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CST: 19/03/2019 11:08:18   

Sprouts Farmers Market, Inc. Reports Fourth Quarter and Full Year 2018 Results

26 Days ago

PHOENIX, Feb. 21, 2019 (GLOBE NEWSWIRE) -- Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week fourth quarter and 52-week year ended December 30, 2018. 

Fourth Quarter Highlights:

  • Net sales of $1.3 billion; an 11% increase from the same period in 2017
  • Comparable store sales growth of 2.3% and two-year comparable store sales growth of 6.9%
  • Net income of $13 million, compared to $40 million from the same period in 2017
  • Adjusted net income(1) of $24 million; compared to $21 million from the same period in 2017
  • Diluted earnings per share of $0.10; compared to $0.29 from the same period in 2017
  • Adjusted diluted earnings per share(1) of $0.19; compared to $0.16 from the same period in 2017

Fiscal Year 2018 Highlights:

  • Net sales of $5.2 billion; a 12% increase from 2017
  • Comparable store sales growth of 2.1% and two-year comparable store sales growth of 5.0%
  • Net income of $159 million; compared to $158 million in 2017
  • Adjusted net income(1) of $168 million; compared to $140 million in 2017
  • Diluted earnings per share of $1.22; compared to $1.15 in 2017
  • Adjusted diluted earnings per share(1) of $1.29; compared to $1.01 in 2017
  • Repurchased 11.1 million common shares in fiscal 2018 for a total investment of $258 million

“Sprouts delivered 12% net sales growth for the year in a competitive and evolving industry, demonstrating the strength of our differentiated model and brand,” said Brad Lukow, interim co-chief executive officer and chief financial officer of Sprouts Farmers Market. “Through our solid operating cash flows, we continue to self-fund our store unit growth and strategic initiatives and, in keeping with our capital structure strategy, returned more than $250 million to our shareholders through share repurchases in 2018.”  

“Our focus on health, value, selection and service continues to produce solid financial returns, supporting our ongoing expansion that allows Sprouts to reach new customers and markets, positioning us well for long-term growth,” said Jim Nielsen, interim co-chief executive officer, president and chief operating officer of Sprouts Farmers Market.  “We remain focused on building upon our strategic initiatives in people, systems and product innovation to drive continued enhancements to our experience, reinforcing Sprouts as a trusted brand for health and value.” 

Adjusted net income and adjusted diluted earnings per share, non-GAAP financial measures, exclude the impact of certain special items.  See the “Non-GAAP Financial Measures” section of this release for additional information about these items.

Reclassification of Certain Income Statement Items

In the fourth quarter of fiscal 2018, we made a voluntary change to our consolidated statements of income presentation as follows:

  • Reclassified occupancy costs and buying costs from cost of sales to selling, general and administrative expenses (“SG&A”);
  • Reclassified depreciation and amortization (exclusive of depreciation related to supply chain which continues to be included in cost of sales) to a separate financial statement line item; and
  • Combined direct stores expense (“DSE”) and store pre-opening costs with SG&A. 

These reclassifications had no impact on sales, income from operations, net income or earnings per share.  We made this voluntary change in presentation because we believe that the exclusion of occupancy and buying costs from cost of sales provides a more meaningful presentation of our gross margin. The changes also enhance the comparability of our financial statements with those of many of our industry peers and align with how we internally manage and review costs and margin. These changes in presentation have been retrospectively applied to all periods presented in this earnings release. A table reflecting the effects of the reclassification is included at the end of this release. (see “Reclassification of Certain Income Statement Items”)

Fourth Quarter 2018 Financial Results

Net sales for the fourth quarter of 2018 were $1.3 billion, an 11% increase compared to the same period in 2017. Net sales growth was driven by a 2.3% increase in comparable store sales and strong performance in new stores opened.

Gross profit for the quarter increased 11% to $421 million, resulting in a gross profit margin of 33.2%, a decrease of 15 basis points compared to the same period in 2017.  This was primarily driven by promotional activity which slightly pressured margins, as well as rising distribution and transportation costs.

SG&A for the quarter increased 11% to $353 million, or 27.8% of sales, compared to 27.9% in the same period in 2017. This improvement primarily reflects lower workers compensation expenses and a payroll tax benefit for California team members, partially offset by planned wage investments and higher occupancy and advertising costs.

Depreciation and amortization for the quarter increased 11% to $28 million, or 2.2% of sales, flat compared to the same period in 2017. Store closure and other costs for the quarter increased to $12 million compared to $0.1 million in the same period in 2017, related to noncash charges of $8 million associated with the closure of two stores, as well as one-time severance costs of $4 million associated with the resignation of our former Chief Executive Officer (“CEO”).

Net income for the quarter was $13 million and diluted earnings per share was $0.10, compared with $40 million and $0.29, respectively, in 2017.  Adjusted net income was $24 million, a 16% increase compared to the same period in 2017, and adjusted diluted earnings per share was $0.19, an increase of $0.03 or 19%, as compared to the same period in 2017. The increase in adjusted earnings per share was driven by higher sales, a lower effective tax rate, excluding special items, of 26.3% compared to 33.5% in the same period last year, and fewer shares outstanding due to our repurchase program. (see “Non-GAAP Financial Measures”)

Fiscal Year 2018 Financial Results

Net sales for the fiscal year 2018 were $5.2 billion, a 12% increase compared to 2017.  Net sales growth was driven by a 2.1% increase in comparable store sales and strong performance in new stores opened. 

Gross profit for the year increased 12% to $1.7 billion, resulting in a gross profit margin of 33.6%, flat compared to 2017. This primarily reflects the benefit of our strategic initiatives and merchandising strategies offsetting the promotional environment.

SG&A for the year increased 13% to $1.4 billion, or 27.0% of sales, compared to 26.7% in 2017.  This deleverage primarily reflects our planned investments in team member wages and benefits, as well as increased occupancy and advertising costs.

Depreciation and amortization for the year increased 15% to $108 million, or 2.1% of sales, compared to 2.0% in 2017.  This primarily reflects higher square footage and capitalized costs associated with recent new store vintages. Store closure and other costs for the year increased to $12 million compared to $1 million in 2017, related to noncash charges of $8 million associated with the closure of two stores, as well as one-time severance costs of $4 million associated with the resignation of our former CEO.

Net income for the year was $159 million and diluted earnings per share was $1.22, compared with $158 million and $1.15 respectively, in 2017. Adjusted net income was $168 million, a 20% increase compared to 2017 and adjusted diluted earnings per share was $1.29, an increase of $0.28 or 28%, as compared to 2017. The increase in adjusted earnings per share was driven by higher sales and margins, a lower effective tax rate, excluding special items, of 19.2% compared to 32.0% in 2017, and fewer shares outstanding due to our repurchase program. (see “Non-GAAP Financial Measures”)

Growth and Development

During the fourth quarter of 2018, we opened 2 new stores, one each in Florida and Nevada. For fiscal 2018, we opened 30 new stores and closed two stores which resulted in a total of 313 stores in 19 states as of December 30, 2018.

Leverage and Liquidity

We generated cash from operations of $294 million in fiscal 2018 and invested $154 million in capital expenditures net of landlord reimbursement, primarily for new stores. In addition, we repurchased 11.1 million shares of common stock for a total investment of $258 million in fiscal 2018. We ended the year with a $453 million balance on our revolving credit facility, $27 million of letters of credit outstanding under the facility, $2 million in cash and cash equivalents, and $218 million available under our current share repurchase authorization.  Subsequent to the end of the year and through February 18, 2019, we have repurchased 850 thousand shares of common stock for a total investment of $20 million.

2019 Outlook

The following provides information on our guidance for 2019:

  Full-Year 2019
Current Guidance
Net sales growth 9% to 10.5%
Unit growth Approximately 28 stores
Comparable store sales growth 1.5% to 3.0%
Diluted earnings per share2 $1.16 to $1.24
Effective tax rate Approximately 26%
Capital expenditures $170M to $175M
(net of landlord reimbursements)  
   

Footnotes

We expect adoption of the new lease accounting standards will result in net incremental noncash rent expense of approximately $7 million pre-tax (or approximately $0.04 decrease in diluted earnings per share) for 2019.

Fourth Quarter 2018 Conference Call

We will hold a conference call at 8 a.m. Mountain Standard Time (10 a.m. Eastern Standard Time) on Thursday, February 21, 2019, during which Sprouts executives will further discuss our fourth quarter and fiscal year 2018 financial results. 

A webcast of the conference call will be available through Sprouts’ investor webpage located at investors.sprouts.com. Participants should register on the website approximately 10 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: 1398294

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: 1398294.

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 guidance, outlook, 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 release. These risks and uncertainties include, without limitation, risks associated with the company’s ability to successfully compete in its intensely 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 operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; general economic conditions; the company’s ability to manage its transition to a new CEO; accounting standard changes including the new lease accounting guidance; 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. 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 Farmers Market, Inc. specializes in fresh, natural and organic products at prices that appeal to everyday grocery shoppers. Based on the belief that healthy food should be affordable, Sprouts’ welcoming environment and knowledgeable team members continue to drive its growth. Sprouts offers a complete shopping experience that includes an array of fresh produce in the heart of the store, a deli with prepared entrees and side dishes, The Butcher Shop, The Fish Market, an expansive vitamins and supplements department and more. Headquartered in Phoenix, Arizona, Sprouts employs more than 30,000 team members and operates in more than 300 stores in 19 states from coast to coast. Visit about.sprouts.com for more information.

 

   
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  
   
    Thirteen
Weeks Ended
    Thirteen
Weeks Ended
    Fifty-two
Weeks Ended
    Fifty-two
Weeks Ended
 
    December 30,
2018
    December 31,
2017
    December 30,
2018
    December 31,
2017
 
Net sales   $ 1,269,338     $ 1,143,933     $ 5,207,336     $ 4,664,612  
Cost of sales     848,369       762,816       3,459,861       3,097,582  
Gross profit     420,969       381,117       1,747,475       1,567,030  
Selling, general and administrative expenses     352,672       318,686       1,404,443       1,245,640  
Depreciation and amortization (exclusive of depreciation included in cost of sales)     27,966       25,213       108,045       94,194  
Store closure and other costs     11,579       134       12,076       1,126  
Income from operations     28,752       37,084       222,911       226,070  
Interest expense, net     (7,420 )     (5,730 )     (27,435 )     (21,177 )
Other income     -       237       320       625  
Income before income taxes     21,332       31,591       195,796       205,518  
Income tax (provision) benefit     (8,629 )     8,108       (37,260 )     (47,078 )
Net income   $ 12,703     $ 39,699     $ 158,536     $ 158,440  
Net income per share:                                
Basic   $ 0.10     $ 0.30     $ 1.23     $ 1.17  
Diluted   $ 0.10     $ 0.29     $ 1.22     $ 1.15  
Weighted average shares outstanding:                                
Basic     126,574       132,408       128,827       135,169  
Diluted     127,398       134,795       129,776       137,884  

 

   
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)  
   
    December 30, 2018     December 31, 2017  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 1,588     $ 19,479  
Accounts receivable, net     40,564       25,893  
Inventories     264,366       229,542  
Prepaid expenses and other current assets     27,323       24,593  
Total current assets     333,841       299,507  
Property and equipment, net of accumulated depreciation     766,429       713,031  
Intangible assets, net of accumulated amortization     194,803       196,205  
Goodwill     368,078       368,078  
Other assets     12,463       4,782  
Total assets   $ 1,675,614     $ 1,581,603  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable and other accrued liabilities   $ 253,969     $ 244,853  
Accrued salaries and benefits     48,603       45,623  
Current portion of capital and financing lease obligations     7,428       9,238  
Total current liabilities     310,000       299,714  
Long-term capital and financing lease obligations     119,642       125,489  
Long-term debt     453,000       348,000  
Other long-term liabilities     153,377       130,640  
Deferred income tax liability     50,399       27,066  
Total liabilities     1,086,418       930,909  
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,
  124,975,691 shares issued and outstanding, December 30, 2018;
  132,823,981 shares issued and outstanding, December 31, 2017
    124       132  
Additional paid-in capital     657,140       620,788  
Accumulated other comprehensive income (loss)     1,134       (784 )
(Accumulated deficit) retained earnings     (69,202 )     30,558  
Total stockholders' equity     589,196       650,694  
Total liabilities and stockholders' equity   $ 1,675,614     $ 1,581,603  

 

   
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(IN THOUSANDS)  
   
    Fifty-two
Weeks Ended
    Fifty-two
Weeks Ended
 
    December 30, 2018     December 31, 2017  
Cash flows from operating activities                
Net income   $ 158,536     $ 158,440  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization expense     110,749       96,987  
Amortization of financing fees and debt issuance costs     799       463  
Loss on disposal of property and equipment     683       1,623  
Store closure and other costs     4,115        —  
Share-based compensation     14,512       14,221  
Deferred income taxes     23,333       7,803  
Changes in operating assets and liabilities:                
Accounts receivable     (7,666 )     (4,920 )
Inventories     (34,824 )     (25,079 )
Prepaid expenses and other current assets     (2,908 )     (2,733 )
Other assets     (5,086 )     (114 )
Accounts payable and other accrued liabilities     4,366       39,244  
Accrued salaries and benefits     3,039       12,764  
Other long-term liabilities     24,731       10,868  
  Cash flows from operating activities     294,379       309,567  
Cash flows used in investing activities                
Purchases of property and equipment     (177,083 )     (198,624 )
Proceeds from sale of property and equipment     1       30  
  Cash flows used in investing activities     (177,082 )     (198,594 )
Cash flows used in financing activities                
Proceeds from revolving credit facilities     233,000       153,000  
Payments on revolving credit facilities     (128,000 )     (60,000 )
Payments on capital and financing lease obligations     (4,517 )     (4,192 )
Payments of deferred financing costs     (2,131 )      
Cash from landlords related to capital and financing lease obligations     3,643       1,325  
Repurchase of common stock     (258,307 )     (203,392 )
Proceeds from exercise of stock options     21,843       9,300  
Other     (59 )      
  Cash flows used in financing activities     (134,528 )     (103,959 )
  (Decrease) increase in cash, cash equivalents, and restricted cash     (17,231 )     7,014  
Cash, cash equivalents, and restricted cash at beginning of the period     19,479       12,465  
Cash, cash equivalents, and restricted cash at the end of the period   $ 2,248     $ 19,479  
                 

Reclassification of Certain Income Statement Items

In the fourth quarter of fiscal 2018, we made a voluntary change to our consolidated statements of income presentation as follows:

  • Reclassified occupancy costs and buying costs from cost of sales to selling, general and administrative expenses (“SG&A”);
  • Reclassified depreciation and amortization (exclusive of depreciation related to supply chain which continues to be included in cost of sales) to a separate financial statement line item; and
  • Combined direct stores expense (“DSE”) and store pre-opening costs with SG&A.

These reclassifications had no impact on sales, income from operations, net income or earnings per share.  We made this voluntary change in presentation because we believe that the exclusion of occupancy and buying costs from cost of sales provides a more meaningful presentation of our gross margin. The changes also enhance the comparability of our financial statements with those of many of our industry peers and align with how we internally manage and review costs and margin. The following table shows these changes in presentation that have been retrospectively applied to all periods presented in this earnings release. 

   
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
(UNAUDITED)  
(IN THOUSANDS)  
   
          Thirty-nine
Weeks Ended
September
30, 2018
    Thirteen
Weeks Ended
September
30, 2018
    Thirteen
Weeks Ended
July 1, 2018
    Thirteen
Weeks Ended
April 1, 2018
 
As previously reported                                      
Cost of sales, buying and occupancy         $ 2,788,167     $ 946,742     $ 941,281     $ 900,144  
Gross profit           1,149,831       382,367       380,412       387,052  
Gross profit margin           29.2 %     28.8 %     28.8 %     30.1 %
Direct store expenses           816,933       281,365       272,973       262,595  
Selling, general and administrative expenses           128,828       43,944       43,437       41,447  
Store pre-opening costs           9,414       3,819       2,275       3,320  
Depreciation and amortization                              
                                       
As revised                                      
Cost of sales         $ 2,611,492     $ 885,693     $ 883,212     $ 842,587  
Gross profit           1,326,506       443,416       438,481       444,609  
Gross profit margin           33.7 %     33.4 %     33.2 %     34.5 %
Direct store expenses                              
Selling, general and administrative expenses           1,051,771       362,584       350,413       338,774  
Store pre-opening costs                              
Depreciation and amortization (1)           80,079       27,593       26,341       26,145  
                                       
                                       
  Fifty-two
Weeks Ended
December 31,
2017
    Thirteen
Weeks Ended
December 31,
2017
    Thirteen
Weeks Ended
October 1,
2017
    Thirteen
Weeks Ended
July 2, 2017
    Thirteen
Weeks Ended
April 2, 2017
 
As previously reported                                      
Cost of sales, buying and occupancy $ 3,314,487     $ 819,489     $ 859,650     $ 841,989     $ 793,359  
Gross profit   1,350,125       324,444       346,409       341,986       337,286  
Gross profit margin   28.9 %     28.4 %     28.7 %     28.9 %     29.8 %
Direct store expenses   962,894       247,558       250,191       236,087       229,058  
Selling, general and administrative expenses   148,408       38,096       39,955       38,189       32,168  
Store pre-opening costs   11,627       1,572       2,456       4,141       3,458  
Depreciation and amortization                            
                                       
As revised                                      
Cost of sales $ 3,097,582     $ 762,816     $ 803,695     $ 789,023     $ 742,048  
Gross profit   1,567,030       381,117       402,364       394,952       388,597  
Gross profit margin   33.6 %     33.3 %     33.4 %     33.4 %     34.4 %
Direct store expenses                            
Selling, general and administrative expenses   1,245,640       318,686       324,443       308,479       294,032  
Store pre-opening costs                            
Depreciation and amortization (1)   94,194       25,213       24,114       22,904       21,963  
                                       
(1) Exclusive of depreciation included in cost of sales                                      
                                       

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 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 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 you should not consider them in isolation or as a substitute for analysis of the company’s results as reported under GAAP.

The following table shows a reconciliation of EBITDA and adjusted EBITDA to net income for the thirteen and fifty-two weeks ended December 30, 2018 and December 31, 2017 and a reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share for the thirteen and fifty-two weeks ended December 30, 2018 and December 31, 2017:

   
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES  
NON-GAAP MEASURE RECONCILIATION  
(UNAUDITED)  
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  
   
  Thirteen
Weeks Ended
    Thirteen
Weeks Ended
    Fifty-two
Weeks Ended
    Fifty-two
Weeks Ended
 
  December 30,
2018
    December 31,
2017
    December 30,
2018
    December 31,
2017
 
Net income $ 12,703     $ 39,699     $ 158,536     $ 158,440  
Income tax provision (benefit) (1)   8,629       (8,108 )     37,260       47,078  
Interest expense, net   7,420       5,729       27,435       21,176  
Earnings before interest and taxes (EBIT)   28,752       37,320       223,231       226,694  
Depreciation, amortization and accretion   28,571       25,944       110,749       96,987  
Earnings before interest, taxes, depreciation and
  amortization (EBITDA)
$ 57,323     $ 63,264     $ 333,980     $ 323,681  
Special Items:                              
Executive compensation (2) $ 3,618     $     $ 3,618     $  
Store closures (3)   7,961             7,961        
Total Special Items - pre-tax   11,579             11,579        
 Adjusted EBITDA $ 68,902     $ 63,264     $ 345,559     $ 323,681  
                               
Net income $ 12,703     $ 39,699     $ 158,536     $ 158,440  
Special Items:                              
Executive compensation, net of tax (2)   5,652             5,652        
Store closures, net of tax (3)   5,921             5,921        
Adjusted Net income before one-time tax benefits $ 24,276     $ 39,699     $ 170,109     $ 158,440  
Income tax benefit related to Tax Act and other one-time tax benefits (4)         (18,692 )     (2,573 )     (18,692 )
Adjusted Net income $ 24,276     $ 21,007     $ 167,536     $ 139,748  
                               
Diluted earnings per share $ 0.10     $ 0.29     $ 1.22     $ 1.15  
Adjusted diluted earnings per share $ 0.19     $ 0.16     $ 1.29     $ 1.01  
                               
Diluted weighted average shares outstanding   127,398       134,795       129,776       137,884  

(1) Income tax provision (benefit) includes approximately $12 million (or $0.10 per diluted share) during the fifty-two weeks ended December 30, 2018 and $10 million (or $0.07 per diluted share) during the fifty-two weeks ended December 31, 2017, in excess federal and state tax benefits for share-based compensation primarily associated with the exercise of expiring pre-IPO options.

(2) During the thirteen and fifty-two weeks ended December 30, 2018, the company recorded one-time pre-tax compensation charges of $4 million associated with the resignation of the former CEO. The after-tax impact includes incremental tax expense associated with certain nondeductible executive compensation costs.

(3) During the thirteen and 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.

(4) During the fifty-two weeks ended December 30, 2018, the company adopted a tax calculation method change for the accelerated deduction of certain items, resulting in a discrete tax benefit of $3 million. During the thirteen and fifty-two weeks ended December 31, 2017, the company recorded a one-time benefit associated with the adoption of the 2017 Tax Cuts and Jobs Act.     

Source: Sprouts Farmers Market, Inc.
Phoenix, AZ
2/21/19

   
Investor Contact: Media Contact:
Susannah Livingston  
(602) 682-1584 (602) 682-3173
susannahlivingston@sprouts.com media@sprouts.com

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