Sprouts Farmers Market remains committed to making healthy food more affordable to draw more shoppers to its stores and boost basket sizes, but it is refining its strategy after selective price cuts and promotions failed to deliver desired results in the first half of the year.
“The consumer environment remains challenging, with customers continuing to make thoughtful choices around their healthy grocery spend, and we continue to face difficult year-on-year comparisons,” CEO Jack Sinclair said during the retailers second quarter earnings call last night.
While the company’s earnings per share of $1.37 in the quarter came in higher than the $1.34 that Wall Street expected and sales rose 5% from a year ago, revenues came in slightly below forecasts at $2.32 billion and comparable store sales fell 1% as shoppers remained cautious.
Inflation keeps grocery shoppers cautious
The mixed results come at a time when consumers are increasingly cost-conscious amid ongoing economic uncertainty and lingering inflation, including a 2.7% year-over-year increase in prices for food consumed at home, according to the June Consumer Price Index report from the Bureau of Labor Statistics.
A survey from the Urban Institute published this month also found that a notable percentage of families are taking on debt to pay for groceries. Specifically, it found one in four working-age adults used credit cards to buy food and experienced repayment challenges in 2025. In addition, one in 10 working-age adults used Buy Now, Pay Later options to pay for groceries in the same period, including one in three who missed a follow-up payment.
At Sprouts, this translates to some consumers buying fewer items or visiting less often. In response, the retailer at the start of the fiscal year cut prices on a small number of SKUs, including coffee and a “handful of other essential items” on the working theory that lower prices on everyday items would spur the core consumer to visit more often and ultimately buy more over time. The retailer also hypothesized that lower prices on select items would result in shoppers buying more items.
Two quarters later, only some of the retailer’s predictions came true.
“Our first half affordability test produced mixed results. Most actions drove better unit movement, while broader traffic response developed more gradually than expected,” admitted Sinclair.
He said the retailer is “using those learnings to refine our second half approach, focusing on the items that matter most to customers and where targeted price and affordability actions can have the greatest impact on engagement.”
Sprouts’ new plan for the back half of the year
Sprouts will use data it is gathering from its loyalty program to inform which new tactics most successfully drive sales and will benefit the retailer in the second half of the fiscal year, Sinclair said.
“The data we are building is increasingly useful across the business, with more in-depth customer behavior and preferences. Building on our first-party data capability, we will continue to support our long-term strategy by unlocking value for our customers and Sprouts across the enterprise,” he said.
The new data will also help the retailer adjust marketing to more effectively engage customers, he added.
“We’ll continue to tailor our messaging to highlight health, discovery, the unique products that distinguish Sprouts and compelling value on the healthy essentials our customers need,” he said.
Sprouts’ three-part affordability playbook
Going forward, Sprouts will continue to focus its affordability efforts on three pillars, said COO Nick Konat.
The first centers on the retailers assortment, which Konat said is delivering “really strong momentum,” especially in health meal solutions, such as new $29.99 family meals and more fresh made salads available for less than $9.
Sprouts will build on this with a broader selection of “healthy essentials,” such as a seed-oil-free frozen potatoes that are now a top-seller, and the upcoming launch of $4 fresh-baked organic sourdough bread, Konat said.
The second pillar is price and promotion, which Konat said has “been a little tougher.” But, he noted, the company is seeing “good basket and unit velocities from some of the price and promotion efforts we are doing.”
As such, he said the company will continue to test and learn about how best to price and message around products.
“The third pillar of that work is on personal loyalty and our personalization efforts and the acceleration of the learnings we’ve had in the first half of the year and the third quarter to help continue to move our existing customer,” he said.
Why didn’t price cuts drive traffic?
If these pillars sound vague, that might be intentional given the unpredictable economic landscape and how consumers are shifting their shopping in response.
“It’s challenging to move the customer in this environment. The longer we’ve gone with the elevated fuel [costs] and the challenging macro, it’s just a little bit harder,” said CFO Curtis Valentine.
He explained the current environment feels uncharted and so the retailer needs to be flexible in its response.
“Things that worked last year aren’t working as well this year. Things that we think should work, that we try, don’t work quite as well. There’s been a lot of learning and kind of readjusting to the current environment for how we go to market, and that’s really kind of how it’s playing out as we think about the tests, whether it’s in personalization or whether it’s in price and promotion,” Valentine said.
The hardest consumer to “move” is the less engaged, lower-income shopper, added Konat.
He explained that this group is visiting the store less frequently than in the past.
“I think that is driven by the macro [environment]. People are managing their wallet right now and what they can spend. That is what we are seeing from the less engaged cohort,” which is a smaller portion of the company’s base, Konat said.
“The good news is our customer has remained pretty resilient,” he added.
Sprouts’ guidance for the remainder of the year
Ultimately, the company will continue to take a disciplined view of the back half while investing in actions it believes will support engagement, said Valentine.
As such, he said he predicts total sales growth between 5.5% and 6.5% for the full year with comp sales between negative 0.5% to positive 0.5%. He also predicts earnings before interest and taxes will be between $675 million and $685 million and diluted earnings per share will come in between $5.32 and $5.40.
