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Sprouts board authorizes $600M stock buyback

Action follows strong Q1 gains and comes amid surge in share repurchases overall

Mark Hamstra

May 23, 2024

2 Min Read
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Sprouts Farmers Market

Sprouts Farmers Market said its board of directors had authorized a new $600 million stock buyback program, which replaces a share repurchase authorization that had almost $120 million remaining.

The buyback reflects the company’s strong cash flow and the board’s confidence in the company’s strategy and potential, Sprouts said. Earlier this month Sprouts reported a 50% gain in net income in the first quarter, to $114.1 million, on a 9% gain in sales, to nearly $1.9 billion. The company also said it expected sales growth of 7% to 8% for the full year and 35 new store openings.

Sprouts’ action also follows a surge in stock buybacks in the first quarter amid growing confidence that the economy will not slide into a recession, according to a recent report in the Wall Street Journal. Stock buybacks were down 14% in 2023, the Journal reported. In addition to uncertainty about the economy in 2023, share repurchasing plans may have also been impacted by a new 1% tax on stock buybacks that went into effect last year.

So far this year, 443 companies have announced a stock buyback plan, up from 378 a year earlier, the Journal said, citing data from money management and research firm Birinyi Associates.

Share buybacks are a mechanism companies use to reduce the number of shares on the market and increase the price of the remaining shares in order to provide value for shareholders.

Related:Sprouts Farmers Market will have coffee cafés inside five California locations

Among other publicly traded food retailers, Kroger last year said it had paused its stock buyback program to prioritize paying down debt in anticipation of its proposed merger with Albertsons. More recently, Kroger also said it remains committed to rewarding shareholders in the long term by offering dividends and repurchasing shares.

Walmart, meanwhile, recently implemented a three-for-one stock split — its first stock split in more than 20 years — which it said would make its shares more affordable for its employees. The split followed the company’s announcement that it was raising its stock dividend by 9%, the largest increase in more than 10 years.

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Sprouts Farmers Market

About the Author

Mark Hamstra

Mark Hamstra is a freelance business writer with experience covering a range of topics and industries, including food and mass retailing, the restaurant industry, direct/mobile marketing, and technology. Before becoming a freelance business journalist, Mark spent 13 years at Supermarket News, most recently as Content Director, where he was involved in all areas of editorial planning and production for print and online. Earlier in his career he also worked as a reporter and editor at other business publications, including Financial Technology, Direct Marketing News, Nation’s Restaurant News and Drug Store News.

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