased assets obtained in exchange for new operating lease liabilities, net of lease terminations			237,068						213,705
Leased assets obtained in exchange for new finance lease liabilities			6,266						—
Property acquired through finance obligations			40,978						—

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

Sprouts Farmers Market, Inc., a Delaware corporation, through its subsidiaries, offers a unique specialty grocery experience featuring an open layout with fresh produce at the heart of the store. The Company continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. As of September 28, 2025, the Company operated 464 stores in 24 states. For convenience, the “Company” is used to refer collectively to Sprouts Farmers Market, Inc. and unless the context otherwise requires, its subsidiaries. The Company’s store operations are conducted by its subsidiaries.

The accompanying unaudited consolidated financial statements include the accounts of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods indicated. All material intercompany accounts and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results for any other interim period or for a full fiscal year. The information included in these consolidated financial statements and notes thereto should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto for the fiscal year ended December 29, 2024 (“fiscal year 2024”) included in the Company’s Annual Report on Form 10-K, filed on February 20, 2025.

The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

The Company reports its results of operations on a 52- or 53-week fiscal calendar ending on the Sunday closest to December 31. The fiscal year ending December 28, 2025 (“fiscal year 2025”) and fiscal year 2024 are 52-week years. The Company reports its results of operations on a 13-week quarter, except for 53-week fiscal years (in which the fourth quarter has 14 weeks).

All dollar amounts are in thousands, unless otherwise noted.

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2. Summary of Significant Accounting Policies

Revenue Recognition

The Company’s performance obligations are satisfied upon the transfer of goods to the customer, which occurs at the point of sale, and payment from customers is also due at the time of sale. Proceeds from the sale of gift cards are recorded as a liability at the time of sale and recognized as sales when they are redeemed by the customer and the performance obligation is satisfied by the Company. The Company’s gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions and was not material in any period presented. The outstanding gift card liability balance is included within Accrued Liabilities on the Company's Consolidated Balance Sheet.

Beginning in July 2025, the Company implemented a customer loyalty program under which customers earn points on qualifying purchases. Points may be redeemed in future periods for rewards to be used for discounts on the Company's products. The loyalty points represent a material right to the customer and are accounted for as a separate performance obligation. At the time of purchase, the Company allocates a portion of the transaction price to a deferred loyalty liability based on their estimated standalone selling price. Revenue allocated to the points is deferred and recognized when the points are redeemed or expire. Points expire after 6 months, and points that have been converted to rewards expire 60 days following conversion. The outstanding liability balance at period end, which the Company classifies as a current liability due to the short expiration period, is included within Accrued Liabilities on the Company's Consolidated Balance Sheet.

A summary of the activity and balances in the gift card and loyalty program liabilities is as follows:

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Beginning Balance			$	11,071					$	10,566
Gift cards issued during the period but not redeemed(1)			2,218						1,899
Loyalty value earned during the period but not redeemed or expired			2,609						—
Revenue recognized from beginning liability			(3,978)						(3,825)
Ending Balance			$	11,920					$	8,640

(1)Net of estimated breakage

The nature of goods the Company transfers to customers at the point of sale are inventories, consisting of merchandise purchased for resale.

The Company does not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current period from performance obligations satisfied in previous periods, any contract performance obligations, or any material costs to obtain or fulfill a contract as of September 28, 2025.

Restricted Cash

Restricted cash primarily relates to the Company's healthcare, general liability and workers’ compensation plan benefits of $3.1 million and $2.1 million as of September 28, 2025 and December 29, 2024, respectively. These balances are included in prepaid expenses and other current assets in the consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recently Issued Accounting Pronouncements Not Yet Adopted

Income Taxes – Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU no. 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures." The amendments in this update enhance a public entity's annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance will be effective beginning with the Company's Annual Report on Form 10-K for its fiscal year 2025. Early adoption is permitted, and the guidance should be applied prospectively, with an option to apply it retrospectively. The Company expects this update to impact its income tax disclosures but does not anticipate that this update will impact its results of operations, cash flows or financial condition.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU no. 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". The standard requires public entities to disclose additional disaggregation of expense in the notes to the financial statements for interim and annual reporting periods. The guidance is effective for the Company for its fiscal year 2027. Early adoption is permitted, and the guidance should be applied prospectively, with an option to apply it retrospectively. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

Intangibles—Goodwill and Other—Internal-Use Software

In September 2025, the FASB issued ASU no. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)". The standard clarifies and modernizes the accounting for costs related to the internal-use software in Accounting Standards Codification (ASC) 350-40. The guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. The guidance is effective for the Company for its fiscal year 2028. Early adoption is permitted, as of the beginning of an annual reporting period. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

No other new accounting pronouncements issued or effective during the thirteen weeks ended September 28, 2025 had, or are expected to have, a material impact on the Company’s consolidated financial statements.

3. Fair Value Measurements

The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with GAAP. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in the impairment analysis of goodwill, intangible assets and long-lived assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company did not have any financial liabilities measured at fair value on a recurring basis as of September 28, 2025 and December 29, 2024.

The determination of fair values of certain tangible and intangible assets for purposes of the Company’s goodwill or long-lived asset impairment evaluation is based upon Level 3 inputs. When necessary, the Company uses third party market data and market participant assumptions to derive the fair value of its asset groupings, which primarily include right-of-use lease assets and property and equipment.

Cash, cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued salaries and benefits approximate fair value because of the short maturity of those instruments.

4. Long-Term Debt and Other Finance Obligations

A summary of long-term debt and other finance obligations is as follows:

																		As of
Facility						Maturity						Interest Rate						September 28, 2025						December 29, 2024
Senior secured debt
$700.0 million Credit Agreement						March 25, 2027						Variable						$	—					$	—
$600.0 million Credit Agreement						July 25, 2030						Variable						$	—					$	—
Finance Obligations						September 30, 2036						n/a						40,874						—
Finance lease liabilities						Various						n/a						12,549						7,248
Long-term debt and other finance obligations																		$	53,423					$	7,248

New Credit Agreement

The Company’s subsidiary, Sprouts Farmers Markets Holdings, LLC (“Intermediate Holdings”), is the borrower under a credit agreement entered into on July 25, 2025 (the “Credit Agreement”). The Credit Agreement provides for a senior secured revolving credit facility (the "Revolving Credit Facility") with an initial aggregate commitment of $600.0 million. Amounts outstanding under the Credit Agreement may be increased from time to time in accordance with an expansion feature set forth in the Credit Agreement.

The Company capitalized debt issuance costs of $1.6 million related to the Credit Agreement, which, combined with the remaining $1.1 million debt issuance costs in respect of that certain amended and restated credit agreement entered into on March 25, 2022, by and among the Company, Intermediate Holdings, certain lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “Former Credit Facility”), which remained outstanding as of the time of Intermediate Holdings’ entry into the Credit Agreement, were recorded to prepaid expenses and other current assets and other assets in the consolidated balance sheets and are being amortized on a straight-line basis to interest expense over the five-year term of the Credit Agreement.

The Credit Agreement provides for a $100.0 million letter of credit sub-facility (the "Letter of Credit Sub-Facility") and a $50.0 million swingline facility. Letters of credit issued under the Credit Agreement reduce the capacity of Intermediate Holdings to borrow under the Revolving Credit Facility. Letters of credit totaling $23.1 million have been issued as of September 28, 2025 under the Letter of Credit Sub-Facility, primarily to support the Company’s insurance programs.

Guarantees

Obligations under the Credit Agreement are guaranteed by the Company and substantially all of its existing and future wholly-owned material domestic subsidiaries, and are secured by first-priority security

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

interests in substantially all of the assets of the Company, Intermediate Holdings, and the subsidiary guarantors, including, without limitation, a pledge by the Company of its equity interest in Intermediate Holdings.

Interest and Fees

Loans under the Credit Agreement will initially bear interest, at the Company's option, either at the Term SOFR (with a floor of 0.00%) plus a 1.00% per annum or alternate base rate (with a floor of 0.00%) plus 0.00% per annum. The interest rate margins are subject to upward adjustments pursuant to a pricing grid based on the Company’s total net leverage ratio as set forth in the Credit Agreement and to upward or downward adjustments of up to 0.05% based upon the achievement of certain sustainability-linked metric thresholds, as set forth in the Credit Agreement.

Under the terms of the Credit Agreement, the Company is obligated to pay a commitment fee on the available unused amount of the commitments, which commitment fee ranges between 0.09% to 0.225% per annum, pursuant to a pricing grid based on the Company’s total net leverage ratio. The commitment fees are subject to upward or downward adjustments of up to 0.01% based upon the achievement of certain sustainability-linked metric thresholds, as set forth in the Credit Agreement.

As of September 28, 2025, loans outstanding under the Credit Agreement bore interest at Term SOFR (as defined in the Credit Agreement) plus 1.00% per annum. The Company had no loans outstanding under the Credit Agreement as of September 28, 2025.

As of September 28, 2025, outstanding letters of credit issued under the Credit Agreement were subject to a participation fee of 1.00% per annum and a fronting fee of 0.125% per annum.

Payments and Borrowings

The Credit Agreement is scheduled to mature, and the commitments thereunder will terminate on July 25, 2030, subject to extensions as set forth therein.

The Company may prepay loans and permanently reduce commitments under the Credit Agreement at any time in agreed-upon minimum principal amounts, without premium or penalty (except SOFR breakage costs, if applicable).

In connection with the execution of the Credit Agreement, the Company's obligations under the Former Credit Facility were prepaid and terminated.

During the thirteen and thirty-nine weeks ended September 28, 2025, the Company made no additional borrowings and had no outstanding debt under the Credit Agreement as of September 28, 2025. During 2024, the Company made no additional borrowings and made principal payments of $125.0 million, resulting in no outstanding debt under the Former Credit Facility as of December 29, 2024.

Covenants

The Credit Agreement contains financial, affirmative and negative covenants. The negative covenants include, among other things, limitations on the Company’s ability to:

•incur additional indebtedness;

•grant additional liens;

•enter into sale-leaseback transactions;

•make loans or investments;

•merge, consolidate or enter into acquisitions;

•pay dividends or distributions;

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(UNAUDITED)

•enter into transactions with affiliates;

•enter into new lines of business;

•modify the terms of certain debt or other material agreements; and

•change its fiscal year.

Each of these covenants is subject to customary and other agreed-upon exceptions.

In addition, the Credit Agreement requires that the Company and its subsidiaries maintain a maximum total net leverage ratio not to exceed 3.75 to 1.00, which ratio may be increased from time to time in connection with certain permitted acquisitions pursuant to conditions as set forth in the Credit Agreement, and a minimum interest coverage ratio not to be less than 3.00 to 1.00. Each of these covenants is tested as of the last day of each fiscal quarter.

The Company was in compliance with all applicable covenants under the Credit Agreement as of September 28, 2025.

Finance Obligations

On April 24, 2025, the Company executed a real estate lease for a new corporate headquarters campus and store location that has since commenced. The initial term of the lease is 10 years and the total non-cancellable lease payments are $110.0 million. In addition, the lease includes a renewal option for a period of 10 years. Monthly payments commence on completion of construction, increase annually by a nominal amount, and continue through end of the initial term. Based on certain criteria and the existence of a purchase option, the Company has been determined to be the owner during the construction period under ASC 842. Further, there is no evidence of an accounting sale to the landlord upon construction completion, which precludes sale-leaseback accounting. As a result, the building assets and corresponding financial obligation will remain on the Company’s balance sheet and will be amortized over the life of the underlying building asset. As of September 28, 2025, the Company has recorded $40.9 million in both construction in progress assets and finance obligations. There will be no material impact to the statements of income until construction completion, which is expected in the latter half of 2026. Additionally, this lease includes a residual value guarantee. The final amount of the guarantee is to be determined based upon final construction costs. As of September 28, 2025, no amounts related to this residual value guarantee have been deemed probable.

5. Income Taxes

The Company’s effective tax rate decreased to 24.0% for the thirteen weeks ended September 28, 2025, compared to 25.8% for the thirteen weeks ended September 29, 2024. The decrease in the effective tax rate was primarily due to a benefit in the current quarter for the purchase discount for transferable tax credits partially offset by a reduction in the benefit for stock-based compensation in the current year. The income tax effect resulting from excess tax benefits of share-based payment awards was $1.3 million and $1.7 million for the thirteen weeks ended September 28, 2025 and September 29, 2024, respectively.

The Company’s effective tax rate decreased to 23.2% for the thirty-nine weeks ended September 28, 2025, compared to 24.5% for the thirty-nine weeks ended September 29, 2024. The decrease in the effective tax rate was primarily due to an increase in the benefit in the current year for stock-based compensation and benefit in the current quarter for the purchase discount for transferable tax credits partially offset by an increase in the rate detriment in the current year for nondeductible executive compensation. The income tax effect resulting from excess tax benefits of share-based payment awards was $15.7 million and $6.8 million for the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively.

The Company files income tax returns for federal purposes and in many states. The Company’s tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three years, following the tax year to which those filings relate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On July 4, 2025, the legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA has extensive provisions, of which many do not apply to the Company. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others effective in 2026 and later. Any impacts to the Company were incorporated into the income tax provision for the thirty-nine weeks ended September 28,2025 and had no material impact to income tax expense for the quarter. The Company continues to evaluate the impact on its consolidated financial statements as additional guidance is issued.

Pursuant to provisions under the Inflation Reduction Act (“IRA”), the Company executed agreements to purchase transferable federal tax credits estimated to be $63 million during the thirty-nine weeks ended September 28, 2025. Such federal tax credits will be purchased at negotiated discounts, allowing the Company to reduce its 2025 federal income taxes payable by the amount of credits it expects to claim on its 2025 tax return. The Company has included the estimated anticipated tax benefit of $3.5 million in its estimated annual effective tax rate for the year ended December 28, 2025 for the difference between the tax credit and negotiated price for expected current year tax credits.

6. Commitments and Contingencies

The Company is exposed to claims and litigation matters arising in the ordinary course of business and uses various methods to resolve these matters that are believed to best serve the interests of the Company’s stakeholders. The Company’s primary contingencies are associated with self-insurance obligations and litigation matters. Self-insurance liabilities require significant judgment and actual claim settlements and associated expenses may differ from the Company’s current provisions for loss.

Litigation

In February 2025, the Company terminated its agreement with Harvest Sherwood Food Distributors, Inc. (“Harvest Sherwood”) for the distribution of certain meat and seafood products to the Company due to, among other things, Harvest Sherwood’s failure to pay the Company’s vendors for these products. Subsequently, on February 24, 2025, Harvest Sherwood filed a complaint against the Company in the Superior Court for the State of Delaware alleging breach of contract among other claims and seeking monetary damages. On March 6, 2025, the Company filed an answer and counterclaims against Harvest Sherwood, asserting its defenses to the complaint and its claims against Harvest Sherwood for breach of contract, negligent misrepresentation and unjust enrichment, among others. On May 5, 2025, Harvest Sherwood filed a petition for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court") and filed a substantially similar adversary proceeding against the Company in the Bankruptcy Court. As a result, the Company's litigation against Harvest Sherwood has been stayed in the Superior Court for the State of Delaware, and the adversary proceeding is pending. Discovery is ongoing, and a trial date has been set for February 2026. At this stage of the proceedings, the Company is unable to predict or reasonably estimate any potential loss or effect on the Company. Accordingly, no loss contingency was recorded for this matter.

7. Stockholders’ Equity

Share Repurchases

On August 13, 2025, the Company's board of directors authorized a new $1 billion share repurchase program for its common stock. The new authorization replaced the Company's then-existing share repurchase authorization of $600 million that was due to expire on May 22, 2027, of which $142.6 million remained available upon its replacement, and under which no further shares may be repurchased. The new repurchase authorization does not have an expiration date; however, the Board expects to periodically review the authorization to assess its continued appropriateness in light of the Company's capital allocation priorities, market conditions, alternative investment opportunities, and other factors. The following table outlines the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

common stock share repurchase programs authorized by the Company’s board of directors and the related repurchase activity and available authorization as of September 28, 2025:

Effective date						Expiration date						Amount authorized						Cost of repurchases						Authorization available
May 22, 2024						May 22, 2027						$	600,000					$	457,408					$	—
August 13, 2025						N/A						$	1,000,000					$	33,994					$	966,006

The shares under the Company’s repurchase programs may be purchased on a discretionary basis from time to time through the applicable expiration date, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The board’s authorization of the share repurchase programs does not obligate the Company to acquire any particular amount of common stock, and the repurchase programs may be commenced, suspended, or discontinued at any time.

Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows (total cost in thousands):

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Number of common shares acquired			364,852						264,135						2,399,289						1,861,453
Average price per common share acquired			$	137.49					$	96.60					$	143.76					$	70.22
Total cost of common shares acquired			$	50,162					$	25,516					$	344,911					$	130,708

Shares purchased under the Company’s repurchase programs were subsequently retired and the excess of the repurchase price over par value was charged to retained earnings. The cost of common shares repurchased included the 1% excise tax imposed as part of the Inflation Reduction Act of 2022.

Subsequent to September 28, 2025 and through October 27, 2025, the Company repurchased an additional 0.1 million shares of common stock for $10.0 million, excluding excise tax.

8. Net Income Per Share

The computation of basic net income per share is based on the number of weighted average shares outstanding during the period. The computation of diluted net income per share includes the dilutive effect of share equivalents consisting of incremental shares deemed outstanding from the assumed exercise of options and unvested restricted stock units ("RSUs"). Performance share awards ("PSAs") are included in the computation of diluted net income per share only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be satisfied if the end of the reporting period were the end of the related performance period, and if the effect would be dilutive.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share amounts):

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Basic net income per share:
Net income			$	120,116					$	91,610					$	433,845					$	300,999
Weighted average shares outstanding - basic			97,672						100,148						98,023						100,560
Basic net income per share			$	1.23					$	0.91					$	4.43					$	2.99
Diluted net income per share:
Net income			$	120,116					$	91,610					$	433,845					$	300,999
Weighted average shares outstanding - basic			97,672						100,148						98,023						100,560
Dilutive effect of share-based awards:
Assumed exercise of options to purchase shares			532						485						563						460
RSUs			237						392						330						449
PSAs			274						—						170						—
Weighted average shares and equivalent shares outstanding - diluted			98,715						101,025						99,086						101,469
Diluted net income per share			$	1.22					$	0.91					$	4.38					$	2.97

For the thirteen weeks ended September 28, 2025, the Company had 0.1 million options and 0.2 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met. For the thirteen weeks ended September 29, 2024, the Company had 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

For the thirty-nine weeks ended September 28, 2025, the Company had 0.1 million options and 0.2 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met. For the thirty-nine weeks ended September 29, 2024, the Company had 0.1 million options and 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

9. Segments

The Company has one operating segment and, therefore, one reportable segment: healthy grocery stores. The Company derives all its revenues from the sale of products at its various store locations across the United States. The accounting policies of the segment are the same as described in the summary of significant accounting policies. The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The CODM assesses performance and allocates resources based on consolidated net income. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The following table represents the significant expense and key metrics reviewed by the CODM:

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SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Net Sales			$	2,200,430					$	1,945,735					$	6,657,468					$	5,723,062
Less:
Cost of sales			1,349,379						1,204,812						4,057,454						3,541,461
Direct store expenses			566,129						497,297						1,652,952						1,440,667
Other segment items (1)			127,524						121,175						383,976						342,900
Interest income, net			(690)						(1,061)						(2,045)						(382)
Income tax provision			37,972						31,902						131,286						97,417
Net income			$	120,116					$	91,610					$	433,845					$	300,999

(1) Other segment items include non-store selling, general, and administrative expenses, depreciation and amortization, store closure costs, and other overhead expenses.

The Company categorizes the varieties of products it sells as perishable and non-perishable. Perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives. Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

In accordance with ASC 606, the following table represents a disaggregation of revenue for the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024:

			Thirteen weeks ended
			September 28, 2025												September 29, 2024
Perishables			$	1,265,962					57.5		%				$	1,128,272					58.0		%
Non-Perishables			934,468						42.5		%				817,463						42.0		%
Net Sales			$	2,200,430					100.0		%				$	1,945,735					100.0		%
			Thirty-nine weeks ended
			September 28, 2025												September 29, 2024
Perishables			$	3,806,839					57.2		%				$	3,288,976					57.5		%
Non-Perishables			2,850,629						42.8		%				2,434,086						42.5		%
Net Sales			$	6,657,468					100.0		%				$	5,723,062					100.0		%

10. Share-Based Compensation

2022 Incentive Plan

In March 2022, the Company’s board of directors adopted the Sprouts Farmers Market, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Incentive Plan”), which became effective May 25, 2022, upon approval by the Company’s stockholders. The 2022 Incentive Plan provides team members of the Company, certain consultants and advisors who perform services for the Company, and non-employee members of the Company's board of directors with the opportunity to receive grants of equity awards, including stock options, RSUs, PSAs, and other stock-based awards. The 2022 Incentive Plan replaced the 2013 Incentive Plan (as described below).

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SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Awards Granted under the 2022 Incentive Plan

During the thirty-nine weeks ended September 28, 2025, the Company granted the following share-based compensation awards under the 2022 Incentive Plan:

Grant Date						RSUs						PSAs						Options
March 18, 2025						185,228						58,805						61,079
June 3, 2025						333						—						—
Total						185,561						58,805						61,079
Weighted-average grant date fair value						$	137.88					$	137.81					$	51.46
Weighted-average exercise price						$	—					$	—					$	137.81

The aggregate number of shares of common stock that may be issued to team members and directors under the 2022 Incentive Plan may not exceed 6,600,000, subject to the following adjustments. If any awards granted under the 2022 Incentive Plan, terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested or paid in shares, the shares will again be available for purposes of the 2022 Incentive Plan. The number of shares subject to outstanding awards under the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”) that terminate, expire, are paid in cash, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid in shares under the 2013 Incentive Plan after the effective date of the 2022 Incentive Plan will be available for issuance under the 2022 Incentive Plan. As of September 28, 2025, there were 1,097,480 stock awards outstanding and 5,305,398 shares remaining available for issuance under the 2022 Incentive Plan.

2013 Incentive Plan

Prior to the adoption of the 2022 Incentive Plan, the 2013 Incentive Plan served as the umbrella plan for the Company’s share-based and cash-based incentive compensation programs for its directors, officers and other team members. Upon stockholder approval of the 2022 Incentive Plan on May 25, 2022, no further awards will be granted under the 2013 Incentive Plan, but awards outstanding under the 2013 Incentive Plan will remain outstanding in accordance with their terms and the terms of the 2013 Incentive Plan.

Stock Options

The Company uses the Black-Scholes option pricing model to estimate the fair value of options at grant date. Options vest in accordance with the terms set forth in the grant letter.

Time-based options vest annually over a period of three years.

RSUs

The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. RSUs generally vest annually over a period of two or three years from the grant date.

PSAs

PSAs granted in 2022 were subject to the Company achieving certain EBIT performance targets for the 2024 fiscal year. The criteria was based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. The performance conditions with respect to fiscal year 2024 EBIT were deemed to have been met, and PSAs vested at 148% pay out level on the third anniversary of the grant date (March 2025). There were no outstanding 2022 PSAs as of September 28, 2025.

PSAs granted in 2023 are subject to the Company achieving certain EBIT performance targets for the 2025 fiscal year. The criteria was based on a range of performance targets in which grantees may earn 0% to

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SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2026).

PSAs granted in 2024 are subject to the Company achieving certain EBIT performance targets for the 2026 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2027).

PSAs granted in 2025 are subject to the Company achieving certain EBIT performance targets for the 2027 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2028).

Share-based Compensation Expense

The Company presents share-based compensation expense in selling, general and administrative expenses on the Company’s consolidated statements of income. The amount recognized was as follows:

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Share-based compensation expense			$	7,642					$	6,659					$	22,045					$	19,925

The following share-based awards were outstanding under the 2022 and 2013 Incentive Plans as of September 28, 2025 and September 29, 2024:

			As of
			September 28, 2025						September 29, 2024
			(in thousands)
Options
Vested			544						454
Unvested			213						317
RSUs			430						618
PSAs			306						370

As of September 28, 2025, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:

			Unrecognized compensation expense						Remaining weighted average recognition period
Options			$	4,503					1.5
RSUs			28,746						1.6
PSAs			14,314						1.2
Total unrecognized compensation expense at September 28, 2025			$	47,563

During the thirty-nine weeks ended September 28, 2025 and September 29, 2024, the Company received $1.7 million and $4.7 million, respectively, in cash proceeds from the exercise of options.

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SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11. Goodwill

The Company’s goodwill balance was $381.8 million as of September 28, 2025 and December 29, 2024. As of September 28, 2025 and December 29, 2024, the Company had no accumulated goodwill impairment losses. The goodwill is related to the acquisitions of Henry’s Farmers Market and Sunflower Farmers Market in 2011 and 2012, respectively, and the acquisition of Ronald Cohn, Inc. in 2023.

12. Store Closures

No stores were closed during the thirty-nine weeks ended September 28, 2025 and all lease costs associated with the Company's closed store locations for which a lease remains in effect are included within Store closure and other cost, net.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the 2024 fiscal year, filed on February 20, 2025 (“Form 10-K”) with the Securities and Exchange Commission. All dollar amounts included below are in thousands, unless otherwise noted.

Business Overview

Sprouts Farmers Market offers a unique specialty grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. We continue to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. From our founding in 2002, we have grown rapidly, significantly increasing our sales, store count and profitability. Headquartered in Phoenix with 464 stores in 24 states as of September 28, 2025, we are one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States.

Our Growth Strategy

We continue to execute on our long-term growth strategy that we believe is transforming our company and driving profitable growth, focusing on the following areas:

•Win with Target Customers. We are focusing attention on our target customers, identified through research as ‘health enthusiasts’ and ‘selective shoppers’, where there is ample opportunity to gain share within these customer segments. We believe our business can continue to grow by leveraging existing strengths in a unique assortment of better-for-you, quality products and by providing a full omnichannel offering through delivery or pickup via our website or the Sprouts app.

•Market Expansion. We are delivering unique smaller stores with expectations of stronger returns, while maintaining the approachable, fresh-focused farmer’s market heritage Sprouts is known for. From 2021 through September 28, 2025, we have opened 99 new stores and remodeled one store featuring our updated format. Our geographic store expansion and new store placement will intersect where our target customers live, in markets with growth potential and supply chain support, which we believe will provide a long runway of approximately 10% annual unit growth.

•Create an Advantaged Supply Chain. We believe our network of distribution centers can drive efficiencies across the chain and support our growth plans. To further deliver on our fresh commitment and reputation, as well as to increase our local offerings and improve financial results, we aspire to ultimately position fresh distribution centers within a 250-mile radius of stores. We are better leveraging our existing distribution center capacity, and approximately 80% of our stores were within 250 miles of a distribution center as of September 28, 2025.

•Customer Engagement and Personalization. We believe we are elevating our national brand recognition and positioning by telling our unique brand story rooted in product innovation and differentiation. We are increasing our use of data analytics and insights. We believe this data-driven intelligence will increase customer engagement through personalization efforts with digital and social connections to drive additional sales growth and loyalty.

•Inspire and Engage Our Talent to Make Sprouts a Best Place to Work. Subsequent to the initial launch of our long-term growth strategy, we have added the focus area of inspiring and engaging our talent through our culture, acquisition and development and total rewards program to attract and retain the talent we believe we need to execute on our strategic goals and transform our company into a premier place to work.

•Invest in Technology for Scalable Growth. We continue to make investments in technology in support of our strategy, with a focus on enhancing efficiency, scalability, and customer experience. While we are showing positive outcomes on our strategic investments in inventory management and customer personalization, we believe that ongoing investments in our

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technology foundation will allow us to streamline operations and improve decision making to execute on our strategy.

•Deliver on Key Financial Metrics. We are measuring and reporting on the success of this strategy against a number of long-term financial and operational targets. Since the implementation of our strategy beginning in 2020, we have significantly improved our margin structure above our 2019 baseline.

Recent Developments

On September 3, 2025, we entered into a Distribution Agreement (the “Agreement”) with KeHE Distributors, LLC (“KeHE”), our primary distributor of dry grocery and frozen food products. The Agreement has a ten-year term and replaces our prior distribution agreement dated July 18, 2018 with KeHE. The Agreement includes terms relating to KeHE’s distribution of products to us, including product pricing, service level arrangements, product management and distribution procedures, and other ordinary course operational terms governing our distribution relationship with KeHE. The Agreement is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q.

Results of Operations for Thirteen Weeks Ended September 28, 2025 and September 29, 2024

The following tables set forth our unaudited results of operations and other operating data for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. All dollar amounts are in thousands, unless otherwise noted.

			Thirteen weeks ended
			September 28, 2025						September 29, 2024
Unaudited Quarterly Consolidated Statement of Income Data:
Net sales			$	2,200,430					$	1,945,735
Cost of sales			1,349,379						1,204,812
Gross profit			851,051						740,923
Selling, general and administrative expenses			653,329						580,332
Depreciation and amortization (exclusive of depreciation included in cost of sales)			38,862						34,408
Store closure and other costs, net			1,462						3,732
Income from operations			157,398						122,451
Interest income, net			(690)						(1,061)
Income before income taxes			158,088						123,512
Income tax provision			37,972						31,902
Net income			$	120,116					$	91,610
Weighted average shares outstanding - basic			97,672						100,148
Diluted effect of equity-based awards			1,043						877
Weighted average shares and equivalent shares outstanding - diluted			98,715						101,025
Diluted net income per share			$	1.22					$	0.91

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			Thirteen weeks ended
			September 28, 2025						September 29, 2024
Other Operating Data:
Comparable store sales growth			5.9		%				8.4		%
Stores at beginning of period			455						419
Closed			—						—
Opened			9						9
Stores at end of period			464						428

Comparison of Thirteen Weeks Ended September 28, 2025 to Thirteen Weeks Ended September 29, 2024

Net sales

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net sales			$	2,200,430					$	1,945,735					$	254,695					13		%
Comparable store sales growth			5.9		%				8.4		%

Net sales during the thirteen weeks ended September 28, 2025 totaled $2.2 billion, an increase of $254.7 million, or 13%, compared to the thirteen weeks ended September 29, 2024. The sales increase was driven by sales from new stores opened in the last twelve months and a 5.9% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirteen weeks ended September 28, 2025 and approximately 94% of total sales for the thirteen weeks ended September 29, 2024.

Cost of sales and gross profit

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net sales			$	2,200,430					$	1,945,735					$	254,695					13		%
Cost of sales			1,349,379						1,204,812						144,567						12		%
Gross profit			851,051						740,923						110,128						15		%
Gross margin			38.7		%				38.1		%				0.6		%

Gross profit totaled $851.1 million during the thirteen weeks ended September 28, 2025, an increase of $110.1 million, or 15%, compared to the thirteen weeks ended September 29, 2024, driven by increased sales volume. Gross margin increased by 0.6% to 38.7% for the thirteen weeks ended September 28, 2025, compared to 38.1% for the thirteen weeks ended September 29, 2024, primarily driven by improved shrink.

Selling, general and administrative expenses

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Selling, general and administrative expenses			$	653,329					$	580,332					$	72,997					13		%
Percentage of net sales			29.7		%				29.8		%				(0.1)		%

Selling, general and administrative expenses increased $73.0 million, or 13%, compared to the thirteen weeks ended September 29, 2024. The increase was primarily due to the increase in new stores opened since the comparable period last year. As a percentage of net sales, selling, general and administrative expenses

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improved slightly as a result of lower compensation expense, which was partially offset by increased benefit costs and pressure from our new store growth.

Depreciation and amortization

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Depreciation and amortization			$	38,862					$	34,408					$	4,454					13		%
Percentage of net sales			1.8		%				1.8		%				0.0		%

Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $38.9 million for the thirteen weeks ended September 28, 2025, compared to $34.4 million for the thirteen weeks ended September 29, 2024. Depreciation and amortization expense primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment for new stores as well as remodel initiatives in older stores.

Store closure and other costs, net

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Store closure and other costs, net			$	1,462					$	3,732					$	(2,270)					(61)		%
Percentage of net sales			0.1		%				0.2		%				(0.1)		%

Store closure and other costs, net decreased $2.3 million to $1.5 million for the thirteen weeks ended September 28, 2025, compared to $3.7 million for the thirteen weeks ended September 29, 2024. Store closure and other costs, net primarily consists of ongoing occupancy costs associated with our closed store locations as well as one-time costs associated with disaster recovery activity. See Note 12, “Store Closures” of our unaudited consolidated financial statements.

Interest (income) expense, net

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Long-term debt			$	204					$	208					$	(4)					(2)		%
Finance leases			337						183						154						84		%
Deferred financing costs			370						193						177						92		%
Interest income and other			(1,601)						(1,645)						44						3		%
Total interest income, net			$	(690)					$	(1,061)					$	371					35		%

The decrease in interest income, net for the thirteen weeks ended September 28, 2025 compared to the thirteen weeks ended September 29, 2024 was primarily due to lower average debt outstanding. See Note 4, “Long-Term Debt and Other Finance Obligations” of our unaudited consolidated financial statements.

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Income tax provision

Income tax provision differed from the amounts computed by applying the U.S. federal income tax rate to pretax income as a result of the following:

			Thirteen weeks ended
			September 28, 2025						September 29, 2024
Federal statutory rate			21.0		%				21.0		%
Change in income taxes resulting from:
State income taxes, net of federal benefit			5.2		%				5.2		%
Enhanced charitable contributions			(0.9)		%				(1.0)		%
Federal credits			(0.4)		%				(0.3)		%
Purchase Discount Transferable Tax Credits			(1.8)		%				—		%
Share-based payment awards			(0.8)		%				(1.4)		%
Return to Provision			(0.2)		%				0.2		%
Non-deductible Executive Compensation			1.9		%				1.9		%
Other, net			—		%				0.2		%
Effective tax rate			24.0		%				25.8		%

The effective tax rate decreased to 24.0% for the thirteen weeks ended September 28, 2025 from 25.8% for the thirteen weeks ended September 29, 2024. The decrease in the effective tax rate was primarily due to benefit in the current quarter for purchase discount for transferable tax credits and a favorable return-to-provision adjustment in the current year compared to an unfavorable adjustment in the prior year partially offset by a reduction in the benefit for stock-based compensation in the current year.

Net income

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net income			$	120,116					$	91,610					$	28,506					31		%
Percentage of net sales			5.5		%				4.7		%				0.8		%

Net income increased $28.5 million primarily due to higher gross profit, partially offset by higher selling, general and administrative expenses for the reasons discussed above.

Diluted earnings per share

			Thirteen weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Diluted earnings per share			$	1.22					$	0.91					$	0.31					34		%
Diluted weighted average shares outstanding			98,715						101,025						(2,310)

The increase in diluted earnings per share of $0.31 was driven by higher net income and fewer diluted shares outstanding compared to the prior year due primarily to the share repurchase program.

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Results of Operations for Thirty-nine Weeks Ended September 28, 2025 and September 29, 2024

The following tables set forth our unaudited results of operations and other operating data for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods. All dollar amounts are in thousands, unless otherwise noted.

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Unaudited Quarterly Consolidated Statement of Income Data:
Net sales			$	6,657,468					$	5,723,062
Cost of sales			4,057,454						3,541,461
Gross profit			2,600,014						2,181,601
Selling, general and administrative expenses			1,921,682						1,676,470
Depreciation and amortization (exclusive of depreciation included in cost of sales)			110,567						98,129
Store closure and other costs, net			4,679						8,968
Income from operations			563,086						398,034
Interest income, net			(2,045)						(382)
Income before income taxes			565,131						398,416
Income tax provision			131,286						97,417
Net income			$	433,845					$	300,999
Weighted average shares outstanding - basic			98,023						100,560
Diluted effect of equity-based awards			1,063						909
Weighted average shares and equivalent shares outstanding - diluted			99,086						101,469
Diluted net income per share			$	4.38					$	2.97

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Other Operating Data:
Comparable store sales growth			9.3		%				6.4		%
Stores at beginning of period			440						407
Closed			—						—
Opened			24						21
Acquired			—						—
Stores at end of period			464						428

Comparison of Thirty-nine Weeks Ended September 28, 2025 to Thirty-nine Weeks Ended September 29, 2024

Net Sales

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net sales			$	6,657,468					$	5,723,062					$	934,406					16		%
Comparable store sales growth			9.3		%				6.4		%

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Net sales during the thirty-nine weeks ended September 28, 2025 totaled $6.7 billion, an increase of $934.4 million, or 16%, over the same period of the prior fiscal year. The sales increase was primarily due to new stores opened in the last twelve months and a 9.3% increase in comparable store sales. Comparable stores contributed approximately 93% of total sales for the thirty-nine weeks ended September 28, 2025 and approximately 94% of total sales for the thirty-nine weeks ended September 29, 2024.

Cost of sales and gross profit

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net sales			$	6,657,468					$	5,723,062					$	934,406					16		%
Cost of sales			4,057,454						3,541,461						515,993						15		%
Gross profit			2,600,014						2,181,601						418,413						19		%
Gross margin			39.1		%				38.1		%				1.0		%

Gross profit totaled $2.6 billion during the thirty-nine weeks ended September 28, 2025, an increase of $418.4 million, or 19%, compared to the thirty-nine weeks ended September 29, 2024, driven by increased sales volume. Gross margin increased to 39.1% for the thirty-nine weeks ended September 28, 2025, compared to 38.1% for the thirty-nine weeks ended September 29, 2024, due to improved inventory management and continued promotional optimization efforts as well as leverage on our supply chain from higher sales.

Selling, general and administrative expenses

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Selling, general and administrative expenses			$	1,921,682					$	1,676,470					$	245,212					15		%
Percentage of net sales			28.9		%				29.3		%				(0.4)		%

Selling, general and administrative expenses increased by $245.2 million, or 15%, compared to the thirty-nine weeks ended September 29, 2024. The increase was primarily driven by the increase in new stores opened since the prior year period. As a percentage of net sales, selling, general and administrative expenses improved as a result of leverage gained from store compensation and occupancy costs.

Depreciation and amortization

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Depreciation and amortization			$	110,567					$	98,129					$	12,438					13		%
Percentage of net sales			1.7		%				1.7		%				0.0		%

Depreciation and amortization expense (exclusive of depreciation included in cost of sales) was $110.6 million for the thirty-nine weeks ended September 28, 2025, compared to $98.1 million for the thirty-nine weeks ended September 29, 2024. Depreciation and amortization expenses (exclusive of depreciation included in cost of sales) primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment.

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Store closure and other costs, net

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Store closure and other costs, net			$	4,679					$	8,968					$	(4,289)					(48)		%
Percentage of net sales			0.1		%				0.2		%				(0.1)		%

Store closure and other costs, net decreased $4.3 million to $4.7 million, compared to $9.0 million for the thirty-nine weeks ended September 29, 2024. Store closure and other costs, net primarily consists of ongoing occupancy costs associated with our closed store locations as well as one-time costs associated with disaster recovery activity.

Interest (income) expense, net

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Long-term debt			$	629					$	4,051					$	(3,422)					(84)		%
Finance leases			681						569						112						20		%
Deferred financing costs			756						579						177						31		%
Interest income and other			(4,111)						(5,581)						1,470						26		%
Total interest income, net			$	(2,045)					$	(382)					$	(1,663)					(435)		%

Interest income, net increased to $2.0 million of income for the thirty-nine weeks ended September 28, 2025, compared to $0.4 million for the thirty-nine weeks ended September 29, 2024 primarily due to lower average debt outstanding and higher interest income earned as a result of higher interest rates. See Note 4, “Long-Term Debt and Other Finance Obligations” of our unaudited consolidated financial statements.

Income tax provision

Income tax provision differed from the amounts computed by applying the U.S. federal income tax rate to pretax income as a result of the following:

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Federal statutory rate			21.0		%				21.0		%
Change in income taxes resulting from:
State income taxes, net of federal benefit			5.1		%				5.0		%
Enhanced charitable contributions			(0.9)		%				(1.0)		%
Federal Credits			(0.2)		%				(0.3)		%
Purchase Discount Transferable Tax Credits			(0.5)		%				—		%
Share-based payment awards			(2.8)		%				(1.7)		%
Return to Provision			(0.1)		%				0.1		%
Non-deductible Executive Compensation			1.6		%				1.3		%
Other, net			—		%				0.1		%
Effective tax rate			23.2		%				24.5		%

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The effective tax rate decreased to 23.2% for the thirty-nine weeks ended September 28, 2025 from 24.5% for the thirty-nine weeks ended September 29, 2024. The decrease in the effective tax rate was primarily due to an increase in the benefit in the current year for stock-based compensation and benefit for purchase discount for transferable tax credits in the current year, partially offset by an increase in the rate detriment in the current year for nondeductible executive compensation, a reduction in the rate benefit for federal employment credits in the current year, and a reduced benefit impact in the current year for enhanced inventory donations in relation to the increase in pre-tax income.

Net income

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Net income			$	433,845					$	300,999					$	132,846					44		%
Percentage of net sales			6.5		%				5.3		%				1.2		%

Net income increased $132.8 million primarily due to higher gross profit and lower store closure and other costs, partially offset by higher selling, general and administrative expenses for the reasons discussed above.

Diluted earnings per share

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						Change						% Change
Diluted earnings per share			$	4.38					$	2.97					$	1.41					47		%
Diluted weighted average shares outstanding			99,086						101,469						(2,383)

The increase in diluted earnings per share of $1.41 was driven by higher net income and fewer diluted shares outstanding compared to the prior year due primarily to the share repurchase program.

Return on Invested Capital

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, we provide information regarding Return on Invested Capital (referred to as “ROIC”) as additional information about our operating results. ROIC is a non-GAAP financial measure and should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ROIC is an important measure used by management to evaluate our investment returns on capital and provides a meaningful measure of the effectiveness of our capital allocation over time.

We define ROIC as net operating profit after tax (referred to as “NOPAT”), including the effect of capitalized operating leases, divided by average invested capital. Operating lease interest represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as a finance lease. The assumed ownership and associated interest expense are calculated using the discount rate for each lease as recorded as a component of rent expense within selling, general and administrative expenses. Invested capital reflects a trailing four-quarter average.

As numerous methods exist for calculating ROIC, our method may differ from methods used by other companies to calculate their ROIC. It is important to understand the methods and the differences in those methods used by other companies to calculate their ROIC before comparing our ROIC to that of other companies.

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Our calculation of ROIC for the fiscal periods indicated was as follows:

			Rolling Four Quarters Ended
			September 28, 2025						September 29, 2024
			(dollars in thousands)
Net income (1)			$	513,447					$	351,048
Interest (income) expense, net of tax (2)			(2,947)						39
Net operating profit after tax (NOPAT)			$	510,500					$	351,087
Total rent expense, net of tax (2)			204,225						188,585
Estimated depreciation on operating leases, net of tax (2)			(112,661)						(103,803)
Estimated interest on operating leases, net of tax (2), (3)			91,564						84,782
NOPAT, including effect of operating leases			$	602,064					$	435,869
Average working capital			165,830						192,891
Average property and equipment			911,604						813,743
Average other assets			605,688						602,865
Average other liabilities			(110,141)						(98,692)
Average invested capital			$	1,572,981					$	1,510,807
Average operating leases (4)			1,715,590						1,567,876
Average invested capital, including operating leases			$	3,288,571					$	3,078,683
ROIC, including operating leases			18.3		%				14.2		%

(1)Net income amounts represent total net income for the past four trailing quarters.

(2)Net of tax amounts are calculated using the normalized effective tax rate for the periods presented.

(3)2025 and 2024 estimated interest on operating leases is calculated by multiplying operating leases by the 7.0% and 7.2% discount rate, respectively, for each lease recorded as rent expense within direct store expense.

(4)Average operating leases represents the average net present value of outstanding lease obligations over the past four trailing quarters.

Liquidity and Capital Resources

The following table sets forth the major sources and uses of cash for each of the periods set forth below, as well as our cash, cash equivalents and restricted cash at the end of each period (in thousands):

			Thirty-nine weeks ended
			September 28, 2025						September 29, 2024
Cash, cash equivalents and restricted cash at end of period			$	325,480					$	311,725
Cash flows from operating activities			$	577,471					$	520,351
Cash flows used in investing activities			$	(176,081)					$	(161,687)
Cash flows used in financing activities			$	(343,123)					$	(250,809)

We have generally financed our operations principally through cash generated from operations and borrowings under our credit facilities. Our primary uses of cash are for purchases of inventory, operating expenses, capital expenditures primarily for opening new stores, remodels and maintenance, repurchases of our common stock and debt service. Our principal contractual obligations and commitments consist of

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obligations under our Credit Agreement, interest on our Credit Agreement, operating and finance leases, purchase commitments and self-insurance liabilities. Our operating and finance leases for the rental of land, buildings, and for rental of facilities and equipment expire or become subject to renewal clauses at various dates through 2048. We believe that our existing cash, cash equivalents and restricted cash, and cash anticipated to be generated from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including new store openings, remodel and maintenance capital expenditures at existing stores, store initiatives and other corporate capital expenditures and activities. Our cash, cash equivalents and restricted cash position benefits from the fact that we generally collect cash from sales to customers the same day or, in the case of credit or debit card transactions, within days from the related sale.

Operating Activities

Cash flows from operating activities increased $57.1 million to $577.5 million for the thirty-nine weeks ended September 28, 2025 compared to $520.4 million for the thirty-nine weeks ended September 29, 2024. The increase in cash flows from operating activities was primarily a result of higher net income adjusted for non-cash items of $152.5 million partially offset by changes in working capital of $91.0 million and $1.0 million increase in payment on our operating lease liabilities.

Cash flows provided by operating activities from changes in working capital were $23.2 million in the thirty-nine weeks ended September 28, 2025 compared to $114.2 million in the thirty-nine weeks ended September 29, 2024. The $91.0 million decrease in cash flows from changes in working capital was primarily attributable to the following factors, each of which had a negative impact on working capital: (i) $50.3 million change in inventory related to improving on-shelf availability in certain departments; (ii) $16.7 million change in accounts payable and accrued liabilities primarily due to timing differences of payments for goods and services; (iii) $15.2 million change in accrued salaries and benefits primarily driven by increased corporate bonuses; and (iv) $13.3 million change in prepaid expenses and other current assets primarily driven by lapsing a prepaid income tax position. These decreases were partially offset by a $10.1 million change in accrued income tax. Certain other immaterial items combined to result in an additional $5.6 million net decrease in cash flows from changes in working capital.

Investing Activities

Cash flows used in investing activities consist primarily of capital expenditures in new stores, including leasehold improvements and store equipment, capital expenditures to maintain the appearance of our stores, sales enhancing initiatives and other corporate investments as well as cash outlays for acquisitions. Cash flows used in investing activities were $176.1 million and $161.7 million, for the thirty-nine weeks ended September 28, 2025 and thirty-nine weeks ended September 29, 2024, respectively.

We expect capital expenditures to be in the range of $230 - 250 million in 2025, including expenditures incurred to date, net of estimated landlord tenant improvement allowances, primarily to fund investments in new stores, remodels, maintenance capital expenditures and corporate capital expenditures. We expect to fund our capital expenditures with cash on hand and cash generated from operating activities.

Financing Activities

Cash flows used in financing activities were $343.1 million for the thirty-nine weeks ended September 28, 2025 compared to $250.8 million for the thirty-nine weeks ended September 29, 2024. During the thirty-nine weeks ended September 28, 2025, cash flows used in financing activities primarily consisted of $341.9 million for stock repurchases and $$2.1 million for payments of excise tax on stock repurchases partially offset by $1.7 million in proceeds from the exercise of stock options.

During the thirty-nine weeks ended September 29, 2024, cash flows used in financing activities primarily consisted of $125.0 million in payments on our Credit Agreement, $129.7 million for stock repurchases partially offset by $4.7 million in proceeds from the exercise of stock options.

Long-Term Debt and Credit Facilities

The Company had no long-term debt outstanding as of September 28, 2025 and December 29, 2024.

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See Note 4, “Long-Term Debt and Other Finance Obligations” of our unaudited consolidated financial statements for a description of our Credit Agreement and our Former Credit Facility (each as defined therein).

Share Repurchase Program

Our board of directors from time to time authorizes share repurchase programs for our common stock. The following table outlines the share repurchase program authorized by our board, and the related repurchase activity and available authorization as of September 28, 2025:

Effective date						Expiration date						Amount authorized						Cost of repurchases						Authorization available
May 22, 2024						May 22, 2027						$	600,000					$	457,408					$	—
August 13, 2025						N/A						$	1,000,000					$	33,994					$	966,006

The shares under our current repurchase program may be purchased on a discretionary basis from time to time through the applicable expiration date, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. Our board’s authorization of the share repurchase program does not obligate our Company to acquire any particular amount of common stock, and the repurchase program may be commenced, suspended, or discontinued at any time.

Share repurchase activity under our repurchase program for the periods indicated was as follows (total cost in thousands):

			Thirteen weeks ended												Thirty-nine weeks ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
Number of common shares acquired			364,852						264,135						2,399,289						1,861,453
Average price per common share acquired			$	137.49					$	96.60					$	143.76					$	70.22
Total cost of common shares acquired			$	50,162					$	25,516					$	344,911					$	130,708

Shares purchased under our repurchase programs were subsequently retired and the excess of the repurchase price over par value was charged to retained earnings. The cost of common shares repurchased included the 1% excise tax imposed as part of the Inflation Reduction Act of 2022.

Subsequent to September 28, 2025 and through October 27, 2025, we repurchased an additional 0.1 million shares of common stock for $10.0 million, excluding excise tax.

Contractual Obligations

Our principal contractual obligations and commitments arising in the normal course of business consist of obligations under our Credit Agreement, interest on our Credit Agreement, operating and finance leases, purchase commitments and self-insurance liabilities. Except as otherwise disclosed in Note 4, “Long-Term Debt and Finance Lease Liabilities” and Note 6, "Commitments and Contingencies" of our unaudited consolidated financial statements, there have been no material changes outside the normal course of business as of September 28, 2025 in our contractual obligations and commitments from those reported in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

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Impact of Inflation and Deflation

Inflation and deflation in the prices of food and other products we sell may periodically affect our sales, gross profit and gross margin. Food inflation, when combined with reduced consumer spending, could also reduce sales, gross profit margins and comparable store sales. Inflationary pressures on compensation, utilities, commodities, equipment and supplies may also impact our profitability. Food deflation or declining levels of inflation across multiple categories, particularly in produce, could reduce sales growth and earnings, particularly if our competitors react by lowering their retail pricing and expanding their promotional activities, which can lead to retail deflation higher than cost deflation that could reduce our sales, gross profit margins and comparable store sales. The short-term impact of inflation and deflation is largely dependent on whether or not the effects are passed through to our customers, which is subject to competitive market conditions.

Food inflation and deflation is affected by a variety of factors and our determination of whether to pass on the effects of inflation or deflation to our customers is made in conjunction with our overall pricing and marketing strategies, as well as our competitors’ responses. Although we may experience periodic effects on sales, gross profit, gross margins and cash flows as a result of changing prices, we do not expect the effect of inflation or deflation to have a material impact on our ability to execute our long-term business strategy.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. These principles require us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, cash flow and related disclosure of contingent assets and liabilities. Our critical accounting estimates include inventories, lease assumptions, self-insurance reserves, goodwill and intangible assets, impairment of long-lived assets, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

There have been no substantial changes to these estimates, or the policies related to them during the thirteen and thirty-nine weeks ended September 28, 2025. For a full discussion of these estimates and policies, see “Critical Accounting Estimates” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Recently Issued Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies” to our accompanying unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As described in Note 4, “Long-Term Debt and Other Finance Obligations” to our unaudited consolidated financial statements located elsewhere in this Quarterly Report on Form 10-Q, our Credit Agreement bears interest at a rate based in part on SOFR. Accordingly, we could be exposed to fluctuations in interest rates. As of September 28, 2025, we had no outstanding borrowings under our Credit Agreement.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.

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Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures under the Exchange Act as of September 28, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the quarterly period ended September 28, 2025, there were no changes in our internal controls over financial reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time we are a party to legal proceedings, including matters involving personnel and employment issues, product liability, personal injury, intellectual property and other proceedings arising in the ordinary course of business, which have not resulted in any material losses to date. Although management does not expect that the outcome in these proceedings will have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements of claims that could materially impact our results.

See Note 6, “Commitments and Contingencies” to our unaudited consolidated financial statements for information regarding certain legal proceedings in which we are involved.

Item 1A. Risk Factors.

Certain factors may have a material adverse effect on our business, financial condition and results of operations. You should carefully consider the risks and uncertainties referenced below, together with all of the other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes. Any of those risks could materially and adversely affect our business, operating results, financial condition, or prospects and cause the value of our common stock to decline, which could cause you to lose all or part of your investment.

There have been no material changes to the Risk Factors described under “Part I – Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table provides information about our share repurchase activity during the thirteen weeks ended September 28, 2025.

Period (1)						Total number of shares purchased						Average price paid per share(2)						Total number of shares purchased as part of publicly announced plans or programs						Approximate dollar value of shares that may yet be purchased under the plans or programs (3)
July 30, 2025 - July 27, 2025						52,781						$	162.85					52,781						$	149,705,000
July 28, 2025 - August 24, 2025						75,317						$	150.19					75,317						$	995,802,000
August 25, 2025 - September 28, 2025						236,754						$	125.85					236,754						$	966,005,930
Total						364,852												364,852

(1)Periodic information is presented by reference to our fiscal periods during the third quarter of fiscal year 2025.

(2)Average price paid per share includes costs associated with the purchases, but excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022.

(3)On August 13, 2025, our board of directors authorized a new $1 billion share repurchase program of our common stock. The new repurchase authorization does not have an expiration date. The shares may be purchased on a discretionary basis from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans.

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Item 5. Other Information.

Rule 10b5-1 Trading Arrangements

On August 20, 2025, Jack Sinclair, our Chief Executive Officer and member of our board of directors, adopted a written plan for the sale of our common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “Rule 10b5-1 Trading Plan”) that provides for the sale of up to 56,639 shares of our common stock beginning January 2, 2026 through June 2, 2026.

During the third quarter of 2025, except as described above, none of our directors or executive officers adopted or terminated a Rule 10b5-1 Trading Plan, or a "non-Rule 10b5-1 trading arrangement" (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits.

Exhibit Number						Description
10.1						Credit Agreement, dated as of July 25, 2025, among Sprouts Farmers Market, Inc., Sprouts Farmers Markets Holdings, LLC, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, an issuing bank and swingline lender, J.P. Morgan Securities LLC, as sustainability structuring agent, Truist Bank and PNC Bank, National Association, as syndication agents, and Bank of America, N.A., BMO Bank, N.A. and US Bank National Association, as documentation agents (1)
10.2 †						Distribution Agreement, entered into on September 3, 2025, by and between SFM, LLC d/b/a Sprouts Farmers Market and KeHE Distributors, LLC
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101						The following financial information from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements
104						Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

_____________________________________________________________

†    Portions of this exhibit and the schedules thereto have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

(1)    Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 25, 2025, and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						SPROUTS FARMERS MARKET, INC.
Date: October 29, 2025			By:			/s/ Curtis Valentine
			Name:			Curtis Valentine
			Title:			Chief Financial Officer
						(Principal Financial Officer)

37

FAQ

How did Sprouts Farmers Market (SFM) perform in Q3 2025?

Net sales were $2,200,430,000 (+13% YoY), gross margin was 38.7%, net income was $120,116,000, and diluted EPS was $1.22.

What were SFM’s year-to-date results through September 28, 2025?

Net sales totaled $6,657,468,000, net income was $433,845,000, and diluted EPS reached $4.38.

What is SFM’s comparable store sales growth?

Comparable store sales grew 5.9% in Q3 2025 and 9.3% year-to-date.

Did SFM authorize any share repurchases?

Yes. A new $1,000,000,000 program was authorized on August 13, 2025; year-to-date buybacks were $344,911,000.

What is SFM’s liquidity position?

Cash and equivalents were $322,415,000 with no outstanding debt and an undrawn $600,000,000 revolving credit facility.

How many stores does SFM operate?

SFM operated 464 stores in 24 states as of September 28, 2025.

Did SFM sign any notable agreements?

Yes. On September 3, 2025, SFM entered a 10-year distribution agreement with KeHE Distributors, LLC.