sfm-8k_20210506.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 6, 2021

Sprouts Farmers Market, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-36029

32-0331600

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

5455 E. 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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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. ☐

Item 2.02. Results of Operations and Financial Condition.

On May 6, 2021, Sprouts Farmers Market, Inc. (the “Company”) issued a press release announcing its results of operations for its first fiscal quarter ended April 4, 2021. On the same date, the Company posted on its investor relations website, located at investors.sprouts.com, a PowerPoint presentation (the “Presentation”) that will be used by management during the Company’s earnings conference call. A copy of the press release and the Presentation are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated into this Item 2.02 by reference.

The information furnished in this Item 2.02, including Exhibits 99.1 and 99.2 attached hereto and incorporated herein, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The text of this Current Report on Form 8-K is available on the Company’s investor relations website located at investors.sprouts.com, although the Company reserves the right to discontinue that availability at any time.

Item 7.01. Regulation FD Disclosure.

The information set forth under Item 2.02 is hereby incorporated by reference.

The information furnished in this Item 7.01, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement in the attached press release or Presentation is based.

The text of this Current Report on Form 8-K and the attached press release and Presentation are available on the Company’s investor relations website located at investors.sprouts.com, although the Company reserves the right to discontinue that availability at any time.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits

Exhibit Number		Description

99.1		Press release of Sprouts Farmers Market, Inc., dated May 6, 2021, entitled “Sprouts Farmers Market, Inc. Reports First Quarter 2021 Results”

99.2		Sprouts Farmers Market, Inc. Presentation, dated May 6, 2021, entitled “Q1 2021 Earnings”

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 hereunto duly authorized.

	SPROUTS FARMERS MARKET, INC.

Date: May 6, 2021	By:	/s/ Brandon F. Lombardi
	Name:	Brandon F. Lombardi
	Title:	Chief Legal Officer and Corporate Secretary

Exhibit 99.1



Investor Contact:	Media Contact:
Susannah Livingston	Diego Romero
(602) 682-1584	(602) 682-3173
[email protected]	[email protected]

Sprouts Farmers Market, Inc. Reports First Quarter 2021 Results

PHOENIX, Ariz. – (Globe Newswire) – May 6, 2021 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week first quarter ended April 4, 2021.

First Quarter Highlights:

•	Net sales of $1.6 billion; a 4% decrease from the same period in 2020

•	Comparable store sales growth of -9.4% and two-year comparable store sales growth of 2.2%

•	Net income and adjusted net income⁽¹⁾ of $83 million; compared to net income of $92 million and adjusted net income of $93 million from the same period in 2020

•	Diluted and adjusted diluted earnings per share⁽¹⁾ of $0.70; compared to $0.78 diluted earnings per share and adjusted diluted earnings per share of $0.79 from the same period in 2020

“I am pleased with how Sprouts has navigated the current environment as we begin to cycle the onset of the COVID-19 impact from last year,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. “Sprouts achieved strong financial results in the first quarter, building on our successful strategic improvements from 2020, which enhanced our profitability to support our long-term growth. We continued to move our strategy forward with the opening of our sixth fresh distribution center, providing our customers with even more affordable, local and organic produce, rooted in Sprouts’ unique farmer’s market heritage. As we look forward, I am confident we will continue to enhance our position as a fast-growing health-focused specialty retailer.”

Adjusted net income and adjusted diluted earnings per share, non-GAAP financial measures, exclude the impact of certain special items. There were no such adjustments for the quarter ended April 4, 2021. See the “Non-GAAP Financial Measures” section of this release for additional information about these items.

First Quarter 2021 Financial Results

Net sales for the first quarter of 2021 were $1.6 billion, a 4% decrease compared to the same period in 2020. Net sales were driven by solid performance in new stores opened, offset by a decrease of 9.4% in comparable store sales due to the impact from the onset of COVID-19 during the first quarter of last year.

Gross profit for the quarter decreased 1.3% to $586 million, resulting in a gross profit margin of 37.2%, an increase of 114 basis points compared to the same period in 2020.This increase is attributed to sustainable strategic changes, including promotional activities and shrink initiatives.

Selling, general and administrative expenses for the quarter increased $3 million to $440 million, or 27.9% of sales, a deleverage of 141 basis points compared to the same period in 2020. This primarily reflects sales deleverage and increased ecommerce fees due to higher omni channel sales as more customer have continued to rely on home delivery and curbside pickup. This was partially offset by lower bonus expense due to COVID-19 in the prior year.

Depreciation and amortization for the quarter decreased 0.7% to $31 million, or 2.0% of sales, an increase of 10 basis points compared to the same period in 2020.

Store closure and other costs, net for the quarter were $2 million compared to a credit of $1 million in the same period of 2020.

Net income for the quarter was $83 million and diluted earnings per share (“EPS”) was $0.70, compared with $92 million and $0.78, respectively, in 2020. Diluted EPS in 2020 included an estimated $0.22 benefit from the COVID-19 impact.

Unit Growth and Development

As planned, Sprouts did not open any new stores in the first quarter of 2021, ending the quarter with a total of 362 stores in 23 states.

Leverage and Liquidity

Sprouts generated cash from operations of $105 million in the first quarter of 2021 and invested $9 million in capital expenditures net of landlord reimbursement, primarily for new stores. Sprouts ended the quarter with a $250 million balance on its revolving credit facility, $39 million of letters of credit outstanding under the facility, $256 million in cash and cash equivalents, and $297 million available under our current share repurchase authorization. Through April 4, 2021, we have repurchased 130,000 shares of common stock under this authorization for a total investment of $3 million.

Full Year 2021 Outlook

The impact that the COVID-19 pandemic will have on the U.S. economy and the company’s fiscal 2021 results is still uncertain. We have adjusted our fiscal 2021 outlook, reflecting our year-to-date performance and our expectations for the remainder of the year:




		Full-year 2021 Guidance
		52-week to 52-week
	Net sales growth	Flat to up slightly
	Unit growth	Approximately 20 new stores
	Comparable store sales growth	Down low to mid- single digits
	Adjusted EBIT	$305M to $325M
	Adjusted diluted earnings per share	$1.87 to $2.00
	Effective tax rate	Approximately 25%
	Capital expenditures	$140M to $160M
	(net of landlord reimbursements)

First Quarter 2021 Conference Call

Sprouts will hold a conference call at 2 p.m. Pacific Daylight Time (5 p.m. Eastern Daylight Time) on Thursday, May 6, 2021, during which Sprouts executives will further discuss first quarter 2021 financial results.

A webcast of the conference call will be available through Sprouts’ investor relations webpage located at investors.sprouts.com. Participants should register on the website approximately 15 minutes prior to the start of the webcast.

The conference call will be available via the following dial-in numbers:

•

U.S. Participants: 877-398-9481

•

International Participants: Dial +1-408-337-0130

•

Conference ID: 9758223

The audio replay will remain available for 72 hours and can be accessed by dialing 855-859-2056 (toll-free) or 404-537-3406 (international) and entering the confirmation code: 9758223.

Important Information Regarding Outlook

There is no guarantee that Sprouts will achieve its projected financial expectations, which are based on management estimates, currently available information and assumptions that management believes to be reasonable. These expectations are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. See “Forward-Looking Statements” below.

Forward-Looking Statements

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, risks associated with the impact of the COVID-19 pandemic; the company’s ability to execute on its long-term strategy; the company’s ability to successfully compete in its competitive industry; the company’s ability to successfully open new stores; the company’s ability to manage its growth; the company’s ability to maintain or improve its operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; general economic conditions; accounting standard changes; and other factors as set forth from time to time in the company’s Securities and Exchange Commission filings, including, without limitation, the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

Corporate Profile

Sprouts is the place where goodness grows. True to its farm-stand heritage, Sprouts offers a unique 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. The healthy grocer continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. Headquartered in Phoenix, and one of the fastest growing retailers in the country, Sprouts employs approximately 35,000 team members and operates more than 360 stores in 23 states nationwide. To learn more about Sprouts, and the good it brings communities, visit about.sprouts.com.

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Thirteen Weeks Ended		Thirteen Weeks Ended
	April 4, 2021		March 29, 2020
Net sales	$	1,575,447	$	1,646,539
Cost of sales		989,273		1,052,707
Gross profit		586,174		593,832
Selling, general and administrative expenses		439,662		436,304
Depreciation and amortization (exclusive of depreciation included in cost of sales)		31,229		31,021
Store closure and other costs, net		2,048		(1,082	)
Income from operations		113,235		127,589
Interest expense, net		2,991		4,827
Income before income taxes		110,244		122,762
Income tax provision		27,196		30,952
Net income	$	83,048	$	91,810
Net income per share:
Basic	$	0.70	$	0.78
Diluted	$	0.70	$	0.78
Weighted average shares outstanding:
Basic		118,044		117,545
Diluted		118,607		117,748

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	April 4, 2021			January 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	256,019		$	169,697
Accounts receivable, net		14,488			14,815
Inventories		270,958			254,224
Prepaid expenses and other current assets		35,862			27,224
Total current assets		577,327			465,960
Property and equipment, net of accumulated depreciation		707,039			726,500
Operating lease assets, net		1,043,455			1,045,408
Intangible assets, net of accumulated amortization		184,960			184,960
Goodwill		368,878			368,878
Other assets		15,079			14,698
Total assets	$	2,896,738		$	2,806,404
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	160,596		$	139,337
Accrued liabilities		133,026			143,402
Accrued salaries and benefits		43,735			76,695
Accrued income tax		16,251			—
Current portion of operating lease liabilities		135,797			135,739
Current portion of finance lease liabilities		968			959
Total current liabilities		490,373			496,132
Long-term operating lease liabilities		1,072,897			1,069,535
Long-term debt and finance lease liabilities		260,287			260,459
Other long-term liabilities		45,481			40,912
Deferred income tax liability		60,830			58,073
Total liabilities		1,929,868			1,925,111
Commitments and contingencies
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, 118,194,576 shares issued and outstanding, April 4, 2021; 117,953,435 shares issued and outstanding, January 3, 2021		118			118
Additional paid-in capital		691,142			686,648
Accumulated other comprehensive income (loss)		(7,230	)		(8,474	)
Retained earnings		282,840			203,001
Total stockholders' equity		966,870			881,293
Total liabilities and stockholders' equity	$	2,896,738		$	2,806,404

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	Thirteen Weeks Ended			Thirteen Weeks Ended
	April 4, 2021			March 29, 2020
Cash flows from operating activities
Net income	$	83,048		$	91,810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		31,841			31,600
Operating lease asset amortization		25,816			23,137
Share-based compensation		3,613			2,400
Deferred income taxes		2,757			232
Other non-cash items		207			(768	)
Changes in operating assets and liabilities:
Accounts receivable		8,795			12,652
Inventories		(16,733	)		22,787
Prepaid expenses and other current assets		(7,747	)		(8,652	)
Other assets		(1,078	)		656
Accounts payable		27,004			80,669
Accrued liabilities		(10,568	)		16,492
Accrued salaries and benefits		(32,959	)		2,984
Accrued income tax		16,251			28,906
Operating lease liabilities		(28,719	)		(30,107	)
Other long-term liabilities		3,910			2,274
Cash flows from operating activities		105,438			277,072
Cash flows used in investing activities
Purchases of property and equipment		(16,605	)		(28,036	)
Cash flows used in investing activities		(16,605	)		(28,036	)
Cash flows used in financing activities
Payments on revolving credit facilities		—			(87,000	)
Payments on finance lease obligations		(163	)		(154	)
Repurchase of common stock		(3,209	)		—
Proceeds from exercise of stock options		881			—
Cash flows used in financing activities		(2,491	)		(87,154	)
Increase in cash, cash equivalents, and restricted cash		86,342			161,882
Cash, cash equivalents, and restricted cash at beginning of the period		171,441			86,785
Cash, cash equivalents, and restricted cash at the end of the period	$	257,783		$	248,667

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), the company presents EBITDA, adjusted EBITDA, adjusted EBIT, adjusted net income and adjusted diluted earnings per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP. The company's management believes that this presentation provides 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 certain of these measures may be used as components of incentive compensation.

The company defines EBITDA as net income before interest expense, provision for income tax, and depreciation, amortization and accretion and adjusted EBITDA as EBITDA excluding the impact of special items. The company defines adjusted EBIT, adjusted net income and adjusted diluted earnings per share by adjusting the applicable GAAP measure to remove the impact of special items.

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, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the company’s business, or as a measure of cash that will be available to meet the company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and they should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP.

The following table shows a reconciliation of adjusted EBITDA to net income for the thirteen weeks ended April 4, 2021 and March 29, 2020 and a reconciliation of EBIT, net income and diluted earnings per share to adjusted EBIT, adjusted net income and adjusted diluted earnings per share for the thirteen weeks ended April 4, 2021 and March 29, 2020:

SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES

NON-GAAP MEASURE RECONCILIATION

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Thirteen Weeks Ended		Thirteen Weeks Ended
	April 4, 2021		March 29, 2020
Net income	$	83,048	$	91,810
Income tax provision		27,196		30,952
Interest expense, net		2,991		4,827
Earnings before interest and taxes (EBIT)		113,235		127,589
Special items:
Strategic initiatives⁽¹⁾		—		1,200
Adjusted EBIT		113,235		128,789

Depreciation, amortization and accretion		31,841		31,600
Adjusted EBITDA	$	145,076	$	160,389

Net income	$	83,048	$	91,810
Special Items:
Strategic initiatives, net of tax⁽¹⁾		—		892
Adjusted Net income	$	83,048	$	92,702
Diluted earnings per share	$	0.70	$	0.78
Adjusted diluted earnings per share	$	0.70	$	0.79

Diluted weighted average shares outstanding		118,607		117,748

(1)	Includes professional fees related to strategic initiatives. After-tax impact includes the tax benefit on the pre-tax charge.

###

Source: Sprouts Farmers Market, Inc

Phoenix, AZ

5/6/21

Q1 2021 Earnings May 2021 Exhibit 99.2

2 Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or its management "anticipates," "plans," "estimates," "expects," "believes," or the negative of these terms and other similar expressions) that are not statements of historical fact should be considered forward-looking statements, including, without limitation, statements regarding the Company’s guidance, outlook, strategy, financial targets, growth and opportunities. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this presentation. These risks and uncertainties include, without limitation, risks associated with the COVID-19 pandemic; the Company’s ability to execute on its long-term strategy; the Company’s ability to successfully compete in its competitive industry; the Company’s ability to successfully open new stores; the Company’s ability to manage its rapid growth; the Company’s ability to maintain or improve its comparable store sales and operating margins; the Company’s ability to identify and react to trends in consumer preferences; product supply disruptions; general economic conditions; accounting standard changes; and other factors as set forth from time to time in the Company’s Securities and Exchange Commission filings. The Company intends these forward-looking statements to speak only as of the date of this presentation and does not undertake to update or revise them as more information becomes available, except as required by law. Non-GAAP Financial Measures We refer to EBIT, adjusted EBIT, adjusted EBIT Margin, and adjusted diluted earnings per share, each of which is a Non-GAAP Financial Measure. These measures are not prepared in accordance with, and are not intended as alternatives to, generally accepted accounting principles in the United States, or GAAP. The Company's management believes that such measures 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 certain of these measures may be used as components of incentive compensation. The Company defines EBIT, as net income before interest expense and provision for income tax, and adjusted EBIT as EBIT, excluding the impact of special items. Adjusted EBIT Margin reflects adjusted EBIT, divided by net sales for the applicable period. The Company defines adjusted diluted earnings per share as diluted earnings per share excluding the impact of special items. 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, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the Company’s business, or as a measure of cash that will be available to meet the Company’s obligations. Each non-GAAP measure 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. To the extent forward looking non-GAAP financial measures are provided herein, they are not reconciled to comparable forward-looking GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.

3 Jack Sinclair CEO

4 Differentiated Product Assortment Focused on Attributes Attribute led product offering continues to drive revenue Establishing partnerships with natural and organic vendor community to be first to market with their new products

5 5 New Aurora, CO Distribution Center Supports our Growth Strategy Focused on Fresh, Local and Organic Offerings We are creating an advantaged fresh supply chain with distribution centers within 250 miles of the majority of our stores Meet our Local Farmer Partners

6 ESG activities are improving our bottom line and the planet! Transitioned 100% of pork supply to be sourced from suppliers that utilize open-pen or group-housed facilities Safe, Healthy Food and Responsible Sourcing Environment & Climate overall landfill diversion rate by repurposing and recycling nearly 78,000 tons of food and waste 58% Reduced Scope 1 emissions 16% driven by reduction in fugitive refrigeration emissions. Achieved Scope 2 emissions slightly below unit growth rate. Reduced Scope 3 waste-related emissions by sending less waste to landfills. 68% of food waste recovered, and donated equivalent to 23 million meals Committed to sustainable palm oil in Sprouts Brand products by 2022 22% sales increase of products that promote health and nutrition 20% sales increase of products with a sustainable attribute, representing nearly $3.5 billion or more than 50% in sales 100% of Sprouts Brand eggs are now cage free 23% of total sales are from organically grown products 2020 Highlights

7 We put customers, team members, and local communities first! Awarded $1.6 million in grants and donations to programs supporting youth nutrition education and academic support, and food system equity Supported an estimated 350,000 students with nutrition programs, taught virtually, during school closures Community Engagement Team Members 87% of Sprouts’ board members are independent 25% of Sprouts’ board members are female and 13% are ethnically diverse Corporate Governance Formed a board-level Risk Committee to monitor enterprise risk management program and provide oversight of our risks related to cybersecurity, critical systems, and environmental and social matters among others. 7,200 promotions! Paid $100+ million in team member bonuses and covered 100% of the costs for testing Paying up to 4 hours of paid sick time off to receive the vaccine COVID-19 Response 55% were female 49% were ethnically diverse Filled 72% of store manager positions with internal candidates Team members received 475,000 hours of in-store training $17.42/hour average store team member pay Workforce Diversity: 48% ethnically diverse and 51% female 2020 Highlights

8 Denise Paulonis CFO

NET SALES $1.6B ADJUSTED DILUTED Earnings Per Share $0.70 9 Ongoing Strategic Changes are Producing Solid Financials 9 ($ in mm) (1) See the Appendix to this presentation for a reconciliation of adjusted diluted EPS to net income

10 Structurally Improved Margin Profile 10 ADJUSTED EBIT & Adjusted EBIT Margin (1) See the Appendix to this presentation for a reconciliation of EBIT to adjusted EBIT. For 2017, adjustments to EBIT were immaterial; thus only EBIT is presented.

11 Ecommerce Sales Remain Elevated as Customers have Continued to Rely on Home Delivery and Pick-up Ecommerce Penetration Customers can now shop how they like – In-Store, Pick-up, or Delivery

12 2021 Outlook 12 Flat to Up Slightly Sales Growth Approximately 20 New Stores Down Low to Mid Single Digit Comps Adjusted EBIT $305M to $325M Adjusted EPS $1.87 to $2.00 Capex $140M to $160M Approximately 25% Corporate Tax Rate

13 Appendix

14 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) The following table shows a reconciliation of EBIT and adjusted EBIT to net income, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share for the thirteen weeks ended April 4, 2021, March 29, 2020, March 31, 2019, April 1, 2018, and April 2, 2017: Appendix Includes professional fees related to strategic initiatives. After-tax impact includes the tax benefit on the pre-tax charge. Includes the direct costs associated with store closures and relocation. During the fifty-two weeks ended December 30, 2018, in connection with the closure of two stores, the Company recorded one-time non-cash pre-tax charges of $8 million primarily related to the estimated fair value of the lease termination obligations and asset impairments. After-tax impact includes the tax benefit on the pre-tax charge.