Sprouts Farmers Market Inc. (NASDAQ:SFM) exceeded Wall Street’s earnings expectations for the second quarter and reaffirmed its full-year outlook, sending shares sharply higher as investors responded positively to the company’s profitability and an analyst upgrade despite continued softness in comparable-store sales.
For the quarter ended June 28, Sprouts reported net sales of $2.33 billion, up 5% from a year earlier. Net income totaled $129.2 million, or $1.37 per diluted share, topping analysts’ expectations of $1.35 per share. EBIT reached $174.2 million, representing a 7.5% margin.
Comparable-store sales declined 1% during the quarter as consumers remained cautious in their grocery spending. The company opened 11 new stores and ended the period with 494 locations across 24 states. During the first half of the year, Sprouts generated $369 million in operating cash flow and repurchased approximately 900,000 shares for $70 million.
Shares of Sprouts rose sharply following the earnings release, with investors encouraged by the earnings beat and the company’s decision to maintain its full-year guidance. Adding to the momentum, JPMorgan upgraded the stock from Neutral to Overweight and raised its price target to $103, citing confidence in Sprouts’ long-term growth strategy.
For the third quarter, Sprouts expects comparable-store sales to range from a 0.5% decline to a 1.5% increase, with diluted earnings per share between $1.20 and $1.24. The company reaffirmed its fiscal 2026 outlook, projecting net sales growth of 5.5% to 6.5%, comparable-store sales ranging from a 0.5% decline to a 0.5% increase, diluted earnings per share of $5.32 to $5.40, and 42 net new stores. Management also noted that fiscal 2026 includes a 53rd week, which is expected to contribute approximately $200 million in fourth-quarter sales and $0.21 in diluted earnings per share.
The results contrast with several conventional grocery operators that have recently reported weaker earnings or reduced guidance, underscoring investors’ continued confidence in Sprouts’ differentiated natural and organic merchandising strategy even as overall grocery demand remains subdued