Sprouts Farmers Market, Inc. (SFM) has reported a 25.33 percent fall in profit for the quarter ended Oct. 02, 2016. The company has earned $23.88 million, or $0.16 a share in the quarter, compared with $31.99 million, or $0.21 a share for the same period last year.
Revenue during the quarter grew 14.70 percent to $1,035.80 million from $903.07 million in the previous year period. Gross margin for the quarter contracted 81 basis points over the previous year period to 28.14 percent. Total expenses were 96 percent of quarterly revenues, up from 93.98 percent for the same period last year. That has resulted in a contraction of 202 basis points in operating margin to 4 percent.
Operating income for the quarter was $41.45 million, compared with $54.40 million in the previous year period.
"The Sprouts team delivered 15% sales growth, strong new store performance and our 38th consecutive quarter of positive same store sales, all despite a highly deflationary and competitive environment," said Amin Maredia, chief executive officer of Sprouts Farmers Market. "The core fundamentals of our business remain strong, and we continue to prioritize product innovation, investing in our team members and infrastructure for scale, and enhancing the customer experience both in and out-of-store."
For financial year 2016, the company forecasts diluted earnings per share to be in the range of $0.83 to $0.86.
Operating cash flow improves
Sprouts Farmers Market, Inc. has generated cash of $196.04 million from operating activities during the nine month period, up 9.46 percent or $16.95 million, when compared with the last year period.
The company has spent $142.40 million cash to meet investing activities during the nine month period as against cash outgo of $97.34 million in the last year period. It has incurred net capital expenditure of $141.91 million on net basis during the nine month period, up 45.79 percent or $44.57 million from year ago period.
The company has spent $139.42 million cash to carry out financing activities during the nine month period as against cash outgo of $80.26 million in the last year period.
Cash and cash equivalents stood at $50.29 million as on Oct. 02, 2016, down 61.90 percent or $81.71 million from $132 million on Sep. 27, 2015.
Working capital drops significantly
Sprouts Farmers Market, Inc. has witnessed a decline in the working capital over the last year. It stood at $46.81 million as at Oct. 02, 2016, down 67.51 percent or $97.26 million from $144.08 million on Sep. 27, 2015. Current ratio was at 1.19 as on Oct. 02, 2016, down from 1.66 on Sep. 27, 2015.
Cash conversion cycle (CCC) was almost stable at 5 days for the quarter, when compared with the last year period. Days sales outstanding were almost stable at 2 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 12 days for the quarter compared with 23 days for the previous year period. At the same time, days payable outstanding went down to 18 days for the quarter from 20 for the same period last year.
Debt moves up
Sprouts Farmers Market, Inc. has witnessed an increase in total debt over the last one year. It stood at $329.84 million as on Oct. 02, 2016, up 13.23 percent or $38.55 million from $291.29 million on Sep. 27, 2015. Total debt was 22.66 percent of total assets as on Oct. 02, 2016, compared with 20.45 percent on Sep. 27, 2015. Debt to equity ratio was at 0.43 as on Oct. 02, 2016, up from 0.36 as on Sep. 27, 2015. Interest coverage ratio deteriorated to 11.13 for the quarter from 14.76 for the same period last year.
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