Published on 29 Apr 2024 on Zacks via Yahoo Finance
Factors Likely to Influence Sprouts Farmers' (SFM) Q1 Earnings
Sprouts Farmers Market, Inc. SFM is likely to register an increase in the top line when it reports first-quarter 2024 earnings on May 1 after market close. The Zacks Consensus Estimate for revenues stands at $1,839 million, which indicates an increase of 6.1% from the prior-year reported figure.The bottom line of this grocery retailer is also expected to rise year over year. Over the past 30 days, the Zacks Consensus Estimate for first-quarter earnings per share has been stable at $1.00, which suggests an increase of 2% from the year-ago quarter. The company had guided adjusted earnings in the band of 98 cents-$1.02 per share for the quarter.Sprouts Farmers has a trailing four-quarter earnings surprise of 10%, on average. In the last reported quarter, this Phoenix, AZ-based company surpassed the Zacks Consensus Estimate by a margin of 8.9%.
Factors to Consider
Sprouts Farmers' focus on product innovation, technology and targeted marketing with everyday great pricing bodes well. It has been steadily expanding its presence in the natural organic space, given the huge demand in the segment. Management has been lowering operational complexity, optimizing production, improving the in-stock position and updating to smaller-format stores. Apart from these, the company has been trying to expand private-label offerings.Cumulatively, the aforementioned factors are likely to have favorably impacted the top line. We expect comparable store sales growth of 2.7% for the quarter under review.Sprouts Farmers has worked diligently to provide customers with a seamless shopping experience through its website, mobile app and a supply chain that prioritizes freshness. The introduction of grocery pickup services and home delivery options at all its stores represents a significant step toward meeting the growing demand for online shopping. Such initiatives have been helping Sprouts Farmers expand its customer base and revenues.However, the company faces challenges in the SG&A domain. We anticipate SG&A expenses to increase 6.4% year over year in the first quarter. As a percentage of net sales, we expect the metric to deleverage 20 basis points to 28.3%. Consequently, we foresee a 30-basis point contraction in the operating margin.