Adjusted EBITDA increased 9.7% to $150.2 million with a margin rate of 12.4%, up 30 basis points year-over-year.
Comparable store sales increased by 0.4%, marking the first quarterly increase since Q4 fiscal 2022.
Diluted earnings per share increased by 11.5% to $0.58 compared to $0.52 in the same period last year, reaching the high end of expectations.
Effective tax rate increased to 21.8% from 19.8% last year due to decreased excess tax benefits from stock-based compensation.
General and administrative expenses increased 2.6% to $69.4 million, with a decrease in other operating expenses partially offsetting personnel expense increases.
Gross profit rose by 8.5% compared to the same period last year, driven by a 7.1% increase in sales and a 60 basis points improvement in gross margin rate to 43.9%.
Inventory increased 7% sequentially and 17% year-over-year, driven by timing of receipts and support for new Seattle distribution center.
Net interest expense increased 62.3% to $1.1 million due to lower interest capitalized partially offset by higher interest income.
Preopening expenses decreased 51.8% to $5.1 million due to fewer store openings compared to last year.
Sales for the quarter rose by 7.1% to $1.214 billion.
Selling and store operating expenses increased by 10.2% to $376.2 million, primarily due to $33.8 million for new stores.
Unrestricted liquidity ended at $876.9 million, including $176.9 million in cash and $700 million available under ABL facility.
Diluted earnings per share reached $1.35, a 44% increase compared to the same period last year.
Gross margin improved by 91 basis points to 38.8%, primarily due to inventory and category management improvements and sales leverage.
Net income was $134 million with an effective tax rate of 26%.
Operating cash flow year-to-date was $410 million, funding $138 million in capital expenditures and $292 million in share repurchases.
SG&A expenses totaled $645 million, with a 33 basis points leverage compared to last year, driven by labor and occupancy efficiencies.
Sprouts ended the quarter with 455 stores across 24 states and $261 million in cash and cash equivalents.
Sprouts reported total sales of $2.2 billion in Q2 2025, a 17% increase year-over-year, driven by a 10.2% comparable store sales increase and strong new store performance.
Gross margin improved to 37.6%, up 1.8 points from last year's quarter due to higher volumes, improved pricing, and cost savings.
Inventory balance was $163.7 million, down about $59.4 million from last year's third quarter and down from fiscal year-end.
Operating expenses decreased by $1.7 million versus prior year third quarter, or $3.7 million excluding a $2 million deferred compensation plan valuation increase.
Operating profit was $7.3 million versus an operating loss in the previous third quarter.
Sales in the third fiscal quarter ending June 2025 increased 5% to $180.7 million compared to $172.5 million in the prior year third quarter.
The company remains debt-free with a solid cash position.
Dafinchi
