Sprouts Farmers Market (NASDAQ: SFM) reported Q1 EPS of $0.79, $0.25 better than the analyst estimate of $0.54. Revenue for the quarter came in at $1.6 billion versus the consensus estimate of $1.59 billion.

First Quarter Highlights:

• Net sales of $1.6 billion; a 16% increase from the same period in 2019
• Comparable store sales growth of 10.6% and two-year comparable store sales growth of 12.0%
• Net income of $92 million; compared to net income of $56 million from the same period in 2019
• Adjusted net income(1) of $93 million; compared to $57 million from the same period in 2019
• Diluted earnings per share of $0.78 and adjusted diluted earnings per share(1) of $0.79; compared to $0.46 diluted and adjusted diluted earnings per share from the same period in 2019
• Positive impact from COVID-19 pandemic was estimated to be $0.22 of diluted earnings per share

First Quarter Highlights:

Net sales of $1.6 billion; a 16% increase from the same period in 2019
Comparable store sales growth of 10.6% and two-year comparable store sales growth of 12.0%
Net income of $92 million; compared to net income of $56 million from the same period in 2019
Adjusted net income(1) of $93 million; compared to $57 million from the same period in 2019
Diluted earnings per share of $0.78 and adjusted diluted earnings per share(1) of $0.79; compared to $0.46 diluted and adjusted diluted earnings per share from the same period in 2019
Positive impact from COVID-19 pandemic was estimated to be $0.22 of diluted earnings per share

“I am inspired by our hard-working and profoundly dedicated 32,000 team members who have served under the most difficult of circumstances to ensure our customers have healthy food to feed their families,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. “During the first quarter, the COVID-19 crisis led to a significant increase in sales as consumers bought more food to consume at home. As we navigate these ever-changing circumstances, we remain steadfast and decisive, prioritizing team member and customer safety and remaining in-stock on fresh, healthy food for our communities, all the while not losing sight of our transformational strategy that will set us up for long-term success.”

Update on Current Performance and 2020 Outlook

We have been closely monitoring our results and certain trends we saw in the later part of the first quarter have continued into April. Elevated levels of grocery spend have continued as many consumers have increased their food at home spend. Social distancing has changed consumer behavior from customers consolidating trips and increasing use of ecommerce services. For the month of April, our comparable store sales increased 7.2%, compared to the same period last year notwithstanding the closure of all our stores on Easter Sunday, and ecommerce sales represented 13% of our net sales. While these increased sales, as well as our strategic initiatives around smarter promotions remain a benefit to operating margin, the timing of significant investments to enhance team members pay and benefits, and to implement additional safety and cleansing measures will weigh heavier in the second quarter compared to the first quarter. Because of this, we do not believe we will sustain the same level of operating margin expansion experienced in the first quarter.

“The COVID-19 crisis has created a lack of visibility for the remainder of 2020 with many unknowns,” said Denise Paulonis, chief financial officer of Sprouts Farmers Market. “While April sales trended higher than average, we are making significant investments in pay, benefits and safety measures, as the health of our team members and customers is our number one priority. We remain uncertain as to when consumer behavior will return to normal or what may emerge as the ‘new normal’. This environment is making it difficult to predict specific outcomes, and accordingly we are not reaffirming or stating a new outlook range, however, we currently expect that we will be able to meet or exceed our previous annual outlook.”

For earnings history and earnings-related data on Sprouts Farmers Market (SFM) click here.