With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

World's Most Admired Companies

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-437-Sprouts Farmers Market

The supermarket chain offers a wide selection of natural and organic foods, and operates more than 340 stores in 23 states. It makes its <em>Fortune</em> 500 debut this year.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Founded in 1943, Sprouts Farmers Market is a retailer of natural and organic food products sold under the Sprouts brand. Perishable products include produce, dairy, meat, and bakery goods. The company also offers nonperishables such as frozen foods, beer and wine, vitamins, body care products, and more.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Sprouts Farmers Market (SFM): Company Profile, Stock Price, News, Rankings

legacy

Sprouts Farmers Market

sprouts farmers market

Hello, and welcome to the Sprouts Farmers Market First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand has been raised.

To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President, Investor Relations and Treasury, Susannah Livingston.

Thank you, and good afternoon, everyone. We are pleased you are joining Sprouts on our first quarter twenty twenty five earnings call. Jack Sinclair, Chief Executive Officer Curtis Valentine, Chief Financial Officer and Nick Koenig, President and Chief Operating Officer are with me today. The earnings release announcing our first quarter twenty twenty five results, the webcast of this call and financial slides can be accessed through the Investor Relations section of our website at investors.sprouts.com. During this call, may make certain forward looking statements, including statements regarding our expectations for 2025 and beyond.

These statements involve several risks and uncertainties that could cause results to differ materially from those described in the forward looking statements. For more information, please refer to the risk factors discussed in our SEC filings and the commentary on forward looking statements at the end of our earnings release. Our remarks today include references to non GAAP financial measures. Please see the tables in our earnings release to reconcile our non GAAP financial measures to the comparable GAAP figures. With that, let me hand it over to Jack.

Thanks, Susanna, and good afternoon, everyone. We're delighted with our strong first quarter results, marking a positive start to the year. Our sales increased 19%, supported by comparable store sales of 11.7% and robust new store performance. Our diluted earnings per share reached $1.81 reflecting a 62% increase compared to the same period last year. These results highlight the effectiveness of our differentiated strategy and the excellent execution by our teams across the business.

In the past five years, more consumers have embraced a movement towards health and wellness, leading to a significant growth in our target market opportunity, now estimated at approximately $290,000,000,000 of the $1,600,000,000,000 spent on food at home. Our strategic commitment to our health enthusiast target customer is clearly resonating, driving both traffic and sales. Our specialty attribute driven products are performing well, and our knowledgeable team members are ready to assist customers in making informed choices to achieve their health goals. Customer engagement remains central to our strategy, which is why we're excited to launch our new loyalty program this year. This initiative, combined with our continued store growth plans, will improve access to fresh healthy products for our customers across the country.

In the first quarter, we made a significant move to begin self distributing fresh meat and seafood through our distribution centers. This step allows greater control over our products, enhancing freshness and optimizing the capacity we've built in our supply chain the past few years. We're just beginning to unlock our potential and I look forward to sharing more about our journey in a few moments. For now, I'll hand it to Curtis to review our first quarter financial results as well as our updated 2025 outlook. Curtis?

Thanks, Jack, and good afternoon, everyone. In the first quarter, total sales were $2,200,000,000 up $353,000,000 or 19% compared to the same period last year. This growth was driven by an 11.7% increase in comparable store sales and the strong results from new stores. The comp performance across categories, channels, and geography was once again balanced and broad based, while also being supported by new stores entering into the comp base at a strong rate. Traffic grew, particularly in our brick and mortar locations.

Our e commerce sales grew approximately 28, representing 15% of our total sales for the quarter with strong performance from all partners. Additionally, Sprouts brand contributed 24% to our total sales for the quarter. A few notable events in the first quarter also boosted sales. Our stores in Colorado benefited from a strike at a conventional grocer, and our vitamin department saw increased sales due to the harsh cold and flu season this past winter. We estimate these events accounted for approximately 50 basis points of the comp sales growth.

Our first quarter gross margin was 39.6%, an increase of 129 basis points compared to the same period last year. This increase was primarily due to leveraging our improvements in inventory management and category management. Supply constraints and strong sales continue to put pressure on our in stocks, resulting in additional shrink leverage. SG and A for the quarter totaled $623,000,000 an increase of $83,000,000 and 79 basis points of leverage compared to the same period last year. Our strong comp performance led to leverage mainly in labor and occupancy.

Store closure and other costs totaled approximately $2,000,000 for the quarter. These are primarily related to costs associated with exiting leases related to our twenty twenty three store closures, as well as disaster recovery charges from the California wildfires. Depreciation and amortization, excluding depreciation included in the cost of sales, was $35,000,000 For the first quarter, our earnings before interest and taxes were $226,000,000 Interest income was approximately $1,000,000 and our effective tax rate was 21%. Net income was $180,000,000 and diluted earnings per share were 1.81 an increase of 62% compared to the same period last year. During the first quarter, we opened three new stores, ending the quarter with four forty three stores across 24 states.

A strong and healthy balance sheet has underpinned our financial performance. During the first quarter of twenty twenty five, we generated $299,000,000 in operating cash flow, which allowed us to self fund our investments of $49,000,000 in capital expenditures, net of landlord reimbursement to grow a business. We have also returned $219,000,000 to our shareholders by repurchasing 1,600,000.0 shares. We have $232,000,000 remaining under our current share repurchase authorization. We ended the quarter with $286,000,000 in cash and cash equivalents, zero balance on our $700,000,000 revolver and 22,000,000 of outstanding letters of credit.

More customers are prioritizing quality, healthy options, driving growth faster than the overall food at home market. This momentum fuels our ambition to enter new markets. As we look ahead towards the rest of 2025, we're committed to achieving strong earnings growth and seizing these opportunities. For 2025, we expect total sales growth to be 12% to 14% and comp sales in the range of 5.5% to 7.5%. We anticipate comp sales to start the year stronger and moderate as we cycle the higher comps from late twenty twenty four.

We plan to open at least 35 new stores. Earnings before interest and taxes are expected to be between $640,000,000 and $660,000,000 and earnings per share are expected to be between 4.94 and $5.1 assuming no additional share repurchases. That said, we do expect to continue to repurchase shares opportunistically. We also expect our corporate tax rate to be approximately 24%. During the year, we expect capital expenditures net of landlord reimbursements to be between $230,000,000 and $250,000,000 For the second quarter of the year thus far, we have continued to see solid customer engagement and expect comp sales to be in the range of approximately 6.5% to 8.5% and earnings per share between $1.19 and $1.23 Year over year margin rate in both gross margin and SG and A will start to normalize in the second quarter, and we anticipate continued EBIT margin expansion of approximately 60 basis points year over year.

To add some perspective for the back half of twenty twenty five, we believe our strong financial position and execution of our strategic initiatives gives us flexibility to navigate uncertainties that may arise from the macro environment. We are effectively managing our expenses while continuing to look for investment opportunities that will drive long term sustainable earnings growth. We believe that our momentum and execution will result in comps towards the high end of our low single digit comp algorithm and continued expansion of our bottom line margin in the second half, even as we cycle the robust performance from the last year. And with that, I'll turn it back to Jack.

Thanks, Curtis. In 2025, we will build on the strong foundation we've established over the past few years as we invest and grow our business. In the midst of uncertainty, this year we will concentrate on continuing our successful initiatives, and we are confident that we are well positioned to compete in any environment. We're committed to enhancing our offerings, increasing customer engagement, optimizing our supply chain and building stores that provide pleasant shopping experiences. Additionally, we're focused on developing our dedicated team that is committed to serving our valued customers now and into the future.

We're focused on our greatest strength, our differentiation. As has been the case, attribute driven products continue to lead our sales and are growing faster than the rest of our business. Trends such as high protein and heritage meats, grass fed options and products free from seed oils are driving our success with our target customers. The foraging team, in collaboration with our merchants, has developed a robust innovation pipeline for both our Sprouts brand and branded products. Our ability to quickly launch and build brands has attracted entrepreneurial vendors from across the country who are eager to partner with us and offer their products in our stores.

Additionally, we showcased our differentiation and curated assortment through unique events such as the Lemon event we hosted in the first quarter, as well as discovery days that highlight the attributes of our Sprouts brand products. In the first quarter, our marketing efforts collectively drove traffic, highlighting our unique value proposition through our storytelling and media strategy. We launched our new brand campaign in January, sharing that Sprouts feeling and distinguishing ourselves from the typical resolution messages. At the same time, we continue to leverage our market based media investment strategy. Social media remains a strong channel for us with both reach and engagement increasing.

Additionally, our e commerce business and partnerships continue to grow, allowing us to support our omnichannel customers on their preferred shopping platforms with Sprouts. We're also enhancing the in store customer experience by offering more sampling opportunities, improving installs, continuing to improve customer service and enhancing freshness. Our personalization and loyalty journey continued in the first quarter, Following our expansion to 35 stores in December, we continued to see positive results and strong customer engagement, including increased scans and sign ups. We are continuing to be more data driven as we analyze new customer information during our test and learn phase. In the second quarter, we plan to enhance the customer experience and prepare for our planned launch in the third quarter.

We're increasingly confident that loyalty customers engage more frequently, grow faster and spend more. Over the past few years, we've implemented new systems, expanded existing space and built new facilities to prepare our supply chain for greater self distribution in various categories. This proactive approach has unlocked exciting opportunities as we scale Sprouts for growth. Our systems and process work has already improved our in stock, shrink and our produce distribution, increasing freshness for our customers. Additionally, we're taking control of our own destiny by laying the groundwork to self distribute our meat and seafood alongside our produce.

While every transition presents challenges, particularly with a fresh category, our dedicated team is rising to the occasion and are making progress. We're on track to begin in sourcing from our first Sprouts DC in the third quarter. Additionally, we have begun the process to expand our Northern California DC capacity in 2026, which will complete the initial meat and seafood in sourcing journey, as well as supporting future growth in that region. We plan to open at least 35 stores for the year and continue to expand our strong pipeline, with nearly 120 stores approved and more than 85 leases signed. While the openings in 2025 will enhance store density in our existing footprint, we are also looking towards expansion in new regions as we develop market plans for the Midwest and the Northeast.

Our new stores continue to perform exceptionally well and are experiencing strong comps as they enter into the base. We're seeing this success from sea to shining sea, which gives us confidence that our offering will resonate with our target customer in any market. None of this would be possible without our amazing team. We're committed to our purpose and our values, and our annual team member survey reflects our progress, showing improvements in every metric. When our values align with those of our customers, community and team members, great things happen.

We recently published our 2024 impact report, which highlights areas that matter to all these stakeholders, such as our partnership with 400 local food banks, to which we donated almost 30,000,000 fresh meals. Our efforts to reduce plastic have resulted in about 75% of our customers bringing their own reusable bags at the checkout. And the support of our Healthy Communities Foundation provided 500 local non profit partners and schools in our communities, brought to us by our team members and our customers in the local stores. We remain focused on scaling our workforce for our future growth. We continue to recruit, develop and engage Sprouts team members.

We've invested in developing our team members through several leadership programmes, including Assistant Store Manager University programme, our Fast Track for Internal Assistant Store Managers, in addition to our leadership programmes for new hire seasoned assistant managers and store managers. These programmes support our retention efforts while filling our leadership pipeline to support our future growth. In summary, we are excited about the future of Sprouts and the growth opportunities ahead, as we continue to execute our strategic initiatives. Our strong business momentum places us in a position of strength, enabling us to navigate an uncertain macro environment while investing in unlocking Sprout's full potential. Over the past five years, our clear strategy has proven successful and we are committed to staying on that path.

As our target market expands and the demand for healthier option increases, we are witnessing growth that outpaces the overall food at home market. This momentum reinforces our commitment to prioritising our customer needs and helping people live and eat better across the country. We look forward to sharing our journey with you throughout the year. And with that, I'd like to turn it over for questions. Operator?

Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 1, 1 again. And due to time constraints, we ask that participants limit themselves to one question and one follow-up. And our first question comes from the line of Leah Jordan with Goldman Sachs.

Thank you. Good afternoon. So you guys had really nice gross margin expansion So as you look at the decelerating trend in your comp outlook, even on a two year basis, plus some uncertainty in the macro backdrop, just how are you thinking through potential reinvestment at this point? It sounded like Curtis you said that you were looking for some investment this year.

Maybe more color on what you were referring to there. Or just how are you thinking about the tradeoffs between balancing top line and bottom line growth at this point?

Hi, Leah. Good afternoon. Yeah, so we are investing in the business similar to a level that we invested in last year. But it's into things like loyalty, the supply chain systems, IT, self distribution, it's still those same pieces, our talent engine getting ready for growth. So it's those areas and if we can find ways to accelerate that, we'll look for ways to do that for the long term sustainable earnings growth.

As we look ahead on the growth side, I think we'll start to see that moderate as the year progresses. Had some one timers in there in Q1 that will start to normalize. But we see continued expansion here in the second quarter. And again, it'll just start to moderate as we get through the rest of the year.

Very helpful. Thank you. And then just Jack, you called out the ongoing consumer shift to health and wellness. It's something we see too. But just given continued outsized growth for the category, do you think this broader trend is becoming too hard for maybe other retailers to ignore at this point?

Are you seeing any shift from your competitors? Or how confident are you that you can retain your differentiated position?

Well, we're very focused on sticking to our own agenda, Leah, and making sure that what we do is we maximize the offer for those health enthusiast customers that we've been so focused on over the last few years, and we'll continue to do that. As we look at other people are clearly bringing some products in across this marketplace, but it doesn't bring them any access to the market that we've chosen not to approach. And as we've watched this market, it's gone from 200,000,000,000 to $290,000,000,000 as we've referenced, the total available market in this space. We're still only 8 and a bit billion of that, so there's plenty of room for us to grow. And the reality is there's $1,300,000,000,000 roughly that we're not focusing in on, that the other guys will always be focusing in on more than us.

And we're doubling down on what we can do in terms of the attributes. The attributes that are working with this health enthusiast customer organic, gluten free, vegan, vegetarian, dairy free those kind of drivers gluten free these drivers are the ones that we can be very good at and the team are continuing to double down. But we'll be as good as we are at this and the team are focused very much on it. I think from a competitive point of view we're in a good place.

Thank you. And our next question comes from the line of Rupesh Parikh with Oppenheimer.

Good afternoon, and thanks for taking my question. So I guess the first one, just on new stores. So it seems at least in my mind, store productivity seemed, again, very strong. So just any surprises, any, I guess, more incremental positive surprises as you continue to roll out new stores?

No, not incremental, Rupesh. Just really good performance. The 24s came out strong, as we talked about on the last call, and they're continuing to perform well. The 'twenty two and 'twenty three vintages have comps really, really well, and they're maintaining strong comps. The overall business is good, and they're outperforming that even.

And so we've only opened three here in Q1, so it's not a huge change from where we were sixty days ago, but the new stores are performing really well, that's driving that number.

Great. And then maybe just on the loyalty program. So the commentary still seems upbeat from your team. So same thing there. Like, as you continue to roll it out, like any positive surprises you're seeing?

And I know it's still early, but I don't know if there's a comp list or anything you can share in terms of what you may be seeing with that small batch of stores. Thank you.

Yeah, Nick, you can take that one because we're having a lot of confidence in this.

Yeah. Hi, Rupesh. It's Nick. Jack mentioned in his comments, we feel very good about where loyalty is. We're really happy with what we're seeing in the 35 stores we're currently in right now across our KPIs in the business.

We're meeting and slightly exceeding those. Jack alluded to some really good uptake on sign ups and scans. Our plan moving forward here is to begin the national launch in the second half of the year, starting with our market here in Arizona. We've got a few things to tidy up as far as getting the enterprise lined up and technology put together, but there's a lot of energy behind it here at Sprouts. Team members can't wait to see it come out, and we're excited to share it with them and all of you guys in the second half.

Thank you. Our next question comes from the line of Ken Goldman with JPMorgan.

Hi, thank you. I wanted to ask about household additions. I know it's only one data source, but in numerator data that we look at, it seems that your rate of additions is huge to over 20% and seems to be accelerating. And I don't want to suggest that that's the necessarily exact accurate number, but it's far bigger than what we're seeing at other grocers. And I'm just curious, A, is it still in line just roughly or at least directionally with kind of what you're seeing in terms of just adding households at a quicker pace than what you used to?

And then how often are these new households becoming loyal customers in comparison to your legacy customers?

Hey, Ken. It's Nick. Thanks for the question. You're right. We're seeing really healthy customer metrics overall.

So I'd start with both our new customers and existing customers. We're seeing strong behavior. We are seeing strong new customer growth, and what excites me is that we're seeing it both in our new and emerging markets, but also in existing markets where we've been for a while. So we're certainly excited to see that customers like what we're doing across the country. The other piece of this I would mention is with our existing customers, we're seeing higher engagement, in turn driving a higher share of wallet.

So they're also certainly liking what we're doing and voting with their wallet. We'll continue to drive both of these. Our focus is on continuing to acquire customers across the board. And as Jack mentioned, with the market size and market segment growing, we think there's an opportunity for us to continue to acquire new. And with the customer engagement work we're doing, deepen the engagement we have with our existing customers to drive growth.

Great. Thank you. And then a quick follow-up. Some of the other data that we have would suggest that in times when consumers are a little more challenged, they will shop in more stores to buy all their groceries. I don't think that's controversial.

But I just wanted to make sure that going ahead, is there a possibility that if consumers do struggle a little bit more, if we head into a recession, that you could potentially pick off even more households just from consumers who are saying, look, I gotta go to three or four stores instead of one, just, you know, and my and my fuel costs are really low, so maybe I can do that. I'm just it's one of the bull thesis we hear on you guys ahead is that you can benefit in a recessionary period. I'm just trying to get a little sense of if you would agree with that.

Well, I think the context of my remarks a little while ago, Ken, were we think we can thrive in any circumstances going forward. And if there is consumer pressure, the one thing that's clear is people have got to eat and they'll carry on eating and people with specialist diets are continuing to if you're a vegan, you stay being a vegan. So we're pretty confident that the offer we've got in front of people is going to be important even in difficult circumstances. The other thing that tends to happen when consumers are under pressure, eat more at home than eating out of home. So we think that's a potential benefit within the context of the question you've asked there.

So yeah, I think we kind of feel almost if it's tough, we'll do fine and if it's not tough, we'll do fine. So we're pretty feeling as if the proposition we're putting in front of our target customers is allowing us to be successful in the context of people shopping more or less number of grocery stores.

Thank you. And our next question comes from the line of John Heinbockel with Guggenheim.

Hey, Jack or Nick, you guys clearly building on the last question, Opportunity with What's For Dinner Tonight. And I think you think you under index in that trip. So what do you think is the unlock there? Does that run through the loyalty program? You think something else?

Well, I'll let you take that, Nick, a little bit. We're certainly confident in the work that we're doing around meals and the investment in space and product and that. But maybe Nick you can expand on that.

Yeah. Hey John. I think a lot of what we're doing is aimed at tackling kind of the thrust of your question. We believe there's a lot of opportunities to gain more share of wallet from our existing customers, and that's by talking to them, sharing them with them the things that are important to them from an attribute standpoint and getting them to shop more of our store. So for instance, if you see our new format, meat's at the front of the store intentionally, it's super important to our target customer.

They're looking for attribute driven grass fed organic protein options. We've been intentional in trying to serve that as a way to take care of the customer, but also to drive more of center of the plate and in turn a larger shop. And as you noted, certainly the loyalty work is aimed at customizing and personalizing everything we do around our vegan shoppers, our organic shoppers, our gluten free shoppers, so we can gain more of their spend and more of their trips.

And I think it's fair to say, John, loyalty will play a role in that as we get further down in understanding the customers and communicating some of the attributes that Nick was talking about.

Maybe building on that, know you want to upgrade, improve the loyalty experience as you start to roll this out. What what what do you think what's not in, the program today that, that that shoppers want, if anything? Right? And and how do you how do you enhance the experience?

Sure. We are today, the good news is we've been asking our customers about the loyalty program in those 35 markets, and we're getting really good marks on the program from the standpoint of getting our customers what they are looking for tailored to their unique needs. I'll I'll maybe answer that question in two pieces. Short term, John, I need to, we're looking to streamline the omnichannel experience for loyalty so that the online experience, the in store experience, the transfer, the experience across channels is really seamless. In the test today, it's not quite the level I think we can be.

So that's one short term change that will help our customer. Long term, I think we're gonna continue to go where the customer takes us as we learn through this process and use the data and use our insight to do so. I will tell you we will always be committed to making sure we find ways to help customers find and get access to new and unique products is they told us that's what's most important to them. They look to us for the as the place that can introduce them to the unique items that they're looking for. So whether that be through technology, experiences, other ways to engage the customer, that's something you'll continue to see us invest in.

Thank you. And our next question comes from the line of Edward Kelly with Wells Fargo.

Yes. Hi. Good morning, everybody or good afternoon, everybody. I wanted to ask you probably, I guess, a follow-up maybe on Ken's question. And it kind of pertains to, one, cadence of the comp momentum throughout the quarter.

I mean, it seems like it's probably pretty steady. But I'm curious because consumer confidence seems to be changing. And as part of that, I'm just wondering if you're seeing any behavioral change at all in the store that might pertain to private label or anything else that you potentially would note.

Hey, it's Curtis. The cadence, just a little bit better February than the other two months, but that was really around the height of the cold and flu season and the couple of things we called out in the script, the strike that sent some business our way. Outside of that, it was pretty steady throughout. Really no dramatic changes from the fourth quarter as far as the shape of the comp. It was broad, it was balanced, geographies, channels, etcetera.

Everything kind of played out as we'd hoped it would, and it was pretty steady throughout the quarter.

And no note of behavioral changes at all related to just the macro and the way the consumer is feeling?

I think probably somewhat surprisingly, we haven't seen any impact from the consumer confidence either regionally or category wise or trading down or different dynamics within it. So that's probably the surprise in some ways. Who knows where consumer confidence is going to lead to in terms of behavior going forward. And we're watching it really carefully, but we haven't seen any significant change in behavior.

Okay. And just a follow-up on self distribution. Jack, you'd mentioned something about just beginning to sort of unlock the benefits associated with that. And I was curious if you could provide a bit more color on both the margin and the operational benefits, what you're doing on the meat and seafood side. And then I'm curious as to whether there is further opportunity beyond those categories down the road.

Well, I'll let Nick go into some detail. But the reality of this, we've been investing in space to be able to add more categories to self distribution over the last few years. And as we've put DCs, we've built three DCs on the ground and expanded some other ones. As we've done that, the intention was always to bring more categories to bear. And the fresh categories are the most important ones as they're so important to our customer base.

So the work that we've been doing and we're building as we talked about in the script is getting our meat and seafood business under our own auspices so that we've got we can manage ourselves. And the aspiration behind that will be to have better in stocks, better working dynamic with our vendor base and enabling us to potentially just get more in stock and be better at providing a service to the customer. And we're very hopeful that that's going to help us in both the top line and the bottom line within the meat category. That's not going to flow through until next year when we get this thing fully up and running, and we're working our way through that. The teams are doing a great job.

But maybe, Nick, you could build on that.

Yeah. Hey, Ed. The protein focus for us is important strategically because as I mentioned, I think in John's earlier question, we have a very differentiated meat and protein business in the meat and seafood side. We offer only attribute driven products in that space, and the importance of freshness, control, quality, and in turn also profitability is really important for us in that business. So we chose that we wanted to invest there and bring that in house with run that self distribution, and we had the capacity to do so.

We're gonna be, as we mentioned, we're gonna be spending this year making that transition, and we've already started that process and will, as Jack mentioned, continue towards the end of the year and early in 'twenty six. So we're not gonna see a ton of the benefit this year, but we should see some of that next year. And right now, for me and my team, that's what we're really focused on, is how do we execute that really well and not create any major issues for the business. And so far, we're doing just that.

And with regard to further opportunities, there may be, as we come down the line on this side, further categories. It's something we're looking at. But at the moment, we're really doubling down on getting the meat and seafood thing right.

you. And our next question comes from the line of Christina Katai with Deutsche Bank.

Hi, good afternoon. Thanks for taking the question. So Jack, I wanted to ask on attribute based products and the momentum that you continue to see there. Can you talk about the planned SKU launches that you have for 2025 and just plans to further leverage the momentum of the Sprouts brand in particular? And then two, some of the reformulation efforts that are out there under the new health secretary removing some of the harmful ingredients like dyes.

Just what are your general views on potential changes in competitors' offerings and how that might change your go to market strategy?

That's a good question. And we're spending a lot of time looking. One great thing about our company is we're well ahead of most of these kind of dynamics about what's in our food and what it does and these kind of things. We've got some work to do, which I'll talk about in a second. With regard to our Sprouts brand business, we've been delighted at the progress that we've made on that.

Our Sprouts brand is very clean relative to the rest of the marketplace. In fact, I don't think we've got any work to do in the Sprouts brand. Our business the business there has been very focused on bringing those attributes to bear. Organic has been a big plus for us. Gluten free has been a big plus for us, and they're doubling down.

The team are doubling down on that. And as we've said, we're not trying to aspire to a bigger percentage of sales in Spruce brand. But without doing that, we've gone from 16% to 24% of Spruce brand because we're bringing products that relate to that attribute based business that you're alluding to. With regard to ingredients and where this goes, as I said, we're in good place relative to that. There's one or two things that we're taking a really close look at.

And I think we'll be better placed than most in terms of managing it. I don't think it's going to change our go to market strategy, because I think we're ahead of this relative to the rest of the market. How it's going to play out with regard to the branded goods in the rest of the market, think is going to be an interesting one, but less relevant to us than it will be to many others.

Great. And if I can just follow-up, I have one for Curtis. Just gross margin continues to surprise to the upside. You obviously noted improvement in inventory and category management. Maybe if you can talk about the sustainability of these.

How much is left there to further unlock? Just trying to understand, you know, the overall ceiling of gross margins that we can see because you continue to just manage that line item really well. Thank you.

Yeah. Thanks, Christina. Yeah, the teams are doing a great job there. They continue to find more opportunities. We talked a lot in the last four, five, six calls about being a fairly immature business and still having opportunities ahead of us.

We're capturing some of those as we go here quarter to quarter to quarter. But we still believe there's levers to pull there. There's ways to get better certainly in how we order, how we allocate product, things like that. We'll continue to get better, How we manage the in and out of 7,000 SKUs that we're bringing in and taking out every year can be better. And so there's still room to go, clearly not as much as is behind us, but we still have opportunities there, that's great.

It gives us the opportunity to invest in things like loyalty and self distribution and the things that we're putting our money into to grow the business in the long term. So expecting it to moderate for sure in the second half of the year as we go forward and hopefully, the teams will continue to surprise us with upside. But for now, we're expecting that to come back closer to normal.

Thank you. And our next question comes from the line of Mark Carden with UBS.

Sprouts Farmers Market (SFM) Q1 2025 Earnings Call Transcript

Company Participants