Sprouts Farmers Market, Inc. Reports Second Quarter 2016 Results

 

Net sales of $1.0 billion; a 14% increase from the same period in 2015. 

Comparable store sales growth of 4.1% and two-year comparable store sales growth of 8.9%

Banner_frasco-suscripcion-800x250

Net income of $37 million and diluted earnings per share of $0.25

Net income increased 19% from the same period in 2015, and 6% from adjusted net income

Diluted earnings per share increased 25% from the same period in 2015, and 14% from adjusted diluted earnings per share.
“Sprouts’ healthy living for less business continues to resonate with customers as we grow coast to coast,” said Amin Maredia, chief executive officer of Sprouts Farmers Market. “Despite the deflationary environment, our team continues to produce solid comparable store sales growth through improved traffic of 3.5% and increased tonnage. We remain laser-focused on our strategic priorities to drive performance today while continuing to invest in team members, technology and infrastructure for sustainable long-term growth.”

In order to aid in understanding the company’s business performance, it has presented results in conformity with accounting principles generally accepted in the United States (“GAAP”) and has also presented certain non-GAAP measures which are explained and reconciled to the GAAP measures in the tables included in this release. For 2016 and 2015, the company has presented EBITDA and adjusted EBITDA, respectively. In addition, for 2015, the company has presented adjusted net income and adjusted earnings per share. In each case, the “adjusted” measure excludes the after-tax impact of disposal of assets, store closure and exit costs, secondary offering expenses and loss on extinguishment of debt. For the first half of 2016, such adjustments would be immaterial. Accordingly, the company has presented net income, earnings per share and EBITDA for 2016 without adjustment and has provided comparisons of such measures to the corresponding adjusted measures from 2015. Where applicable, results are first presented on a GAAP basis and then on an adjusted basis.

Second Quarter 2016 Financial Results

Net sales for the second quarter of 2016 were $1.0 billion, a 14% increase compared to the same period in 2015. Net sales growth was driven by a 4.1% increase in comparable store sales and solid performance in new stores opened.

LEA TAMBIÉN: Resultado dispar para Procter & Gamble

Gross profit for the quarter increased 16% to $306 million, resulting in a gross profit margin of 29.6%, an increase of 40 basis points compared to the same period in 2015. This increase reflects higher margins in certain categories primarily due to deflation and improved shrink.

Direct store expenses (“DSE”) as a percentage of sales for the quarter increased 40 basis points to 20.1% compared to the same period in 2015. This was primarily due to higher payroll expense from planned wage increases and increased training costs.

Selling, general and administrative expenses (“SG&A”) as a percentage of sales for the quarter increased 40 basis points to 3.0%, compared to the same period in 2015. This was primarily driven by higher stock compensation costs due to executive changes in 2015, higher bonus expense accrual versus the prior year, and higher corporate overhead as we continue to build out infrastructure to support our growth.

Net income for the quarter was $37 million, up $6 million from the same period in 2015. Excluding the after-tax impact of the loss on disposal of assets, the store closure and exit costs and loss on extinguishment of debt in the second quarter of 2015, net income for the quarter increased 6% compared to adjusted net income of $35 million for the same period in 2015. Diluted earnings per share was $0.25, a 25% increase from diluted earnings per share of $0.20 and a 14% increase from adjusted diluted earnings per share of $0.22, for the same period in 2015. These increases were driven by higher sales and margins, the benefit from lower interest expense due to a voluntary pay-down on our revolving credit facility and fewer shares outstanding due to our repurchase program.

Fiscal Year-to-Date Financial Results

For the 26-week period ended July 3, 2016, net sales were $2.0 billion, or a 15% increase compared to the same period in 2015. Growth was driven by a 4.4% increase in comparable store sales and solid performance in new stores opened. Net income was $83 million, up $15 million from the same period in 2015. Excluding the after-tax impact of the loss on extinguishment of debt, store closure and exit costs, secondary offering expenses and loss on disposal of assets in the first half of 2015, net income increased 13% compared to adjusted net income of $74 million for the same period in 2015. Diluted earnings per share was $0.55, a 25% increase from diluted earnings per share of $0.44 and a 17% increase from adjusted diluted earnings per share of $0.47, for the same period in 2015.

Growth and Development

During the second quarter of 2016, we opened 12 new stores: one each in Alabama, Colorado, Georgia, Kansas, Oklahoma, Nevada and Texas; two in Arizona; and three in California. Three additional stores have been opened in the third quarter, resulting in 26 stores opened year-to-date and a total of 243 stores in 13 states as of August 4, 2016. The company expects to open a total of 36 stores in 2016 representing a 17% increase in total store count.

Leverage and Liquidity

We generated cash from operations of $148 million year-to-date through July 3, 2016 and invested $79 million in capital expenditures net of landlord reimbursement, primarily for new stores. In addition, we purchased $65 million of our common stock in the second quarter, fully utilizing our $150 million share repurchase authorization. We ended the quarter with a $160 million balance on our revolving credit facility, $2 million of letters of credit outstanding under the facility, and $78 million in cash and cash equivalents.
Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, the company has presented EBITDA for 2016 and for 2015, adjusted net income, adjusted earnings per share and adjusted EBITDA. These measures are not in accordance with, and are not intended as an alternative to, GAAP. The company’s management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the company, and they are a component of incentive compensation. The company defines EBITDA as net income before interest expense, provision for income tax, and depreciation, amortization and accretion, and defines adjusted EBITDA as EBITDA as further adjusted to exclude store closure and exit costs, gains and losses from disposal of assets, expenses incurred by the company in its secondary public offerings and employment taxes paid by the company in connection with options exercised in those offerings (“Public Offering Expenses”) and the loss on extinguishment of debt. The company defines adjusted net income as net income excluding, gain and losses from disposal of assets, store closure and exit costs, Public Offering Expenses, the loss on extinguishment of debt and the related tax impact of those adjustments. For the thirteen and twenty-six weeks ended July 3, 2016, such further adjustments to net income and EBITDA were immaterial; thus only EBITDA is presented.

These non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, none of these non-GAAP measures should be considered as a measure of discretionary cash available to use to reinvest in growth of the company’s business, or as a measure of cash that will be available to meet the company’s obligations. Each of these non-GAAP measures has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the company’s results as reported under GAAP.

For more information: Seeking Alpha

Fuente: Seeking Alpha


Reciba las últimas noticias de la industria en su casilla:

Suscribirse ✉


 

Please enter your comment!
Please enter your name here