Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 02, 2017 | May 02, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 2, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SFM | |
Entity Registrant Name | SPROUTS FARMERS MARKET, INC. | |
Entity Central Index Key | 1,575,515 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 137,492,285 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Apr. 02, 2017 | Jan. 01, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 21,326 | $ 12,465 |
Accounts receivable, net | 24,698 | 25,228 |
Inventories | 204,267 | 204,464 |
Prepaid expenses and other current assets | 23,218 | 21,869 |
Total current assets | 273,509 | 264,026 |
Property and equipment, net of accumulated depreciation | 653,360 | 604,660 |
Intangible assets, net of accumulated amortization | 197,257 | 197,608 |
Goodwill | 368,078 | 368,078 |
Other assets | 5,435 | 5,521 |
Total assets | 1,497,639 | 1,439,893 |
Current liabilities: | ||
Accounts payable | 191,825 | 157,550 |
Accrued salaries and benefits | 31,217 | 32,859 |
Other accrued liabilities | 55,937 | 56,376 |
Current portion of capital and financing lease obligations | 10,619 | 12,370 |
Income tax payable | 10,526 | |
Total current liabilities | 300,124 | 259,155 |
Long-term capital and financing lease obligations | 119,373 | 117,366 |
Long-term debt | 285,000 | 255,000 |
Other long-term liabilities | 121,068 | 116,200 |
Deferred income tax liability | 28,140 | 19,263 |
Total liabilities | 853,705 | 766,984 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Undesignated preferred stock; $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.001 par value; 200,000,000 shares authorized, 137,261,840 and 140,256,313 shares issued and outstanding, April 2, 2017 and January 1, 2017, respectively | 137 | 140 |
Additional paid-in capital | 602,006 | 597,269 |
Retained earnings | 41,791 | 75,500 |
Total stockholders’ equity | 643,934 | 672,909 |
Total liabilities and stockholders’ equity | $ 1,497,639 | $ 1,439,893 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Apr. 02, 2017 | Jan. 01, 2017 |
Statement Of Financial Position [Abstract] | ||
Undesignated preferred stock, par value | $ 0.001 | $ 0.001 |
Undesignated preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Undesignated preferred stock, shares issued | 0 | 0 |
Undesignated preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 137,261,840 | 140,256,313 |
Common stock, shares outstanding | 137,261,840 | 140,256,313 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 1,130,645 | $ 993,241 |
Cost of sales, buying and occupancy | 793,359 | 686,728 |
Gross profit | 337,286 | 306,513 |
Direct store expenses | 229,149 | 193,815 |
Selling, general and administrative expenses | 32,168 | 30,896 |
Store pre-opening costs | 3,458 | 3,966 |
Income from operations | 72,511 | 77,836 |
Interest expense | (4,738) | (3,601) |
Other income | 95 | 101 |
Income before income taxes | 67,868 | 74,336 |
Income tax provision | (21,581) | (28,129) |
Net income | $ 46,287 | $ 46,207 |
Net income per share: | ||
Basic | $ 0.34 | $ 0.31 |
Diluted | $ 0.33 | $ 0.30 |
Weighted average shares outstanding: | ||
Basic | 137,069 | 150,723 |
Diluted | 140,147 | 153,144 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid In Capital [Member] | Retained Earnings [Member] |
Beginning Balance at Jan. 03, 2016 | $ 822,992 | $ 153 | $ 577,393 | $ 245,446 |
Beginning Balance, Shares at Jan. 03, 2016 | 152,577,884 | |||
Net income | 124,306 | 124,306 | ||
Issuance of shares under stock plans | 2,740 | 2,740 | ||
Issuance of shares under stock plans, Shares | 666,841 | |||
Repurchase and retirement of common stock | (294,265) | $ (13) | (294,252) | |
Repurchase and retirement of common stock, Shares | (13,242,483) | |||
Excess tax benefit for exercise of options | 3,737 | 3,737 | ||
Equity-based compensation | 13,399 | 13,399 | ||
Ending Balance at Jan. 01, 2017 | 672,909 | $ 140 | 597,269 | 75,500 |
Ending Balance, Shares at Jan. 01, 2017 | 140,002,242 | |||
Net income | 46,287 | 46,287 | ||
Issuance of shares under stock plans | 2,292 | $ 1 | 2,291 | |
Issuance of shares under stock plans, Shares | 893,395 | |||
Repurchase and retirement of common stock | $ (80,000) | $ (4) | (79,996) | |
Repurchase and retirement of common stock, Shares | (4,099,936) | (4,099,936) | ||
Equity-based compensation | $ 2,446 | 2,446 | ||
Ending Balance at Apr. 02, 2017 | $ 643,934 | $ 137 | $ 602,006 | $ 41,791 |
Ending Balance, Shares at Apr. 02, 2017 | 136,795,701 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Cash flows from operating activities | ||
Net income | $ 46,287 | $ 46,207 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 22,622 | 18,832 |
Accretion of asset retirement obligation and closed store reserve | 19 | 80 |
Amortization of financing fees and debt issuance costs | 116 | 116 |
(Gain) / Loss on disposal of property and equipment | 45 | (117) |
Equity-based compensation | 2,446 | 2,656 |
Deferred income taxes | 8,878 | 7,410 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 213 | 5,638 |
Inventories | 196 | (7,119) |
Prepaid expenses and other current assets | (1,350) | 4,547 |
Other assets | (27) | (4,876) |
Accounts payable | 21,466 | 15,578 |
Accrued salaries and benefits | (1,642) | (5,068) |
Other accrued liabilities and income taxes payable | 10,081 | 5,105 |
Other long-term liabilities | 5,187 | 8,958 |
Cash flows from operating activities | 114,537 | 97,947 |
Cash flows from investing activities | ||
Purchases of property and equipment | (57,205) | (34,000) |
Proceeds from sale of property and equipment | 30 | 662 |
Purchase of leasehold interests | (138) | |
Cash flows used in investing activities | (57,175) | (33,476) |
Cash flows from financing activities | ||
Proceeds from revolving credit facility | 60,000 | |
Payments on revolving credit facility | (30,000) | |
Payments on capital and financing lease obligations | (1,093) | (1,078) |
Cash from landlords related to financing lease obligations | 300 | |
Repurchase of common stock | (80,000) | (59,308) |
Proceeds from exercise of stock options | 2,292 | 1,933 |
Excess tax benefit for exercise of stock options | 3,563 | |
Cash flows used in financing activities | (48,501) | (54,890) |
Increase in cash and cash equivalents | 8,861 | 9,581 |
Cash and cash equivalents at beginning of the period | 12,465 | 136,069 |
Cash and cash equivalents at the end of the period | 21,326 | 145,650 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 4,435 | 3,716 |
Cash refunded for income taxes | (48) | |
Supplemental disclosure of non-cash investing and financing activities | ||
Property and equipment in accounts payable | 36,038 | 23,137 |
Property acquired through capital and financing lease obligations | $ 3,167 | $ 1,744 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Apr. 02, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation Sprouts Farmers Market, Inc., a Delaware corporation, through its subsidiaries, operates as a healthy grocery store that offers fresh, natural and organic food through a complete shopping experience that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, beer and wine, natural body care and household items catering to consumers’ growing interest in health and wellness. The “Company” is used to refer collectively to Sprouts Farmers Market, Inc. and unless the context otherwise requires, its subsidiaries. The accompanying unaudited consolidated financial statements include the accounts of the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods indicated. All material intercompany accounts and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results for any other interim period or for a full fiscal year. The information included in these consolidated financial statements and notes thereto should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto for the fiscal year ended January 1, 2017 (“fiscal year 2016”) included in the Company’s Annual Report on Form 10-K, filed on February 23, 2017. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The Company reports its results of operations on a 52- or 53-week fiscal calendar ending on the Sunday closest to December 31. The fiscal year ending December 31, 2017 (“fiscal year 2017”) is a 52-week year, and fiscal year 2016 was a 52-week year. The Company reports its results of operations on a 13-week quarter, except for 53-week fiscal years. Certain reclassifications of amounts reported in prior periods have been made to conform with the current period presentation. The Company has one reportable and one operating segment, healthy grocery stores. All dollar amounts are in thousands, unless otherwise noted. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 3 Months Ended |
Apr. 02, 2017 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
Recently Issued Accounting Pronouncements | 2. Recently Issued Accounting Pronouncements Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” ASU No. 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business; less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for the Company for its fiscal year 2017. Adoption of the guidance took place prospectively during the thirteen weeks ended April 2, 2017, and the adoption did not have a material effect on the Company’s consolidated financial statements or disclosures. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718).” This update involves several aspects of the accounting for share-based transactions, including the income tax consequences, classification of awards as either equity or liabilities, how to account for forfeitures, and classification on the statement of cash flows. The amendments in this update are effective for the Company for its fiscal year 2017. As a result of the adoption, the Company recognized excess tax benefits related to the exercise of options in its income tax provision during the thirteen weeks ended April 2, 2017 (see Note 11). Prior to the adoption, these items were recorded in Additional Paid-in Capital. The Company has elected to prospectively apply the amendments related to classifying cash flows related to excess tax benefits as an operating activity. During the thirteen weeks ended April 2, 2017, excess tax benefits were classified as an operating activity on the consolidated statement of cash flows, along with other income tax cash flows. The Company has made a policy election to account for forfeitures as they occur. This election was adopted using a modified retrospective approach resulting in no cumulative effect on retained earnings at the beginning of the period. Prior to the adoption, forfeitures were accounted for using an estimated forfeiture rate. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance and does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (ASC 842).” ASU No. 2016-02 requires lessees to recognize a right-of-use asset and corresponding lease liability for all leases with terms greater than twelve months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The new guidance also requires certain additional quantitative and qualitative disclosures. This guidance will be effective for the Company for its fiscal year 2019, with early adoption permitted, and the Company is currently evaluating the potential impact of this guidance. The adoption of this ASU is expected to result in a material increase to the Company’s consolidated balance sheets for right-of-use assets and lease liabilities. In March 2016, the FASB issued ASU No. 2016-04, “Liabilities-Extinguishments of Liabilities (Subtopic 405-20): Recognition of breakage for certain prepaid stored-value products.” ASU No. 2016-04 provides a narrow scope exception to the guidance in Subtopic 405-20 to require that stored-value breakage be accounted for consistently with the breakage guidance in Topic 606. The amendments in this update contain specific guidance for derecognition of prepaid stored-value product liabilities, thereby eliminating the current and potential future diversity. This guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update provides clarifications on the cash flow classification for eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate the second step of the goodwill impairment test and provide that a n entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance will be effective for the Company for its fiscal year 2020, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance. No other new accounting pronouncements issued or effective during the thirteen weeks ended April 2, 2017 had, or are expected to have, a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 02, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with GAAP. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in the impairment analysis of goodwill, indefinite-lived intangible assets and long-lived assets, and in the valuation of store closure and exit costs. The determination of fair values of certain tangible and intangible assets for purposes of the Company’s goodwill impairment evaluation as described above was based upon a step zero assessment. Closed facility reserves are recorded at net present value to approximate fair value which is classified as Level 3 in the hierarchy. The estimated fair value of the closed facility reserve is calculated based on the present value of the remaining lease payments and other charges using a weighted average cost of capital, reduced by estimated sublease rentals. The weighted average cost of capital was estimated using information from comparable companies and management’s judgment related to the risk associated with the operations of the stores. Cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued salaries and benefits and other accrued liabilities approximate fair value because of the short maturity of those instruments. Based on open market transactions comparable to the Credit Facility (as defined in Note 4, “Long-Term Debt”), the fair value of the long-term debt approximates carrying value as of April 2, 2017 and January 1, 2017. The Company’s estimates of the fair value of long-term debt were classified as Level 2 in the fair value hierarchy. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 02, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 4. Long-Term Debt A summary of long-term debt is as follows: As of Facility Maturity Interest Rate April 2, 2017 January 1, 2017 Senior secured debt $450.0 million Credit Facility April 17, 2020 Variable $ 285,000 $ 255,000 Total debt 285,000 255,000 Long-term debt $ 285,000 $ 255,000 Senior Secured Revolving Credit Facility On April 17, 2015, the Company’s subsidiary, Sprouts Farmers Markets Holdings, LLC (“Intermediate Holdings”), as borrower, entered into a credit agreement that provides for a revolving credit facility with an initial aggregate commitment of $450.0 million (the “Credit Facility”), which may be increased from time to time pursuant to an expansion set forth in the Credit Facility. The Credit Facility replaced the Company’s existing senior secured credit facility, dated April 23, 2013 (the “Former Credit Facility). The Company capitalized debt issuance costs of $2.3 million related to the Credit Facility, which are being amortized on a straight-line basis to interest expense over the five-year term of the Credit Facility. The Credit Facility also provides for a letter of credit subfacility and a $15.0 million swingline facility. Letters of credit issued under the Credit Facility reduce the borrowing capacity of the Credit Facility. Letters of credit totaling $24.8 million have been issued as of April 2, 2017, primarily to support the Company’s insurance programs. Guarantees Obligations under the Credit Facility are guaranteed by the Company and all of its current and future wholly-owned material domestic subsidiaries, and are secured by first-priority security interests in substantially all of the assets of the Company and its subsidiary guarantors, including, without limitation, a pledge by the Company of its equity interest in Intermediate Holdings. Interest and Fees Loans under the Credit Facility bear interest, at the Company’s option, either at adjusted LIBOR plus 1.50% per annum, or a base rate plus 0.25% per annum. The interest rate margins are subject to adjustment pursuant to a pricing grid based on the Company’s total gross leverage ratio, as defined in the Credit Facility. Under the terms of the Credit Facility, the Company is obligated to pay a commitment fee on the available unused amount of the Credit Facility commitments equal to 0.20% per annum. Outstanding letters of credit under the Credit Facility are subject to a participation fee of 1.50% per annum and an issuance fee of 0.125% per annum. Payments and Borrowings The Credit Facility is scheduled to mature, and the commitments thereunder will terminate on April 17, 2020, subject to extensions as set forth in the Credit Facility. The Company may repay loans and reduce commitments under the Credit Facility at any time in agreed-upon minimum principal amounts, without premium or penalty (except LIBOR breakage costs, if applicable). During fiscal year 2016, the Company borrowed $105.0 million to be used in connection with the Company’s $250.0 million share repurchase program (see Note 9) and made a total of $10.0 million of principal payments; resulting in total outstanding debt under the Credit Facility of $255.0 million at January 1, 2017. During the thirteen weeks ended April 2, 2017, the Company borrowed an additional $60.0 million and made a total of $30.0 million of principal payments; resulting in total outstanding debt under the Credit Facility of $285.0 million as of April 2, 2017. Covenants The Credit Facility contains financial, affirmative and negative covenants. The negative covenants include, among other things, limitations on the Company’s ability to: • incur additional indebtedness; • grant additional liens; • enter into sale-leaseback transactions; • make loans or investments; • merge, consolidate or enter into acquisitions; • pay dividends or distributions; • enter into transactions with affiliates; • enter into new lines of business; • modify the terms of debt or other material agreements; and • change its fiscal year. Each of these covenants is subject to customary and other agreed-upon exceptions. In addition, the Credit Facility requires that the Company and its subsidiaries maintain a maximum total net leverage ratio not to exceed 3.00 to 1.00 and minimum interest coverage ratio not to be less than 1.75 to 1.00. Each of these covenants is tested on the last day of each fiscal quarter. The Company was in compliance with all applicable covenants under the Credit Facility as of April 2, 2017. |
Closed Store Reserves
Closed Store Reserves | 3 Months Ended |
Apr. 02, 2017 | |
Restructuring And Related Activities [Abstract] | |
Closed Store Reserves | 5. Closed Store Reserves The following is a summary of closed store reserve activity during the thirteen weeks ended April 2, 2017 and fiscal year 2016: Thirteen Weeks Ended Fiscal Year Ended April 2, 2017 January 1, 2017 Beginning balance $ 1,083 $ 2,017 Additions — — Usage (133 ) (998 ) Adjustments 125 64 Ending balance $ 1,075 $ 1,083 Usage during fiscal year 2016 relates to lease payments made during the period for closed stores. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 02, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 6. Income Taxes The Company’s effective tax rate for the thirteen weeks ended April 2, 2017 and April 3, 2016 was 31.8% and 37.8%, respectively. The decrease in the effective tax rate is primarily related to recognition of excess tax benefits related to the exercise of stock options in the income tax provision. See ASU 2016-09, Compensation – “Stock Compensation (Topic 718)” under Recently Adopted Accounting Pronouncements (Note 2). Excess tax benefits associated with share-based payment awards are recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. The income tax benefits resulting from stock awards were $3.8 million for the thirteen weeks ended April 2, 2017. The income tax benefits resulting from stock awards for the thirteen weeks ended April 3, 2016 were $3.6 million and recorded in Additional Paid-in Capital. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Apr. 02, 2017 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 7. Related-Party Transactions A member of the Company’s board of directors is an investor in a company that is a supplier of coffee to the Company for resale. During the thirteen weeks ended April 2, 2017 and April 3, 2016, purchases from this supplier were $2.9 million and $2.5 million, respectively. As of April 2, 2017, and April 3, 2016, the Company had recorded accounts payable due to this vendor of $0.9 million and $0.8 million, respectively. The Company’s former Executive Chairman of the Board has been the chief executive officer, an equity investor, and lender to a technology supplier to the Company. During the thirteen weeks ended April 2, 2017 and April 3, 2016, purchases from this supplier and its predecessors were $1.5 million and $1.3 million, respectively. As of April 2, 2017 and April 3, 2016, the Company had recorded accounts payable due to the supplier of $0.3 million and $0.2 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 02, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies The Company is exposed to claims and litigation matters arising in the ordinary course of business and uses various methods to resolve these matters that are believed to best serve the interests of the Company’s stakeholders. The Company’s primary contingencies are associated with self-insurance obligations. Self-insurance liabilities require significant judgment and actual claim settlements and associated expenses may differ from the Company’s current provisions for loss. Securities Action On March 4, 2016, a complaint was filed in the Superior Court for the State of Arizona against the Company and certain of its directors and officers on behalf of a purported class of purchasers of shares of the Company’s common stock in the Company’s underwritten secondary public offering which closed on March 10, 2015 (the “March 2015 Offering”). The complaint purports to state claims under Sections 11, 12 and 15 of the Securities Act of 1933, as amended, based on an alleged failure by the Company to disclose adequate information about produce price deflation in the March 2015 Offering documents. The complaint seeks damages on behalf of the purported class in an unspecified amount, rescission, and an award of reasonable costs and attorneys’ fees. On March 24, 2016, the Company removed the action to federal court in the District of Arizona. On March 24, 2017, the federal court in the District of Arizona remanded the case to state court. On April 21, 2017, the Company filed a Notice of Appeal of the federal court decision to remand the case. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 02, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 9. Stockholders’ Equity Share Repurchases On November 4, 2015, the Company’s board of directors authorized a $150 million common stock share repurchase program, which was completed during the second quarter of 2016. On September 6, 2016, the Company’s board of directors authorized a $250 million share repurchase program for its common stock, which was completed during the thirteen weeks ended April 2, 2017. On February 20, 2017, the Company’s board of directors authorized a new $250 million share repurchase program for its common stock. The following table outlines the share repurchase programs authorized by the Board, and the related repurchase activity and available authorization as of April 2, 2017. Effective date Expiration date Amount authorized Cost of repurchases Authorization available November 4, 2015 November 4, 2017 $ 150,000 $ 150,000 $ — September 6, 2016 December 31, 2017 $ 250,000 $ 250,000 $ — February 20, 2017 December 31, 2018 $ 250,000 $ — $ 250,000 The shares under the Company’s repurchase programs may be purchased on a discretionary basis from time to time prior to the applicable expiration date, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The board’s authorization of the share repurchase programs does not obligate the Company to acquire any particular amount of common stock, and the repurchase programs may be commenced, suspended, or discontinued at any time. The Company has used borrowings under its Credit Facility to assist with the repurchase program authorized on September 6, 2016 (see Note 4). Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows: Thirteen Weeks Ended April 2, 2017 April 3, 2016 Number of common shares acquired 4,099,936 2,431,721 Average price per common share acquired $ 19.51 $ 24.39 Total cost of common shares acquired $ 80,000 $ 59,308 Shares purchased under the Company’s repurchase programs were subsequently retired. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 02, 2017 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 10. Net Income Per Share The computation of net income per share is based on the number of weighted average shares outstanding during the period. The computation of diluted net income per share includes the dilutive effect of share equivalents consisting of incremental shares deemed outstanding from the assumed exercise of options, assumed vesting of restricted stock units (“RSUs”), assumed vesting of performance stock awards (“PSAs”), and assumed vesting of restricted stock awards (“RSAs”). A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share amounts): Thirteen Weeks Ended April 2, 2017 April 3, 2016 Basic net income per share: Net income $ 46,287 $ 46,207 Weighted average shares outstanding 137,069 150,723 Basic net income per share $ 0.34 $ 0.31 Diluted net income per share: Net income $ 46,287 $ 46,207 Weighted average shares outstanding - basic 137,069 150,723 Dilutive effect of equity-based awards: Assumed exercise of options to purchase shares 2,962 2,350 RSUs 62 49 RSAs 19 — PSAs 35 22 Weighted average shares and equivalent shares outstanding 140,147 153,144 Diluted net income per share $ 0.33 $ 0.30 For the thirteen weeks ended April 2, 2017, the computation of diluted net income per share does not include 2.6 million options and 0.1 million PSAs as those awards would have been antidilutive or were unvested performance awards. For the thirteen weeks ended April 3, 2016, the computation of diluted net income per share does not include 0.9 million options, 0.2 million RSUs, and 0.1 million PSAs as those awards would have been antidilutive or were unvested performance awards. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Apr. 02, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-Based Compensation | 11. Equity-Based Compensation 2013 Incentive Plan The Company’s board of directors adopted, and its equity holders approved, the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”). The 2013 Incentive Plan became effective July 31, 2013 in connection with the Company’s initial public offering and replaced the 2011 Option Plan (as defined below) (except with respect to outstanding options under the 2011 Option Plan). The 2013 Incentive Plan serves as the umbrella plan for the Company’s stock-based and cash-based incentive compensation programs for its directors, officers and other team members. On May 1, 2015, the Company’s stockholders approved the material terms of the performance goals under the 2013 Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code. The aggregate number of shares of common stock that may be issued to team members and directors under the 2013 Incentive Plan may not exceed 10,089,072. Shares subject to awards granted under the 2013 Incentive Plan which are subsequently forfeited, expire unexercised or are otherwise not issued will not be treated as having been issued for purposes of the share limitation. As of April 2, 2017, there were 4,041,123 stock awards outstanding and 5,642,235 shares remaining available for issuance under the 2013 Incentive Plan. 2011 Option Plan In May 2011, the Company adopted the Sprouts Farmers Markets, LLC Option Plan (the “2011 Option Plan”) to provide team members or directors of the Company with options to acquire shares of the Company. The Company had authorized 12,100,000 shares for issuance under the 2011 Option Plan. Options may no longer be issued under the 2011 Option Plan. As of April 2, 2017, there were 3,100,099 options outstanding under the 2011 Option Plan. Awards Granted During the thirteen weeks ended April 2, 2017, the Company granted the following stock-based compensation awards: Grant Date RSUs PSAs RSAs March 3, 2017 323,687 148,944 288,746 March 27, 2017 1,719 — — Total: 325,406 148,944 288,746 Weighted-average grant date fair value $ 18.13 $ 18.11 $ 18.11 Weighted-average exercise price — — — Stock Options The Company uses the Black-Scholes option pricing model to estimate the fair value of options at grant date. Options vest in accordance with the terms set forth in the grant letter and vary depending on if they are time-based or performance-based. Time-based options granted prior to fiscal year 2016 generally vest ratably over a period of 12 quarters (three years), and time-based options granted in fiscal year 2016 vest annually over a period of three years. RSUs The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. RSUs generally vest annually over a period of two or three years from the grant date. PSAs PSAs granted in fiscal year 2015 are restricted shares that were subject to the Company achieving certain earnings per share performance targets, as well as additional time-vesting conditions. The fair value of PSAs is based on the closing price of the Company’s common stock on the grant date. During the thirteen weeks ended April 3, 2016, the performance conditions with respect to 2015 earnings per share were deemed to have been met, and the PSAs will vest 50 percent at each of the second and third anniversary of the grant date. During the thirteen weeks ended April 2, 2017, 21,050 of the 2015 PSAs were vested. No PSAs vested during the thirteen weeks ended April 3, 2016. PSAs granted in fiscal year 2016 are restricted shares that are subject to the Company achieving certain earnings before interest and taxes (“EBIT”) performance targets on an annual and cumulative basis over a three-year performance period, as well as additional time-vesting conditions. The fair value of these PSAs is based on the closing price of the Company’s common stock on the grant date. The EBIT target resets annually for each of the three years during the performance period based on a percentage increase over the previous year’s actual EBIT, with each annual performance tranche independent of the previous and next tranche. Cumulative performance is based on the aggregate annual performance targets. Payout of the performance shares will either be 0% or range from 50% to 150% of the target number of shares granted. If the performance conditions are met, PSAs cliff vest on the third anniversary of the grant date. The Company’s board of directors determined that the performance targets for the fiscal year 2016 tranche were not met and 30,981 performance shares were not earned. PSAs granted in fiscal year 2017 are restricted shares that are subject to the Company achieving certain earnings per share performance targets, as well as additional time-vesting conditions. The fair value of PSAs is based on the closing price of the Company’s common stock on the grant date. If the performance conditions are met, PSAs will vest 50 percent at each of the second and third anniversary of the grant date. RSAs The fair value of RSAs is based on the closing price of the Company’s common stock on the grant date. RSAs will vest either ratably over a seven quarter period, beginning on December 31, 2016 or cliff vest on June 30, 2018. Equity Award Restructuring In connection with the appointments of the Company’s Chief Executive Officer and President & Chief Operating Officer in August 2015, the Compensation Committee of the Company’s Board of Directors approved a grant of stock options to purchase 1,200,000 and 500,000 shares of the Company’s common stock at an exercise price of $20.98 per share to these officers, respectively (the “August 2015 Options”) pursuant to the 2013 Incentive Plan. The August 2015 Options, taken together with other options granted under the 2013 Incentive Plan to such officers during 2015, exceeded the limit of 500,000 shares which may be granted pursuant to stock options and stock appreciation rights per calendar year to each participant under the 2013 Incentive Plan by 733,439 shares in the case of the Company’s Chief Executive Officer and 33,439 shares in the case of the Company’s President & Chief Operating Officer (the “Excess Options”). Accordingly, the Company has determined, and these officers have acknowledged, that the grants of the Excess Options were null and void. In order to satisfy the original intent with respect to these individuals’ compensation, on May 23, 2016, the Compensation Committee granted to the Company’s Chief Executive Officer and President & Chief Operating Officer under the 2013 Incentive Plan options to purchase 386,496 and 33,439 shares of the Company’s common stock at an exercise price of $24.48 per share, respectively, and 215,251 and 2,601 RSAs, respectively. The Company recognized compensation expense of $1.0 million during the thirteen weeks ended April 2, 2017 related to the options and RSAs granted. Equity-based Compensation Expense Equity-based compensation expense was reflected in the consolidated statements of operations as follows: Thirteen Weeks Ended April 2, 2017 April 3, 2016 Cost of sales, buying and occupancy $ 246 $ 218 Direct store expenses 361 317 Selling, general and administrative expenses 1,839 2,121 Equity-based compensation expense before income taxes 2,446 2,656 Income tax benefit (915 ) (1,009 ) Net equity-based compensation expense $ 1,531 $ 1,647 The following equity-based awards were outstanding as of April 2, 2017 and January 1, 2017: As of April 2, 2017 January 1, 2017 (in thousands) Options Vested 5,077 5,552 Unvested 916 1,205 RSUs 471 274 PSAs 232 159 RSAs 445 187 As of April 2, 2017, total unrecognized compensation expense related to outstanding equity-based awards was as follows: As of April 2, 2017 Options $ 5,935 RSUs 9,156 PSAs 2,831 RSAs 8,239 Total unrecognized compensation expense $ 26,161 As of April 2, 2017, the total remaining weighted average recognition period related to outstanding equity-based awards was as follows: As of April 2, 2017 Options 1.4 RSUs 2.1 PSAs 2.2 RSAs 2.3 During the thirteen weeks ended April 2, 2017 and April 3, 2016, the Company received $2.3 million and $1.9 million, respectively, in cash proceeds from the exercise of options. |
Recently Issued Accounting Pr18
Recently Issued Accounting Pronouncements (Policies) | 3 Months Ended |
Apr. 02, 2017 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” ASU No. 2015-11 changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business; less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for the Company for its fiscal year 2017. Adoption of the guidance took place prospectively during the thirteen weeks ended April 2, 2017, and the adoption did not have a material effect on the Company’s consolidated financial statements or disclosures. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718).” This update involves several aspects of the accounting for share-based transactions, including the income tax consequences, classification of awards as either equity or liabilities, how to account for forfeitures, and classification on the statement of cash flows. The amendments in this update are effective for the Company for its fiscal year 2017. As a result of the adoption, the Company recognized excess tax benefits related to the exercise of options in its income tax provision during the thirteen weeks ended April 2, 2017 (see Note 11). Prior to the adoption, these items were recorded in Additional Paid-in Capital. The Company has elected to prospectively apply the amendments related to classifying cash flows related to excess tax benefits as an operating activity. During the thirteen weeks ended April 2, 2017, excess tax benefits were classified as an operating activity on the consolidated statement of cash flows, along with other income tax cash flows. The Company has made a policy election to account for forfeitures as they occur. This election was adopted using a modified retrospective approach resulting in no cumulative effect on retained earnings at the beginning of the period. Prior to the adoption, forfeitures were accounted for using an estimated forfeiture rate. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU No. 2014-09 provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance and does not expect this ASU to materially impact the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (ASC 842).” ASU No. 2016-02 requires lessees to recognize a right-of-use asset and corresponding lease liability for all leases with terms greater than twelve months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The new guidance also requires certain additional quantitative and qualitative disclosures. This guidance will be effective for the Company for its fiscal year 2019, with early adoption permitted, and the Company is currently evaluating the potential impact of this guidance. The adoption of this ASU is expected to result in a material increase to the Company’s consolidated balance sheets for right-of-use assets and lease liabilities. In March 2016, the FASB issued ASU No. 2016-04, “Liabilities-Extinguishments of Liabilities (Subtopic 405-20): Recognition of breakage for certain prepaid stored-value products.” ASU No. 2016-04 provides a narrow scope exception to the guidance in Subtopic 405-20 to require that stored-value breakage be accounted for consistently with the breakage guidance in Topic 606. The amendments in this update contain specific guidance for derecognition of prepaid stored-value product liabilities, thereby eliminating the current and potential future diversity. This guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update provides clarifications on the cash flow classification for eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The amendments in this update eliminate the second step of the goodwill impairment test and provide that a n entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance will be effective for the Company for its fiscal year 2020, with early adoption permitted. The Company is currently evaluating the potential impact of this guidance. No other new accounting pronouncements issued or effective during the thirteen weeks ended April 2, 2017 had, or are expected to have, a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements | 3. Fair Value Measurements The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with GAAP. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in the impairment analysis of goodwill, indefinite-lived intangible assets and long-lived assets, and in the valuation of store closure and exit costs. The determination of fair values of certain tangible and intangible assets for purposes of the Company’s goodwill impairment evaluation as described above was based upon a step zero assessment. Closed facility reserves are recorded at net present value to approximate fair value which is classified as Level 3 in the hierarchy. The estimated fair value of the closed facility reserve is calculated based on the present value of the remaining lease payments and other charges using a weighted average cost of capital, reduced by estimated sublease rentals. The weighted average cost of capital was estimated using information from comparable companies and management’s judgment related to the risk associated with the operations of the stores. Cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued salaries and benefits and other accrued liabilities approximate fair value because of the short maturity of those instruments. Based on open market transactions comparable to the Credit Facility (as defined in Note 4, “Long-Term Debt”), the fair value of the long-term debt approximates carrying value as of April 2, 2017 and January 1, 2017. The Company’s estimates of the fair value of long-term debt were classified as Level 2 in the fair value hierarchy. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Apr. 02, 2017 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt | A summary of long-term debt is as follows: As of Facility Maturity Interest Rate April 2, 2017 January 1, 2017 Senior secured debt $450.0 million Credit Facility April 17, 2020 Variable $ 285,000 $ 255,000 Total debt 285,000 255,000 Long-term debt $ 285,000 $ 255,000 |
Closed Store Reserves (Tables)
Closed Store Reserves (Tables) | 3 Months Ended |
Apr. 02, 2017 | |
Restructuring And Related Activities [Abstract] | |
Summary of Closed Store Reserve Activity | The following is a summary of closed store reserve activity during the thirteen weeks ended April 2, 2017 and fiscal year 2016: Thirteen Weeks Ended Fiscal Year Ended April 2, 2017 January 1, 2017 Beginning balance $ 1,083 $ 2,017 Additions — — Usage (133 ) (998 ) Adjustments 125 64 Ending balance $ 1,075 $ 1,083 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Apr. 02, 2017 | |
Equity [Abstract] | |
Schedule of Share Repurchase Programs Authorized by Board and Related Repurchase Activity and Available Authorized | The following table outlines the share repurchase programs authorized by the Board, and the related repurchase activity and available authorization as of April 2, 2017. Effective date Expiration date Amount authorized Cost of repurchases Authorization available November 4, 2015 November 4, 2017 $ 150,000 $ 150,000 $ — September 6, 2016 December 31, 2017 $ 250,000 $ 250,000 $ — February 20, 2017 December 31, 2018 $ 250,000 $ — $ 250,000 |
Schedule of Share Repurchase Activity under Share Repurchase Programs | Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows: Thirteen Weeks Ended April 2, 2017 April 3, 2016 Number of common shares acquired 4,099,936 2,431,721 Average price per common share acquired $ 19.51 $ 24.39 Total cost of common shares acquired $ 80,000 $ 59,308 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 02, 2017 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of Numerators and Denominators of Basic and Diluted Net Income Per Share | A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share amounts): Thirteen Weeks Ended April 2, 2017 April 3, 2016 Basic net income per share: Net income $ 46,287 $ 46,207 Weighted average shares outstanding 137,069 150,723 Basic net income per share $ 0.34 $ 0.31 Diluted net income per share: Net income $ 46,287 $ 46,207 Weighted average shares outstanding - basic 137,069 150,723 Dilutive effect of equity-based awards: Assumed exercise of options to purchase shares 2,962 2,350 RSUs 62 49 RSAs 19 — PSAs 35 22 Weighted average shares and equivalent shares outstanding 140,147 153,144 Diluted net income per share $ 0.33 $ 0.30 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Apr. 02, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock-Based Compensation Awards Granted | During the thirteen weeks ended April 2, 2017, the Company granted the following stock-based compensation awards: Grant Date RSUs PSAs RSAs March 3, 2017 323,687 148,944 288,746 March 27, 2017 1,719 — — Total: 325,406 148,944 288,746 Weighted-average grant date fair value $ 18.13 $ 18.11 $ 18.11 Weighted-average exercise price — — — |
Summary of Equity-Based Compensation Expense | Equity-based Compensation Expense Equity-based compensation expense was reflected in the consolidated statements of operations as follows: Thirteen Weeks Ended April 2, 2017 April 3, 2016 Cost of sales, buying and occupancy $ 246 $ 218 Direct store expenses 361 317 Selling, general and administrative expenses 1,839 2,121 Equity-based compensation expense before income taxes 2,446 2,656 Income tax benefit (915 ) (1,009 ) Net equity-based compensation expense $ 1,531 $ 1,647 |
Summary of Outstanding Equity-Based Awards | The following equity-based awards were outstanding as of April 2, 2017 and January 1, 2017: As of April 2, 2017 January 1, 2017 (in thousands) Options Vested 5,077 5,552 Unvested 916 1,205 RSUs 471 274 PSAs 232 159 RSAs 445 187 |
Summary of Total Unrecognized Compensation Expense Related to Outstanding Equity-Based Awards | As of April 2, 2017, total unrecognized compensation expense related to outstanding equity-based awards was as follows: As of April 2, 2017 Options $ 5,935 RSUs 9,156 PSAs 2,831 RSAs 8,239 Total unrecognized compensation expense $ 26,161 |
Summary of Total Remaining Weighted Average Recognition Period Related to Outstanding Equity-Based Awards | As of April 2, 2017, the total remaining weighted average recognition period related to outstanding equity-based awards was as follows: As of April 2, 2017 Options 1.4 RSUs 2.1 PSAs 2.2 RSAs 2.3 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) | 3 Months Ended |
Apr. 02, 2017Segment | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of reportable segment | 1 |
Number of operating segment | 1 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2017 | Jan. 01, 2017 | |
Debt Instrument [Line Items] | ||
Total debt | $ 285,000 | $ 255,000 |
Long-term debt | 285,000 | 255,000 |
Senior Lien [Member] | Secured Debt [Member] | $450.0 million Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 285,000 | $ 255,000 |
Debt instrument maturity | Apr. 17, 2020 | |
Debt instrument, Interest Rate | Variable |
Long-Term Debt - Summary of L26
Long-Term Debt - Summary of Long-Term Debt (Parenthetical) (Detail) | Apr. 02, 2017USD ($) |
Senior Lien [Member] | Secured Debt [Member] | $450.0 million Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Debt instrument face amount | $ 450,000,000 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Apr. 02, 2017 | Jan. 01, 2017 | Sep. 06, 2016 | Apr. 17, 2015 | |
Debt Instrument [Line Items] | ||||
Participation fee | 1.50% | |||
Issuance fee | 0.125% | |||
Credit facility termination date | Apr. 17, 2020 | |||
Borrowings under credit facilities | $ 285,000,000 | $ 255,000,000 | ||
Principal payments on the Credit Facility | 30,000,000 | |||
Borrowings during the period | $ 60,000,000 | 105,000,000 | ||
Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Net leverage ratio | 300.00% | |||
Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest coverage ratio | 175.00% | |||
September 6, 2016 Share Repurchase Program [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal payments on the Credit Facility | 10,000,000 | |||
Shares authorized to be repurchased | $ 250,000,000 | $ 250,000,000 | $ 250,000,000 | |
Senior Lien [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Letters of credit issued | $ 24,800,000 | |||
Line of credit interest rate terms | Either at adjusted LIBOR plus 1.50% per annum, or a base rate plus 0.25% per annum. The interest rate margins are subject to adjustment pursuant to a pricing grid based on the Company’s total gross leverage ratio, as defined in the Credit Facility. | |||
Credit facility unused commitment fee percentage | 0.20% | |||
Senior Lien [Member] | Secured Debt [Member] | LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate spread on base rate | 1.50% | |||
Senior Lien [Member] | Secured Debt [Member] | Alternate Base Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate spread on base rate | 0.25% | |||
Senior Lien [Member] | Secured Debt [Member] | Swingline Loan Subfacility [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 15,000,000 | |||
Senior Lien [Member] | Secured Debt [Member] | $450.0 million Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Credit facility maximum borrowing capacity | $ 450,000,000 | |||
Capitalized total debt issuance costs | 2,300,000 | |||
Debt instrument face amount | $ 450,000,000 |
Closed Store Reserves - Summary
Closed Store Reserves - Summary of Closed Store Reserve Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 02, 2017 | Jan. 01, 2017 | |
Restructuring And Related Activities [Abstract] | ||
Beginning balance | $ 1,083 | $ 2,017 |
Usage | (133) | (998) |
Adjustments | 125 | 64 |
Ending balance | $ 1,075 | $ 1,083 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Income Tax Contingency [Line Items] | ||
Effective tax rate | 31.80% | 37.80% |
Excess tax benefits resulting from stock awards | $ 3.8 | |
Additional Paid-in Capital [Member] | ||
Income Tax Contingency [Line Items] | ||
Excess tax benefits resulting from stock awards | $ 3.6 |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Coffee Supplier [Member] | ||
Related Party Transaction [Line Items] | ||
Purchases from board member | $ 2.9 | $ 2.5 |
Accounts payable to supplier | 0.9 | 0.8 |
Technology Supplier [Member] | ||
Related Party Transaction [Line Items] | ||
Purchases from board member | 1.5 | 1.3 |
Accounts payable to supplier | $ 0.3 | $ 0.2 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) | Apr. 02, 2017 | Feb. 20, 2017 | Jan. 01, 2017 | Sep. 06, 2016 | Nov. 04, 2015 |
November 4, 2015 Share Repurchase Program [Member] | |||||
Equity Class Of Treasury Stock [Line Items] | |||||
Shares authorized to be repurchased | $ 150,000,000 | $ 150,000,000 | |||
September 6, 2016 Share Repurchase Program [Member] | |||||
Equity Class Of Treasury Stock [Line Items] | |||||
Shares authorized to be repurchased | 250,000,000 | $ 250,000,000 | $ 250,000,000 | ||
February 20, 2017 Share Repurchase Program [Member] | |||||
Equity Class Of Treasury Stock [Line Items] | |||||
Shares authorized to be repurchased | $ 250,000,000 | $ 250,000,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Share Repurchase Programs Authorized by Board and Related Repurchase Activity and Available Authorized (Detail) - USD ($) | 3 Months Ended | |||||
Apr. 02, 2017 | Apr. 03, 2016 | Feb. 20, 2017 | Jan. 01, 2017 | Sep. 06, 2016 | Nov. 04, 2015 | |
Equity Class Of Treasury Stock [Line Items] | ||||||
Cost of repurchases | $ 80,000,000 | $ 59,308,000 | ||||
November 4, 2015 [Member] | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Effective date | Nov. 4, 2015 | |||||
Expiration date | Nov. 4, 2017 | |||||
Amount authorized | $ 150,000,000 | $ 150,000,000 | ||||
Cost of repurchases | $ 150,000,000 | |||||
September 6, 2016 [Member] | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Effective date | Sep. 6, 2016 | |||||
Expiration date | Dec. 31, 2017 | |||||
Amount authorized | $ 250,000,000 | $ 250,000,000 | $ 250,000,000 | |||
Cost of repurchases | $ 250,000,000 | |||||
February 20, 2017 [Member] | ||||||
Equity Class Of Treasury Stock [Line Items] | ||||||
Effective date | Feb. 20, 2017 | |||||
Expiration date | Dec. 31, 2018 | |||||
Amount authorized | $ 250,000,000 | $ 250,000,000 | ||||
Authorization available | $ 250,000,000 |
Stockholders' Equity - Schedu33
Stockholders' Equity - Schedule of Share Repurchase Activity under Share Repurchase Programs (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | Jan. 01, 2017 | |
Equity [Abstract] | |||
Number of common shares acquired | 4,099,936 | 2,431,721 | |
Average price per common share acquired | $ 19.51 | $ 24.39 | |
Total cost of common shares acquired | $ 80,000 | $ 59,308 | $ 294,265 |
Net Income Per Share - Summary
Net Income Per Share - Summary of Reconciliation of Numerators and Denominators of Basic and Diluted Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | Jan. 01, 2017 | |
Basic net income per share: | |||
Net income | $ 46,287 | $ 46,207 | $ 124,306 |
Weighted average shares outstanding - basic | 137,069 | 150,723 | |
Basic net income per share | $ 0.34 | $ 0.31 | |
Diluted net income per share: | |||
Net income | $ 46,287 | $ 46,207 | $ 124,306 |
Weighted average shares outstanding - basic | 137,069 | 150,723 | |
Dilutive effect of equity-based awards: | |||
Assumed exercise of options to purchase shares | 2,962 | 2,350 | |
Weighted average shares and equivalent shares outstanding | 140,147 | 153,144 | |
Diluted net income per share | $ 0.33 | $ 0.30 | |
RSUs [Member] | |||
Dilutive effect of equity-based awards: | |||
Dilutive effect | 62 | 49 | |
RSAs [Member] | |||
Dilutive effect of equity-based awards: | |||
Dilutive effect | 19 | ||
PSAs [Member] | |||
Dilutive effect of equity-based awards: | |||
Dilutive effect | 35 | 22 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Stock option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 2.6 | 0.9 |
RSUs [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 0.2 | |
Performance Stock Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities | 0.1 | 0.1 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Detail) - USD ($) | May 23, 2016 | Aug. 31, 2015 | Apr. 02, 2017 | Apr. 03, 2016 | Jan. 01, 2017 | Jan. 03, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total equity-based compensation expense | $ 2,446,000 | $ 2,656,000 | ||||
Proceeds from exercise of stock options | $ 2,292,000 | 1,933,000 | ||||
RSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of awards issued | 325,406 | |||||
RSUs [Member] | Minimum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards vesting period | 2 years | |||||
RSUs [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards vesting period | 3 years | |||||
Performance Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock awards vesting description | During the thirteen weeks ended April 3, 2016, the performance conditions with respect to 2015 earnings per share were deemed to have been met, and the PSAs will vest 50 percent at each of the second and third anniversary of the grant date. During the thirteen weeks ended April 2, 2017, 21,050 of the 2015 PSAs were vested. No PSAs vested during the thirteen weeks ended April 3, 2016. | |||||
Total grant date fair value vested | $ 21,050 | $ 0 | ||||
Performance stock awards description | Payout of the performance shares will either be 0% or range from 50% to 150% of the target number of shares granted. | |||||
Grant date fair value not earned | 30,981 | |||||
Number of awards issued | 148,944 | |||||
RSAs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards vesting period | 1 year 9 months | |||||
Number of awards issued | 288,746 | |||||
Second Anniversary [Member] | Stock option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards vesting period | 3 years | |||||
Second Anniversary [Member] | Performance Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance stock awards vesting percentage | 50.00% | 50.00% | ||||
Third Anniversary [Member] | Stock option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Awards vesting period | 3 years | |||||
Third Anniversary [Member] | Performance Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance stock awards vesting percentage | 50.00% | 50.00% | ||||
Option One [Member] | Performance Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance stock awards payout percentage of shares granted | 0.00% | |||||
Option Two [Member] | Performance Stock Awards [Member] | Minimum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance stock awards payout percentage of shares granted | 50.00% | |||||
Option Two [Member] | Performance Stock Awards [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance stock awards payout percentage of shares granted | 150.00% | |||||
2013 Incentive Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized for issuance under plan | 10,089,072 | |||||
Options outstanding | 4,041,123 | |||||
Remaining shares available for issuance | 5,642,235 | |||||
Total equity-based compensation expense | $ 1,000,000 | |||||
2013 Incentive Plan [Member] | Chief Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options, Granted | 386,496 | 1,200,000 | ||||
Stock options awarded to employees, exercise price | $ 24.48 | $ 20.98 | ||||
Excess stock options granted | 733,439 | |||||
2013 Incentive Plan [Member] | President & Chief Operating Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options, Granted | 33,439 | 500,000 | ||||
Stock options awarded to employees, exercise price | $ 24.48 | $ 20.98 | ||||
Excess stock options granted | 33,439 | |||||
2013 Incentive Plan [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of options, Granted | 500,000 | |||||
2013 Incentive Plan [Member] | RSAs [Member] | Chief Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of awards issued | 215,251 | |||||
2013 Incentive Plan [Member] | RSAs [Member] | President & Chief Operating Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of awards issued | 2,601 | |||||
2011 Option Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized for issuance under plan | 12,100,000 | |||||
Options outstanding | 3,100,099 |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Stock-Based Compensation Awards Granted (Detail) | 3 Months Ended |
Apr. 02, 2017$ / sharesshares | |
RSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 325,406 |
Weighted-average grant date fair value | $ / shares | $ 18.13 |
RSUs [Member] | March 3, 2017 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 323,687 |
RSUs [Member] | March 27, 2017 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 1,719 |
Performance Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 148,944 |
Weighted-average grant date fair value | $ / shares | $ 18.11 |
Performance Stock Awards [Member] | March 3, 2017 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 148,944 |
RSAs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 288,746 |
Weighted-average grant date fair value | $ / shares | $ 18.11 |
RSAs [Member] | March 3, 2017 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of other than options, Granted | 288,746 |
Equity-Based Compensation - S38
Equity-Based Compensation - Summary of Equity-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2017 | Apr. 03, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense before income taxes | $ 2,446 | $ 2,656 |
Income tax benefit | (915) | (1,009) |
Net equity-based compensation expense | 1,531 | 1,647 |
Cost of Sales, Buying and Occupancy [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense before income taxes | 246 | 218 |
Direct Store Expenses [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense before income taxes | 361 | 317 |
Selling, General and Administrative Expenses [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense before income taxes | $ 1,839 | $ 2,121 |
Equity-Based Compensation - S39
Equity-Based Compensation - Summary of Outstanding Equity-Based Awards (Detail) - shares shares in Thousands | Apr. 02, 2017 | Jan. 01, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vested options, outstanding | 5,077 | 5,552 |
Unvested options, outstanding | 916 | 1,205 |
RSUs [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based awards other than options, outstanding | 471 | 274 |
PSAs [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based awards other than options, outstanding | 232 | 159 |
RSAs [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based awards other than options, outstanding | 445 | 187 |
Equity-Based Compensation - S40
Equity-Based Compensation - Summary of Total Unrecognized Compensation Expense Related to Outstanding Equity-Based Awards (Detail) $ in Thousands | Apr. 02, 2017USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense related to outstanding options | $ 5,935 |
Total unrecognized compensation expense | 26,161 |
RSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense related to outstanding equity-based awards other than options | 9,156 |
Performance Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense related to outstanding equity-based awards other than options | 2,831 |
RSAs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense related to outstanding equity-based awards other than options | $ 8,239 |
Equity-Based Compensation - S41
Equity-Based Compensation - Summary of Total Remaining Weighted Average Recognition Period Related to Outstanding Equity-Based Awards (Detail) | 3 Months Ended |
Apr. 02, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining weighted average recognition period related to outstanding equity-based awards | 1 year 4 months 24 days |
RSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining weighted average recognition period related to outstanding equity-based awards | 2 years 1 month 6 days |
PSAs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining weighted average recognition period related to outstanding equity-based awards | 2 years 2 months 12 days |
RSAs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Remaining weighted average recognition period related to outstanding equity-based awards | 2 years 3 months 18 days |