SPROUTS FARMERS MARKET, INC., 10-K filed on 2/22/2024
Annual Report
v3.24.0.1
Document and Entity Information - USD ($)
 12 Months Ended
Dec. 31, 2023
Feb. 20, 2024
Jun. 30, 2023
Cover [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2023    
Document Fiscal Year Focus 2023    
Document Fiscal Period Focus FY    
Trading Symbol SFM    
Entity Registrant Name Sprouts Farmers Market, Inc.    
Entity Central Index Key 0001575515    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Common Stock, Shares Outstanding   101,211,984  
Entity Public Float     $ 3,732,015,340
Document Financial Statement Error Correction [Flag] false    
Title of 12(b) Security Common Stock, $0.001 par value    
Security Exchange Name NASDAQ    
Entity Interactive Data Current Yes    
Entity File Number 001-36029    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 32-0331600    
Entity Address, Address Line One 5455 East High Street    
Entity Address, Address Line Two Suite 111    
Entity Address, City or Town Phoenix    
Entity Address, State or Province AZ    
Entity Address, Postal Zip Code 85054    
City Area Code 480    
Local Phone Number 814-8016    
Document Annual Report true    
Document Transition Report false    
ICFR Auditor Attestation Flag true    
Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement for its 2024 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K where indicated. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2023.

    
Auditor Name PricewaterhouseCoopers LLP    
Auditor Location Phoenix, Arizona    
Auditor Firm ID 238    
v3.24.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Current assets:    
Cash and cash equivalents $ 201,794 $ 293,233
Accounts receivable, net 30,313 16,108
Inventories 323,198 310,545
Prepaid expenses and other current assets 48,467 53,918
Total current assets 603,772 673,804
Property and equipment, net of accumulated depreciation 798,707 722,241
Operating lease assets, net 1,322,854 1,106,524
Intangible assets 208,060 184,960
Goodwill 381,741 368,878
Other assets 12,294 13,973
Total assets 3,327,428 3,070,380
Current liabilities:    
Accounts payable 179,927 172,904
Accrued liabilities 164,887 151,306
Accrued salaries and benefits 74,752 61,574
Current portion of operating lease liabilities 126,271 [1],[2] 135,584
Current portion of finance lease liabilities 1,032 1,012
Total current liabilities 546,869 522,380
Long-term operating lease liabilities 1,399,676 [1],[2] 1,145,173
Long-term debt and finance lease liabilities 133,685 258,902
Other long-term liabilities 36,270 36,340
Deferred income tax liability 62,381 61,123
Total liabilities 2,178,881 2,023,918
Commitments and contingencies (Note 19)
Stockholders’ equity:    
Undesignated preferred stock; $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding 0 0
Common stock, $0.001 par value; 200,000,000 shares authorized, 101,211,984 shares issued and outstanding, December 31, 2023; 105,072,756 shares issued and outstanding, January 1, 2023 101 105
Additional paid-in capital 774,834 726,345
Retained earnings 373,612 320,012
Total stockholders’ equity 1,148,547 1,046,462
Total liabilities and stockholders’ equity $ 3,327,428 $ 3,070,380
[1] Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.
[2] These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2023
Jan. 01, 2023
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 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 101,211,984 105,072,756
Common stock, shares outstanding 101,211,984 105,072,756
v3.24.0.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Income Statement [Abstract]      
Net sales $ 6,837,384 $ 6,404,223 $ 6,099,869
Cost of sales 4,315,543 4,055,659 3,890,657
Gross profit 2,521,841 2,348,564 2,209,212
Selling, general and administrative expenses 2,000,437 1,855,649 1,748,205
Depreciation and amortization (exclusive of depreciation included in cost of sales) 131,893 123,530 122,258
Store closure and other costs, net 39,280 11,025 4,673
Income from operations 350,231 358,360 334,076
Interest expense, net 6,491 9,047 11,684
Income before income taxes 343,740 349,313 322,392
Income tax provision 84,884 88,149 78,235
Net income $ 258,856 $ 261,164 $ 244,157
Net income per share:      
Basic $ 2.53 $ 2.41 $ 2.12
Diluted $ 2.5 $ 2.39 $ 2.1
Weighted average shares outstanding:      
Basic 102,479 108,232 115,377
Diluted 103,390 109,139 116,077
v3.24.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Statement of Comprehensive Income [Abstract]      
Net Income (Loss) $ 258,856 $ 261,164 $ 244,157
Other comprehensive income, net of tax      
Unrealized gains on cash flow hedging activities, net of income tax of $1,819, $3,116 in fiscal 2022 and fiscal 2021 0 5,259 9,009
Reclassification of net losses on cash flow hedges to net income, net of income tax of ($520) and ($1,485) in fiscal 2022 and fiscal 2021 0 (1,501) (4,293)
Total other comprehensive income 0 3,758 4,716
Comprehensive income $ 258,856 $ 264,922 $ 248,873
v3.24.0.1
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Thousands
 12 Months Ended
Jan. 01, 2023
Jan. 02, 2022
Statement of Comprehensive Income [Abstract]    
Income tax expenses (Benefit) on cash flow hedging activities $ 1,819 $ 3,116
Income tax expenses (Benefit) for reclassification of net gains (losses) on cash flow hedges $ (520) $ 1,485
v3.24.0.1
Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid In Capital [Member]
(Accumulated Deficit) Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Jan. 03, 2021 $ 881,293 $ 118 $ 686,648 $ 203,001 $ (8,474)
Beginning Balance, Shares at Jan. 03, 2021   117,953,435      
Net Income (Loss) 244,157     244,157  
Other comprehensive income (loss) 4,716       4,716
Issuance of shares under stock plans $ 2,170   2,170    
Issuance of shares under stock plans, Shares 115,123 577,296      
Repurchase and retirement of common stock, including excise tax $ (188,343) $ (7)   (188,336)  
Repurchase and retirement of common stock, including excise tax, Shares   (7,416,357)      
Share-based compensation 15,883   15,883    
Stock Issued During Period, Value, Acquisitions 0        
Ending Balance at Jan. 02, 2022 959,876 $ 111 704,701 258,822 (3,758)
Ending Balance, Shares at Jan. 02, 2022   111,114,374      
Net Income (Loss) 261,164     261,164  
Other comprehensive income (loss) 3,758       3,758
Issuance of shares under stock plans $ 5,041   5,041    
Issuance of shares under stock plans, Shares 218,509 855,464      
Repurchase and retirement of common stock, including excise tax $ (199,980) $ (6)   (199,974)  
Repurchase and retirement of common stock, including excise tax, Shares (6,897,082) (6,897,082)      
Share-based compensation $ 16,603   16,603    
Stock Issued During Period, Value, Acquisitions 0        
Ending Balance at Jan. 01, 2023 1,046,462 $ 105 726,345 320,012 0
Ending Balance, Shares at Jan. 01, 2023   105,072,756      
Net Income (Loss) 258,856     258,856 0
Other comprehensive income (loss) 0        
Issuance of shares under stock plans $ 11,454 $ 1 11,453    
Issuance of shares under stock plans, Shares 637,387 1,449,116      
Repurchase and retirement of common stock, including excise tax $ (205,262) $ (6)   (205,256)  
Repurchase and retirement of common stock, including excise tax, Shares (5,864,246) (5,864,246)      
Share-based compensation $ 18,898   18,898    
Stock Issued During Period, Value, Acquisitions 18,139 $ 1 18,138    
Stock Issued During Period, Shares, Acquisitions   554,358      
Ending Balance at Dec. 31, 2023 $ 1,148,547 $ 101 $ 774,834 $ 373,612 $ 0
Ending Balance, Shares at Dec. 31, 2023   101,211,984      
v3.24.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Operating activities      
Net income $ 258,856 $ 261,164 $ 244,157
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense 137,811 127,067 125,541
Operating lease asset amortization 127,208 117,315 108,517
Impairment of assets 30,549 8,066 4,762
Share-based compensation 18,898 16,603 15,883
Deferred income taxes (4,915) 3,228 (178)
Other non-cash items 1,086 672 1,167
Changes in operating assets and liabilities, net of effects from acquisition:      
Accounts receivable 3,173 13,381 16,928
Inventories (10,857) (45,158) (11,417)
Prepaid expenses and other current assets 2,210 (18,467) (5,879)
Other assets 3,482 2,039 (1,782)
Accounts payable 12,215 13,362 4,523
Accrued liabilities 11,746 5,416 610
Accrued salaries and benefits 12,880 2,831 (17,951)
Operating lease liabilities (138,795) (132,889) (120,483)
Other long-term liabilities (479) (3,301) 401
Cash flows from operating activities 465,068 371,329 364,799
Investing activities      
Purchases of property and equipment (225,310) (124,010) (102,378)
Payments for acquisition, net of cash acquired (13,032) 0 0
Cash flows used in investing activities (238,342) (124,010) (102,378)
Financing activities      
Proceeds from revolving credit facilities 0 62,500 0
Payments on revolving credit facilities (125,000) (62,500) 0
Payments on finance lease liabilities (1,006) (819) (685)
Payments of deferred financing costs 0 (3,373) 0
Repurchase of common stock (203,496) (199,980) (188,343)
Proceeds from exercise of stock options 11,454 5,041 2,170
Cash flows used in financing activities (318,048) (199,131) (186,858)
(Decrease)/Increase in cash, cash equivalents, and restricted cash (91,322) 48,188 75,563
Cash, cash equivalents, and restricted cash at beginning of the period 295,192 247,004 171,441
Cash, cash equivalents, and restricted cash at the end of the period 203,870 295,192 247,004
Supplemental disclosure of cash flow information      
Cash paid for interest 12,561 11,132 11,431
Cash paid for income taxes 96,633 93,419 82,888
Supplemental disclosure of non-cash investing and financing activities      
Property and equipment in accounts payable and accrued liabilities 29,592 36,177 25,166
Issuance of shares for acquisition 18,139 0 0
Excise tax accrued on repurchase of common stock 1,766 0 0
Leased assets obtained in exchange for new operating lease liabilities 364,997 157,269 139,349
Leased assets obtained in exchange for new operating lease liabilities $ 809 $ 0 $ 0
v3.24.0.1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Pay vs Performance Disclosure      
Net Income (Loss) $ 258,856 $ 261,164 $ 244,157
v3.24.0.1
Insider Trading Arrangements
 12 Months Ended
Dec. 31, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
v3.24.0.1
Organization and Description of Business
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Organization and Description of Business

1. Organization and Description of Business

Sprouts Farmers Market, Inc., a Delaware corporation, through its subsidiaries, offers a unique specialty grocery experience featuring an open layout with fresh produce at the heart of the store. The Company continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. As of December 31, 2023, the Company operated 407 stores in 23 states. For convenience, the “Company” is used to refer collectively to Sprouts Farmers Market, Inc. and, unless the context requires otherwise, its subsidiaries. The Company’s store operations are conducted by its subsidiaries.

v3.24.0.1
Basis of Presentation
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

2. Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All material intercompany accounts and transactions have been eliminated in consolidation.

The Company has one operating segment, and therefore, one reportable segment: healthy grocery stores.

The Company categorizes the varieties of products it sells as perishable and non-perishable. Perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives. Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

The following is a breakdown of the Company’s perishable and non-perishable sales mix:

 

 

2023

 

 

2022

 

 

2021

 

Perishables

 

 

57.3

%

 

 

58.0

%

 

 

57.7

%

Non-Perishables

 

 

42.7

%

 

 

42.0

%

 

 

42.3

%

 

All dollar amounts are in thousands, unless otherwise indicated.
v3.24.0.1
Significant Accounting Policies
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Significant Accounting Policies

3. Significant Accounting Policies

Fiscal Years

The Company reports its results of operations on a 52- or 53-week fiscal calendar ending on the Sunday closest to December 31. Fiscal year 2023 ended on December 31, 2023 and included 52 weeks. Fiscal year 2022 ended on January 1, 2023 and included 52 weeks. Fiscal year 2021 ended on January 2, 2022 and included 52 weeks. Fiscal years 2023, 2022 and 2021 are referred to as 2023, 2022 and 2021, respectively.

Significant Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting estimates include inventories, lease assumptions, self-insurance reserves, goodwill and intangible assets, impairment of long-lived assets, and income taxes. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits in transit include sales through the end of the period, the majority of which were paid with credit and debit cards and settle within a few days of the sales transactions. The amounts due from banks for these transactions at each reporting date were as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Due from banks for debit and credit card transactions

 

$

85,116

 

 

$

77,665

 

 

Restricted Cash

Restricted cash relates to the Company’s defined benefit plan forfeitures and the Company’s healthcare, general liability and workers’ compensation plan benefits of approximately $2.1 million and $2.0 million as of December 31, 2023 and January 1, 2023, respectively, and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

 

Accounts Receivable

Accounts receivable primarily represents billings to vendors for scan, advertising and other rebates, receivables from ecommerce partners, billings to landlords for tenant allowances and receivables for manufacturer coupons. Accounts receivable also includes receivables from the Company’s insurance carrier for payments expected to be made in excess of self-insured retentions. The Company provides an allowance for doubtful accounts when a specific account is determined to be uncollectible.

Inventories

Inventories consist of merchandise purchased for resale, which are stated at the lower of cost or net realizable value. The cost method is used for distribution center and store perishable department inventories by assigning costs to each of these items based on a first-in, first-out (FIFO) basis (net of vendor discounts).

The Company’s non-perishable inventory is valued at the lower of cost or net realizable value using weighted averaging, the use of which approximates the FIFO method.

Inventories are reduced for estimated losses related to shrinkage. The Company believes that all inventories are saleable and no allowances or reserves for obsolescence were recorded as of December 31, 2023 and January 1, 2023.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for major additions and improvements to facilities as well as significant component replacements are capitalized. All other maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of income. Depreciation expense, which includes the amortization of assets recorded as finance leases, is computed using the straight-line method over the estimated useful lives of the individual assets. Terms of leases used in the determination of estimated useful lives may include renewal options if the exercise of the renewal option is determined to be reasonably certain.

The following table includes the estimated useful lives of certain of the Company’s asset classes:

Computer hardware and software

 

3 to 5 years

Furniture, fixtures and equipment

 

7 to 20 years

Leasehold improvements

 

up to 15 years

Buildings

 

40 years

 

Store development costs, which include costs associated with the selection and procurement of real estate sites, are also included in property and equipment. These costs are included in leasehold improvements and are amortized over the remaining lease term of the successful sites with which they are associated.

 

Self-Insurance Reserves

The Company uses a combination of insurance and self-insurance programs to provide for costs associated with general liability, workers’ compensation and team member health benefits. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. The Company utilizes various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. Amounts expected to be recovered from insurance companies are included in the liability, with a corresponding amount recorded in accounts receivable.

Goodwill and Intangible Assets

Goodwill represents the cost of acquired businesses in excess of the fair value of assets and liabilities acquired. The Company’s indefinite-lived intangible assets consist of trade names related to “Sprouts Farmers Market,” liquor licenses and reacquired rights recognized in connection with the acquisition of Ronald Cohn, Inc. in 2023. See Note 28, “Business Combination” for more information on this acquisition.

Goodwill and indefinite-lived intangible assets are evaluated for impairment on an annual basis during the fourth fiscal quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company’s impairment evaluation of goodwill consists of a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company’s qualitative assessment considered factors including changes in the competitive market, budget-to-actual performance, trends in market capitalization for the Company and its peers, turnover in key management personnel and overall changes in the macroeconomic environment. If this qualitative assessment indicates it is more likely than not that the estimated fair value of the reporting unit exceeds its carrying value, no further analysis is required, and goodwill is not impaired. Otherwise, the Company compares the estimated fair value of the reporting unit to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value.

The impairment evaluation for the Company’s indefinite-lived intangible assets consists of a qualitative assessment, similar to that for goodwill. If the qualitative assessment indicates it is more likely than not that the estimated fair value exceeds its carrying value, no further analysis is required, and the asset is not impaired. Otherwise, the Company compares the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value.

The Company has determined its business consists of a single reporting unit. The Company has had no goodwill impairment charges for the past three fiscal years. See Note 8, “Intangible Assets” and Note 9, “Goodwill” for further discussion.

 

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property and equipment and right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. These events primarily include current period losses combined with a history of losses or a projection of continuing losses, a significant decrease in the market value of an asset or a decision to close or relocate a store. The Company groups and evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which independent identifiable cash flows are available. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the future undiscounted cash flows expected to be generated by that asset group. The Company’s impairment analysis contains management assumptions about key variables including sales growth rate, gross margin, payroll and other controllable expenses.

If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset group. The fair value of the asset group is estimated based on the discounted future cash flows using a discount rate commensurate with the related risk or comparable market values, if available. The Company recorded an impairment loss of $30.5 million in 2023, of which $27.8 million was in connection with the decision to close certain underperforming stores (see Note 27, "Store Closures") and $2.7 million was in the normal course of business primarily related to the write-down of right-of-use assets and leasehold improvements. The Company recorded an impairment loss of $8.1 million and $4.8 million in 2022 and 2021, respectively, as part of the normal course of business primarily related to the write-down of right-of-use assets and leasehold improvements. These charges are recorded as a component of Store closure and other costs, net in the accompanying consolidated statements of income.

Deferred Financing Costs

The Company capitalizes certain fees and costs incurred in connection with the issuance of debt. Deferred financing costs are amortized to interest expense over the term of the debt using the effective interest method. For the Credit Agreement and Former Credit Facility (as defined in Note 13, “Long-Term Debt and Finance Lease Liabilities”), deferred financing costs are amortized on a straight-line basis over the term of the facility. Upon prepayment, redemption or conversion of debt, the Company accelerates the recognition of an appropriate amount of financing costs as loss on extinguishment of debt. The current and noncurrent portions of deferred financing costs are included in prepaid expenses and other current assets and other assets, respectively, in the accompanying consolidated balance sheets.

Leases

The Company leases its stores, distribution centers, and administrative offices. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets, current portion of operating lease liabilities and noncurrent portion of operating lease liabilities in the accompanying consolidated balance sheets. Finance leases are included in property, plant, equipment, net, current portion of finance lease liabilities, and long-term debt and finance lease liabilities in the accompanying consolidated balance sheets. Operating lease payments are charged on a straight-line basis to rent expense, a component of selling, general and administrative expenses, over the lease term and finance lease payments are charged to interest expense and depreciation and amortization expense using a debt model over the lease term.

The Company’s lease assets represent a right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities and the related rent expense are recognized at the lease commencement date (date on which the Company gains access to the property) based on the estimated present value of lease payments over the lease term, net of landlord allowances expected to be received. The Company accounts for the lease and non-lease components as a single lease component for all current classes of leases.

Most of the Company’s lease agreements include variable payments related to pass-through costs for common area maintenance ("CAM"), property taxes, and insurance. Additionally, some of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels. These variable payments are not included in the measurement of the lease liability or asset and are expensed as incurred.

As most of the Company’s lease agreements do not provide an implicit rate, the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to twenty years or more. The exercise of lease renewal options is at the Company’s sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less (“short-term leases”) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. Additionally, the Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

The Company subleases certain real estate to third parties, which have all been classified as operating leases. The Company recognizes sublease income on a straight-line basis.

Fair Value Measurements

The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with ASC 820. This framework establishes a three-level 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, intangible assets, and long-lived assets. Impairment losses related to store-level assets are calculated using significant unobservable inputs including the present value of future cash flows expected to be generated using a risk-adjusted market based weighted-average cost of capital, comparable store sales growth assumptions, and third party property appraisal data. Therefore, these inputs are classified as a level 3 measurement in the fair value hierarchy.

Derivative Financial Instruments

The Company records derivatives at fair value. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how the Company reflects the change in fair value of the derivative instrument in its financial statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the underlying hedged cash flows, and the Company fulfills the hedge documentation standards at the time it enters into the derivative contract. The Company designates its hedge based on the exposure it is hedging. For qualifying cash flow hedges, the Company records changes in fair value in other comprehensive income (“OCI”). The Company releases the derivative’s gain or loss from OCI to match the timing of the underlying hedged item’s effect on earnings.

The Company reviews the effectiveness of its hedging instruments quarterly. The Company recognizes changes in the fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. The Company discontinues hedge accounting for any hedge that is no longer evaluated to be highly effective.

The Company does not enter into derivative financial instruments for trading or speculative purposes, and it monitors the financial stability and credit standing of its counterparties in these transactions. The Company had no active derivative financial instruments as of December 31, 2023 or January 1, 2023.

Share-Based Compensation

The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes share-based compensation cost as expense over the vesting period. As share-based compensation expense recognized in the consolidated statements of income is based on awards ultimately expected to vest, the amount of expense has been reduced for actual forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value for each option grant. See Note 26, “Share-Based Compensation” for a discussion of assumptions used in the calculation of fair values. Application of alternative assumptions could produce different estimates of the fair value of share-based compensation and, consequently, the related amounts recognized in the accompanying consolidated statements of income. The grant date fair value of restricted stock units (“RSUs”) and performance share awards (“PSAs”) is based on the closing price per share of the Company’s common stock on the grant date. The Company recognizes compensation expense for time-based awards on a straight-line basis and for performance-based awards on the graded-vesting method over the vesting period of the awards.

Revenue Recognition

The Company’s performance obligations are satisfied upon the transfer of goods to the customer, which occurs at the point of sale, and payment from customers is also due at the time of sale. Proceeds from the sale of gift cards are recorded as a liability at the time of sale and recognized as sales when they are redeemed by the customer and the performance obligation is satisfied by the Company. The Company’s gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions and was not material in any period presented. A summary of the activity and balances in the gift card liability, net is as follows:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning Balance

 

$

10,906

 

 

$

12,586

 

 

$

15,888

 

Gift cards issued during the period but not redeemed(1)

 

 

4,271

 

 

 

4,291

 

 

 

5,711

 

Revenue recognized from beginning liability

 

 

(4,611

)

 

 

(5,971

)

 

 

(9,013

)

Ending Balance

 

$

10,566

 

 

$

10,906

 

 

$

12,586

 

(1) net of estimated breakage

 

The nature of goods the Company transfers to customers at the point of sale are inventories, consisting of merchandise purchased for resale.

The Company does not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current period from performance obligations satisfied in previous periods, any contract performance obligations, or any material costs to obtain or fulfill a contract as of December 31, 2023.

Cost of Sales

Cost of sales includes the cost of inventory sold during the period, including the direct costs of purchased merchandise (net of discounts and allowances), distribution and supply chain costs, and depreciation and amortization for distribution centers and supply chain related assets. The Company recognizes vendor allowances and merchandise volume related rebate allowances as a reduction of inventories during the period when earned and reflects the allowances as a component of cost of sales as the inventory is sold.

The Company’s largest supplier accounted for approximately 47%, 45% and 44% of total purchases during 2023, 2022 and 2021, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of salaries, wages and benefits costs, share-based compensation, occupancy costs (including rent, property taxes, utilities, CAM and insurance), advertising costs, buying costs, pre-opening and other administrative costs.

The Company charges certain vendors to place advertisements in the Company’s in-store guide and circulars under a cooperative advertising program. The Company records rebates received from vendors in connection with cooperative advertising programs as a reduction to advertising costs when the allowance represents a reimbursement of a specific incremental and identifiable cost. Advertising costs are expensed as incurred. Advertising expense, net of rebates, was $45.8 million, $49.2 million and $45.9 million for 2023, 2022 and 2021, respectively.

Depreciation and amortization

Depreciation and amortization expense (exclusive of depreciation included in cost of sales) primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company’s deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income offset by deferred tax liabilities. Changes in recognition or measurement are reflected in the period in which the judgment occurs.

The Company files income tax returns for federal purposes and in many states. The Company’s tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three years, following the tax year to which those filings relate.

The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as part of income tax expense.

Share Repurchases

The Company has elected to retire shares repurchased to date. Shares retired become part of the pool of authorized but unissued shares. The Company has elected to record the purchase price of the retired shares in excess of par value directly as a reduction of retained earnings. The cost of common shares repurchased includes a 1% excise tax imposed as part of the Inflation Reduction Act of 2022.

Net Income per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the fiscal period.

Diluted net income per share is based on the weighted average number of shares outstanding, plus, where applicable, shares that would have been outstanding related to dilutive options, PSAs and RSUs.

Comprehensive Income

Comprehensive income consists of net income and the unrealized gains or losses on derivative instruments that qualify for and have been designated as cash flow hedges, for all periods presented.

 

Recently Adopted Accounting Pronouncements

 

Reference Rate Reform

 

In March 2020 and January 2021, the FASB issued ASU no. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform (Topic 848): Scope,” respectively. The amendments in these updates provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for contracts, hedging relationships, and other transactions affected by reference rate reform. During 2022, the Company adopted certain optional expedients provided under Topic 848 that permitted its hedging relationships to continue without de-designation upon changes due to reference rate reform. The adoption of this guidance resulted in no material impact to the Company’s consolidated financial statements. See Note 22, “Derivative Financial Instruments” for more information on our hedging activities.

 

Income Taxes –Accounting for Income Taxes

 

In December 2019, the FASB issued ASU no. 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes.” Among other things, the amendment removes certain exceptions for periods with operating losses, and reduces the complexity surrounding franchise tax, step up in tax basis of goodwill in conjunction with a business combination, and timing of enacting changes in tax laws during interim periods. The Company adopted this standard effective January 4, 2021 on a prospective basis. There was no impact on the Company’s consolidated financial statements.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

Segment Reporting – Improvements to Reportable Segment Disclosures

 

In November 2023, the FASB issued ASU no. 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures." The amendments in this update increase required disclosures about a public entity's reportable segments, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM. The guidance will be effective for the Company for its fiscal year 2024 and for interim periods starting in the first quarter of its fiscal year 2025. Early adoption is permitted, and the guidance is required to be applied retrospectively. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

 

Income Taxes – Improvements to Income Tax Disclosures

 

In December 2023, the FASB issued ASU no. 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures." The amendments in this update enhance a public entity's annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance will be effective for the Company for its fiscal year 2025. Early adoption is permitted, and the guidance should be applied prospectively, with an option to apply it retrospectively. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

 

No other new accounting pronouncements issued or effective during 2023 had, or are expected to have, a material impact on the Company’s consolidated financial statements.
v3.24.0.1
Accounts Receivable
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Accounts Receivable

4. Accounts Receivable

 

A summary of accounts receivable is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Landlords

 

$

5,451

 

 

$

232

 

Vendors

 

 

3,168

 

 

 

3,544

 

Insurance

 

 

2,884

 

 

 

2,320

 

Ecommerce

 

 

7,682

 

 

 

6,988

 

Other

 

 

11,128

 

 

 

3,024

 

Total

 

$

30,313

 

 

$

16,108

 

 

The Company recorded allowances for certain vendor receivables of $1.3 million and $1.4 million at December 31, 2023 and January 1, 2023, respectively.

v3.24.0.1
Prepaid Expenses and Other Current Assets
 12 Months Ended
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Prepaid Expenses and Other Current Assets

5. Prepaid Expenses and Other Current Assets

 

A summary of prepaid expenses and other current assets is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Prepaid expenses

 

$

22,062

 

 

$

33,034

 

Restricted cash

 

 

2,076

 

 

 

1,959

 

Income tax receivable

 

 

23,559

 

 

 

18,155

 

Other current assets

 

 

770

 

 

 

770

 

Total

 

$

48,467

 

 

$

53,918

 
v3.24.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Property and Equipment

6. Property and Equipment

 

A summary of property and equipment, net is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Land and finance lease assets

 

$

16,562

 

 

$

15,753

 

Furniture, fixtures and equipment

 

 

1,002,824

 

 

 

850,357

 

Leasehold improvements

 

 

715,489

 

 

 

679,880

 

Construction in progress

 

 

92,066

 

 

 

110,106

 

Total property and equipment

 

 

1,826,941

 

 

 

1,656,096

 

Accumulated depreciation and amortization

 

 

(1,028,234

)

 

 

(933,855

)

Property and equipment, net

 

$

798,707

 

 

$

722,241

 

 

 

Depreciation expense was $136.6 million, $125.7 million and $124.1 million for 2023, 2022 and 2021, respectively. Depreciation expense is primarily reflected in Depreciation and amortization on the consolidated statements of income.

 

Impairment expense was $30.5 million, $8.1 million and $4.8 million for 2023, 2022 and 2021, respectively. Impairment expense is reflected in Store closure and other costs, net on the consolidated statements of income.
v3.24.0.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Leases

7. Leases

Lease cost includes both the fixed and variable expenses recorded for leases. The components of lease cost are as follows:

 

 

 

 

 

Year Ended

 

 

 

Classification

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Operating lease cost

 

Selling, general and administrative expenses (1), (2)

 

$

232,745

 

 

$

204,559

 

 

$

196,602

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

 

 

Amortization of Property
   and Equipment

 

Depreciation and amortization

 

 

1,062

 

 

 

966

 

 

 

966

 

Interest on lease liabilities

 

Interest expense

 

 

816

 

 

 

852

 

 

 

906

 

Variable lease cost

 

Selling, general and administrative expenses (1), (2)

 

 

70,197

 

 

 

65,979

 

 

 

60,763

 

Sublease income

 

Selling, general and administrative expenses

 

 

(832

)

 

 

(833

)

 

 

(839

)

Total net lease cost

 

 

 

$

303,988

 

 

$

271,523

 

 

$

258,398

 

 

(1)
Supply chain-related amounts of $18.2 million, $12.4 million and $10.6 million were included in cost of sales for 2023, 2022 and 2021, respectively.

 

(2)
Lease cost related to closed store locations of $6.3 million, $1.3 million and $0.7 million were included in Store closure and other costs, net for 2023, 2022 and 2021, respectively.

 

Supplemental balance sheet information related to leases is as follows:

 

 

 

 

 

As Of

 

 

 

Classification

 

December 31, 2023

 

 

January 1, 2023

 

Assets

 

 

 

 

 

 

 

 

Operating

 

Operating lease assets

 

$

1,322,854

 

 

$

1,106,524

 

Finance

 

Property and equipment, net

 

 

7,127

 

 

 

7,285

 

Total lease assets

 

 

 

$

1,329,981

 

 

$

1,113,809

 

Liabilities

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

Operating

 

Current portion of operating lease liabilities

 

$

126,271

 

 

$

135,584

 

Finance

 

Current portion of finance lease liabilities

 

 

1,032

 

 

 

1,012

 

Noncurrent:

 

 

 

 

 

 

 

 

Operating

 

Long-term operating lease liabilities

 

 

1,399,676

 

 

 

1,145,173

 

Finance

 

Long-term debt and finance lease liabilities

 

 

8,685

 

 

 

8,902

 

Total lease liabilities

 

 

 

$

1,535,664

 

 

$

1,290,671

 

 

 

 

2023

 

 

2022

 

 

2021

 

Weighted average remaining lease term (years):

 

 

 

 

 

 

 

 

 

Operating leases

 

 

10.0

 

 

 

9.4

 

 

 

9.6

 

Finance leases

 

 

6.7

 

 

 

7.8

 

 

 

8.8

 

Weighted average discount rate:

 

 

 

 

 

 

 

 

 

Operating leases

 

 

7.2

%

 

 

7.1

%

 

 

6.7

%

Finance leases

 

 

8.3

%

 

 

8.4

%

 

 

8.4

%

 

Supplemental cash flow and other information related to leases is as follows:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Cash paid for amounts included in measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

228,411

 

 

$

207,516

 

 

$

182,926

 

Operating cash flows for finance leases

 

 

816

 

 

 

852

 

 

 

906

 

 

 

 

 

 

 

 

 

 

 

Lease assets obtained in exchange for lease liabilities:

 

 

 

 

 

 

 

 

 

Finance leases

 

$

809

 

 

$

—

 

 

$

—

 

Operating leases

 

 

364,997

 

 

 

157,269

 

 

 

139,349

 

 

A summary of maturities of lease liabilities is as follows:

 

 

 

Operating Leases(1), (2)

 

 

Finance Leases

 

 

Total

 

2024

 

$

208,602

 

 

$

1,780

 

 

$

210,382

 

2025

 

 

267,082

 

 

 

2,107

 

 

 

269,189

 

2026

 

 

231,900

 

 

 

1,945

 

 

 

233,845

 

2027

 

 

215,856

 

 

 

2,032

 

 

 

217,888

 

2028

 

 

185,758

 

 

 

1,766

 

 

 

187,524

 

Thereafter

 

 

1,072,847

 

 

 

3,241

 

 

 

1,076,088

 

Total lease payments

 

 

2,182,045

 

 

 

12,871

 

 

 

2,194,916

 

Less: Imputed interest

 

 

(656,098

)

 

 

(3,154

)

 

 

(659,252

)

Total lease liabilities

 

 

1,525,947

 

 

 

9,717

 

 

 

1,535,664

 

Less: Current portion

 

 

(126,271

)

 

 

(1,032

)

 

 

(127,303

)

Long-term lease liabilities

 

$

1,399,676

 

 

$

8,685

 

 

$

1,408,361

 

 

(1)
Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.

 

(2)
These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Intangible Assets
 12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

8. Intangible Assets

A summary of the activity and balances in intangible assets is as follows:

 

 

Balance at January 2, 2022

 

 

Additions/Adjustments

 

 

Balance at January 1, 2023

 

Indefinite-lived trade names

 

$

182,937

 

 

$

—

 

 

$

182,937

 

Indefinite-lived liquor licenses

 

 

2,023

 

 

 

—

 

 

 

2,023

 

Total intangible assets

 

$

184,960

 

 

$

—

 

 

$

184,960

 

 

 

 

Balance at January 1, 2023

 

 

Additions/Adjustments

 

 

Balance at December 31, 2023

 

Indefinite-lived trade names

 

$

182,937

 

 

$

—

 

 

$

182,937

 

Indefinite-lived reacquired rights

 

 

—

 

 

 

23,100

 

 

 

23,100

 

Indefinite-lived liquor licenses

 

 

2,023

 

 

 

—

 

 

 

2,023

 

Total intangible assets

 

$

184,960

 

 

$

23,100

 

 

$

208,060

 

 

There was no amortization expense in 2023, 2022 and 2021.
v3.24.0.1
Goodwill
 12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill

9. Goodwill

The Company’s goodwill balance was $381.7 million and $368.9 million as of December 31, 2023 and January 1, 2023, respectively. As of December 31, 2023 and January 1, 2023, the Company had no accumulated goodwill impairment losses. The goodwill was related to the acquisitions of Henry’s Farmers Market and Sunflower Farmers Market in 2011 and 2012, respectively, and the acquisition of Ronald Cohn, Inc. in 2023. For further details, see Note 28, "Business Combination."

A summary of the activity and balances in goodwill is as follows:

 

 

 

Balance at January 1, 2023

 

 

Additions

 

 

Balance at December 31, 2023

 

Goodwill

 

$

368,878

 

 

$

12,863

 

 

$

381,741

 
v3.24.0.1
Other Assets
 12 Months Ended
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Assets

10. Other Assets

As of December 31, 2023 and January 1, 2023, other assets of $12.3 million and $14.0 million, respectively, primarily consisted of deferred software as a service, capitalized durable supplies, deferred financing costs, utilities deposits and miscellaneous other assets.

v3.24.0.1
Accrued Liabilities
 12 Months Ended
Dec. 31, 2023
Payables and Accruals [Abstract]  
Accrued Liabilities

11. Accrued Liabilities

A summary of accrued liabilities is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Self-insurance reserves

 

$

25,012

 

 

$

23,954

 

Accrued occupancy related (CAM, property taxes, etc.)

 

 

23,935

 

 

 

24,981

 

Gift cards, net of breakage

 

 

10,566

 

 

 

10,906

 

Accrued sales, use and excise tax

 

 

14,296

 

 

 

13,820

 

Other accrued liabilities

 

 

91,078

 

 

 

77,645

 

Total

 

$

164,887

 

 

$

151,306

 
v3.24.0.1
Accrued Salaries and Benefits
 12 Months Ended
Dec. 31, 2023
Payables and Accruals [Abstract]  
Accrued Salaries and Benefits

12. Accrued Salaries and Benefits

A summary of accrued salaries and benefits is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Bonuses

 

$

33,890

 

 

$

23,679

 

Payroll

 

 

20,652

 

 

 

19,873

 

Vacation

 

 

18,050

 

 

 

16,732

 

Severance and other

 

 

2,160

 

 

 

1,290

 

Total

 

$

74,752

 

 

$

61,574

 
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities
 12 Months Ended
Dec. 31, 2023
Long Term Debt And Finance Lease Liabilities [Abstract]  
Long-Term Debt and Finance Lease Liabilities

13. Long-Term Debt and Finance Lease Liabilities

A summary of long-term debt and finance lease liabilities is as follows:

 

 

 

 

 

 

 

As Of

 

Facility

 

Maturity

 

Interest Rate

 

December 31, 2023

 

 

January 1, 2023

 

Senior secured debt

 

 

 

 

 

 

 

 

 

 

$700.0 million Credit Agreement

 

March 25, 2027

 

Variable

 

$

125,000

 

 

$

250,000

 

Finance lease liabilities

 

Various

 

n/a

 

 

8,685

 

 

 

8,902

 

Long-term debt and finance lease liabilities

 

 

 

 

 

$

133,685

 

 

$

258,902

 

 

A summary of maturities of long-term debt is as follows:

 

 

 

$700 million Credit Agreement

 

2024

 

$

—

 

2025

 

 

—

 

2026

 

 

—

 

2027

 

 

125,000

 

2028

 

 

—

 

Thereafter

 

 

—

 

Total

 

$

125,000

 

Credit Agreement

The Company’s subsidiary, Sprouts Farmers Markets Holdings, LLC (“Intermediate Holdings”), is the borrower under a credit agreement entered into on March 25, 2022 (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility (the "Revolving Credit Facility") with an initial aggregate commitment of $700.0 million. Amounts outstanding under the Credit Agreement may be increased from time to time in accordance with an expansion feature set forth in the Credit Agreement.

The Company capitalized debt issuance costs of $3.4 million related to the Credit Agreement, which, combined with the remaining $0.5 million debt issuance costs in respect of that certain amended and restated credit agreement entered into on March 27, 2018, by and among the Company, Intermediate Holdings, certain lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “Former Credit Facility”), which remained outstanding as of the time of Intermediate Holdings’ entry into the Credit Agreement, are being amortized on a straight-line basis to interest expense over the five-year term of the Credit Agreement.

The Credit Agreement provides for a $70.0 million letter of credit sub-facility (the "Letter of Credit Sub-Facility") and a $50.0 million swingline facility. Letters of credit issued under the Credit Agreement reduce the capacity of Intermediate Holdings to borrow under the Revolving Credit Facility. Letters of credit totaling $21.5 million have been issued as of December 31, 2023 under the Letter of Credit Sub-Facility, primarily to support the Company’s insurance programs.

Guarantees

Obligations under the Credit Agreement are guaranteed by the Company and substantially all of its existing and future wholly-owned material domestic subsidiaries, and are secured by first-priority security interests in substantially all of the assets of the Company, Intermediate Holdings, and the subsidiary guarantors, including, without limitation, a pledge by the Company of its equity interest in Intermediate Holdings.

Interest and Fees

Loans under the Credit Agreement will initially bear interest, at the Company's option, either at the Term SOFR (with a floor of 0.00%) plus a 0.10% SOFR adjustment and 1.00% per annum or base rate (with a floor of 0.00%) plus 0.00% per annum. The interest rate margins are subject to upward adjustments pursuant to a pricing grid based on the Company’s total net leverage ratio as set forth in the Credit Agreement and to upward or downward adjustments of up to 0.05% based upon the achievement of certain diversity and sustainability-linked metric thresholds, as set forth in the Credit Agreement.

Under the terms of the Credit Agreement, the Company is obligated to pay a commitment fee on the available unused amount of the commitments, which commitment fee ranges between 0.10% to 0.225% per annum, pursuant to a pricing grid based on the Company’s total net leverage ratio. The commitment fees are subject to upward or downward adjustments of up to 0.01% based upon the achievement of certain diversity and sustainability-linked metric thresholds, as set forth in the Credit Agreement.

As of December 31, 2023, loans outstanding under the Credit Agreement bore interest at Term SOFR (as defined in the Credit Agreement) plus a 0.10% SOFR adjustment and 0.95% per annum.

As of December 31, 2023, outstanding letters of credit issued under the Credit Agreement were subject to a participation fee of 0.95% per annum and an issuance fee of 0.125% per annum.

Payments and Borrowings

The Credit Agreement is scheduled to mature, and the commitments thereunder will terminate on March 25, 2027, subject to extensions as set forth therein.

The Company may prepay loans and permanently reduce commitments under the Credit Agreement at any time in agreed-upon minimum principal amounts, without premium or penalty (except SOFR breakage costs, if applicable).

In connection with the execution of the Credit Agreement, the Company's obligations under the Former Credit Facility were prepaid and terminated.

During 2023, the Company made no additional borrowings and made principal payments of $125.0 million, resulting in total outstanding debt under the Credit Agreement of $125.0 million as of December 31, 2023. During 2022, the Company made no additional borrowings or principal payments, other than the net change of $62.5 million in the composition of the lending syndicate associated with a modification of the Company's revolving credit facility on March 25, 2022, resulting in total outstanding debt under the Credit Agreement of $250.0 million as of January 1, 2023.

Covenants

The Credit Agreement 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 Agreement requires that the Company and its subsidiaries maintain a maximum total net leverage ratio not to exceed 3.75 to 1.00, which ratio may be increased from time to time in connection with certain permitted acquisitions pursuant to conditions as set forth in the Credit Agreement, and a minimum interest coverage ratio not to be less than 3.00 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 Agreement as of December 31, 2023.
v3.24.0.1
Other Long-Term Liabilities
 12 Months Ended
Dec. 31, 2023
Other Liabilities Disclosure [Abstract]  
Other Long-Term Liabilities

14. Other Long-Term Liabilities

A summary of other long-term liabilities is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Long-term portion of self-insurance reserves

 

$

22,826

 

 

$

23,658

 

Other

 

 

13,444

 

 

 

12,682

 

Total

 

$

36,270

 

 

$

36,340

 
v3.24.0.1
Self-Insurance Programs
 12 Months Ended
Dec. 31, 2023
Insurance [Abstract]  
Self-Insurance Programs

15. Self-Insurance Programs

The Company is self-insured for costs related to workers’ compensation, general liability and employee health benefits up to certain self-insured retentions and stop-loss limits. The Company establishes reserves for the ultimate obligation of reported and incurred but not reported (“IBNR”) claims. IBNR claims are estimated using various techniques, including analysis of historical trends and actuarial valuation methods.

The Company purchases coverage from third-party insurers for exposures in excess of certain stop-loss limits and recorded receivables of $1.3 million and $1.2 million from its insurance carriers for payments expected to be made in excess of self-insured retentions at December 31, 2023 and January 1, 2023, respectively. The Company recorded amounts for general liability, workers' compensation and team member health benefit liabilities of $47.8 million and $47.6 million at December 31, 2023 and January 1, 2023, respectively.

The following table summarizes the changes in the Company's self-insurance reserves through December 31, 2023:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning Balance

 

$

47,612

 

 

$

50,529

 

 

$

48,518

 

Expenses, net of actuarial adjustments

 

 

85,148

 

 

 

76,720

 

 

 

85,892

 

Claim Payments

 

 

(84,922

)

 

 

(79,637

)

 

 

(83,881

)

Ending Balance

 

 

47,838

 

 

 

47,612

 

 

 

50,529

 

Less: Current portion

 

 

(25,012

)

 

 

(23,954

)

 

 

(27,136

)

Long-term portion

 

$

22,826

 

 

$

23,658

 

 

$

23,393

 

 

The current portion of the self-insurance reserves is included in "Accrued Liabilities" and the long-term portion is included in "Other Long-Term Liabilities" in the accompanying consolidated balance sheets.
v3.24.0.1
Defined Contribution Plan
 12 Months Ended
Dec. 31, 2023
Postemployment Benefits [Abstract]  
Defined Contribution Plan

16. Defined Contribution Plan

The Company maintains the Sprouts Farmers Market, Inc. Employee 401(k) Savings Plan (the “Plan”), which is a defined contribution plan covering all eligible team members. Under the provisions of the Plan, participants may direct the Company to defer a portion of their compensation to the Plan, subject to the Internal Revenue Code limitations. The Company provides for an employer matching contribution equal to 50% of each dollar contributed by the participants up to 6% of their eligible compensation.

The following table outlines the total expense recorded for the matching under the Plan, which is reflected in Selling, general and administrative expenses on the consolidated statements of income:

 

Year Ended

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

$

8,496

 

 

$

7,820

 

 

$

7,517

 
v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

17. Income Taxes

Income Tax Provision

The income tax provision consists of the following:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

U.S. Federal—current

 

$

67,898

 

 

$

66,398

 

 

$

60,329

 

U.S. Federal—deferred

 

 

(5,927

)

 

 

1,028

 

 

 

(1,663

)

U.S. Federal—total

 

 

61,971

 

 

 

67,426

 

 

 

58,666

 

State—current

 

 

21,902

 

 

 

19,823

 

 

 

19,715

 

State—deferred

 

 

1,011

 

 

 

900

 

 

 

(146

)

State—total

 

 

22,913

 

 

 

20,723

 

 

 

19,569

 

Total provision

 

$

84,884

 

 

$

88,149

 

 

$

78,235

 

 

Tax Rate Reconciliation

Income tax provision differed from the amounts computed by applying the U.S. federal income tax rate to pre-tax income as a result of the following:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

 

 

 

State income taxes, net of federal benefit

 

 

5.4

 

 

 

4.7

 

 

 

4.8

 

Enhanced charitable contribution impact

 

 

(1.0

)

 

 

(0.9

)

 

 

(1.5

)

Non-deductible Executive Compensation

 

 

1.4

 

 

 

0.9

 

 

 

0.3

 

Benefit of federal tax credit

 

 

(0.7

)

 

 

(0.5

)

 

 

(0.4

)

Excess tax benefits from share based payments

 

 

(1.2

)

 

 

(0.4

)

 

 

(0.1

)

Other, net

 

 

(0.2

)

 

 

0.4

 

 

 

0.2

 

Effective income tax rate

 

 

24.7

%

 

 

25.2

%

 

 

24.3

%

 

 

The effective income tax rate decreased to 24.7% in 2023 from 25.2% in 2022 primarily due to excess tax benefits related to the exercise or vesting of share-based awards partially offset by an increase in nondeductible executive compensation The effective income tax rate increased to 25.2% in 2022 from 24.3% in 2021 primarily due to decreased charitable contribution deductions in 2022 from the lapsing of benefits initially provided for in the CARES Act.

Excess tax benefits or detriments associated with share-based payment awards are recognized as income tax benefits or expense in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. The income tax benefit resulting from share-based awards was $5.0 million, $1.7 million and $0.2 million for 2023, 2022 and 2021, respectively, and is reflected as a reduction to the 2023, 2022 and 2021 income tax provision.

Deferred Taxes

Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Deferred tax assets

 

 

 

 

 

 

Employee benefits

 

$

18,329

 

 

$

16,052

 

Tax credits

 

 

105

 

 

 

166

 

Operating leases

 

 

392,168

 

 

 

329,154

 

Other lease related

 

 

6,137

 

 

 

5,740

 

Other accrued liabilities

 

 

4,320

 

 

 

4,004

 

Charitable contribution carryforward

 

 

3,343

 

 

 

2,819

 

Inventories and other

 

 

2,905

 

 

 

2,605

 

Total gross deferred tax assets

 

 

427,307

 

 

 

360,540

 

Less: Valuation Allowance

 

 

(3,343

)

 

 

(917

)

Total deferred tax assets, net of valuation allowance

 

 

423,964

 

 

 

359,623

 

Deferred tax liabilities

 

 

 

 

 

 

Depreciation and amortization

 

 

(80,765

)

 

 

(83,091

)

Intangible assets

 

 

(64,668

)

 

 

(52,413

)

Operating leases

 

 

(339,973

)

 

 

(284,377

)

Asset retirement obligations

 

 

(939

)

 

 

(865

)

Total gross deferred tax liabilities

 

 

(486,345

)

 

 

(420,746

)

Net deferred tax liability

 

$

(62,381

)

 

$

(61,123

)

 

A valuation allowance is established for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that the realization of future deductions is uncertain.

Management performs an assessment over future taxable income to analyze whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The valuation allowance was $3.3 million and $0.9 million as of December 31, 2023 and January 1, 2023, respectively, related to contribution carryforwards that management does not believe will ultimately be realized.

The Company has evaluated all available positive and negative evidence and believes it is probable that all other the deferred tax assets will be realized and has not recorded any other valuation allowance against the Company’s deferred tax assets as of December 31, 2023 and January 1, 2023.

The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification and disclosure of uncertain tax positions taken or expected to be taken in a tax return.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning balance

 

$

1,119

 

 

$

1,770

 

 

$

1,803

 

Additions based on tax positions related to the
   current year

 

 

58

 

 

 

43

 

 

 

16

 

Additions based on tax positions related to prior years

 

 

—

 

 

 

—

 

 

 

31

 

Reductions for settlements with taxing authorities

 

 

—

 

 

 

(694

)

 

 

—

 

Reduction due to lapse of applicable statute of limitations

 

 

(700

)

 

 

—

 

 

 

—

 

Reductions for tax positions for prior years

 

 

—

 

 

 

—

 

 

 

(80

)

Ending balance

 

$

477

 

 

$

1,119

 

 

$

1,770

 

 

The Company had unrecognized tax benefits (tax effected) of $0.5 million and $1.1 million as of December 31, 2023 and January 1, 2023, respectively. These would impact the effective tax rate if recognized.

The Company’s policy is to recognize accrued interest and penalties as a component of income tax expense.

The Company anticipates a decrease in the total amount of unrecognized tax benefits in the amount of $0.2 million during the next twelve months related to the passing of the applicable statute of limitations for a tax position taken for executive compensation.

The Company files income tax returns with federal and state tax authorities within the United States. The general statute of limitations for income tax examinations remains open for federal tax returns for tax years 2017 through 2022 and state tax returns for the tax years 2018 through 2022.

v3.24.0.1
Related-Party Transactions
 12 Months Ended
Dec. 31, 2023
Related Party Transactions [Abstract]  
Related-Party Transactions

18. Related Party Transactions

During 2023, the Company did not have any material related party transactions.

On May 24, 2022, the Company appointed a new member to its board of directors who served as an executive officer of a company that is a supplier of nutrition bars and related products to the Company for resale. The director departed employment from this supplier on February 28, 2023. The cost of sales recognized from this supplier was $3.4 million from the beginning of the second quarter of 2022 through January 1, 2023.
v3.24.0.1
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

19. Commitments and Contingencies

Commitments

Real estate obligations, which include legally binding minimum lease payments for leases executed but not yet commenced, were $584.1 million as of December 31, 2023.

In addition to its lease obligations, the Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled. As of December 31, 2023, total future purchase commitments under noncancelable service and supply contracts were $28.6 million.

Commitments related to the Company’s business operations cover varying periods of time and are not individually significant. These commitments are expected to be fulfilled with no adverse consequences to the Company’s operations or financial conditions.

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 and litigation matters. Self-insurance liabilities require significant judgments, and actual claim settlements and associated expenses may differ from the Company’s current provisions for loss. See Note 15, “Self-Insurance Programs” for more information.

Proposition 65 Coffee Action

On April 13, 2010, an organization named Council for Education and Research on Toxics (“CERT”) filed a lawsuit in the Superior Court of the State of California, County of Los Angeles, against nearly 80 defendants who manufacture, package, distribute or sell brewed coffee, including the Company. CERT alleged that the defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65. CERT seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties.

The Company, as part of a joint defense group, asserted multiple defenses against the lawsuit. On May 7, 2018, the trial court issued a ruling adverse to defendants on these defenses to liability. On October 1, 2019, before the court tried damages, remedies and attorneys' fees, California’s Office of Environmental Health Hazard Assessment adopted a regulation that exempted “Exposures to listed chemicals in coffee created by and inherent in the processes of roasting coffee beans or brewing coffee” from Proposition 65’s warning requirement. On August 25, 2020, the trial court granted the defense motion for summary judgment on the affirmative defense, and the case was dismissed.

 

On November 20, 2020, CERT filed a notice of appeal to appeal the ruling on the defense motion for summary judgment. On October 26, 2022, the appellate court affirmed the trial court’s decision. In December 2022, CERT appealed this ruling to the Supreme Court of the State of California, which denied the petition for review in February 2023, concluding the matter.
v3.24.0.1
Capital Stock
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Capital Stock . Capital Stock

Common stock

As of December 31, 2023, 101,211,984 shares of the Company’s common stock were issued and outstanding after the repurchase and retirement of 5,864,246 shares during 2023, as described below. As of December 31, 2023, 5,874,286 shares of common stock are reserved for issuance under the 2022 Incentive Plan (see Note 26, “Share-Based Compensation”).

The following table outlines the options exercised in exchange for the issuance of shares of common stock during 2023, 2022 and 2021:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Options exercised

 

 

637,387

 

 

 

218,509

 

 

 

115,123

 

Other share issuances under stock plans

 

 

811,729

 

 

 

636,955

 

 

 

462,173

 

 

Share Repurchases

On March 2, 2022, the Company's board of directors authorized a new $600 million share repurchase program for its common stock. The new authorization replaced the Company's then-existing share repurchase authorization of $300 million that was due to expire on March 3, 2024, of which $99.8 million remained available upon its replacement. No further shares may be repurchased under the $300 million authorization. The following table outlines the common stock share repurchase programs authorized by the Company’s board of directors and the related repurchase activity and available authorization as of December 31, 2023:

 

Effective date

 

Expiration date

 

Amount
authorized

 

 

Cost of
repurchases

 

 

Authorization
available

 

March 2, 2022

 

December 31, 2024

 

$

600,000

 

 

$

391,619

 

 

$

208,381

 

The shares under the Company’s repurchase programs may be purchased on a discretionary basis from time to time through 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.

Share repurchase activity under the Company’s repurchase programs for the periods indicated was as follows (total cost in thousands):

 

Year Ended

 

 

December 31, 2023

 

 

January 1, 2023

 

Number of common shares acquired

 

5,864,246

 

 

 

6,897,082

 

Average price per common share acquired

$

35.00

 

 

$

28.99

 

Total cost of common shares acquired

$

205,262

 

 

$

199,980

 

 

Shares purchased under the Company’s repurchase programs were subsequently retired and the excess of the repurchase price over par value was charged to retained earnings. The cost of common shares repurchased during 2023 included the 1% excise tax imposed as part of the Inflation Reduction Act of 2022.

 

Preferred Stock

The Company’s board of directors is authorized, subject to limitations prescribed by Delaware law, to issue up to 10,000,000 shares of the Company’s preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further action by the Company’s stockholders. The Company’s board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding. The Company’s board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in control of the Company and might adversely affect the market price of the Company’s common stock and the voting and other rights of the holders of the Company’s common stock. The Company has no current plan to issue any shares of preferred stock.
v3.24.0.1
Net Income Per Share
 12 Months Ended
Dec. 31, 2023
Earnings Per Share [Abstract]  
Net Income Per Share

21. Net Income per Share

The computation of basic 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 and unvested RSUs. PSAs are included in the computation of diluted net income per share only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be satisfied if the end of the reporting period were the end of the related performance period, and if the effect would be dilutive.

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):

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

Net income

 

$

258,856

 

 

$

261,164

 

 

$

244,157

 

Weighted average shares outstanding - basic

 

 

102,479

 

 

 

108,232

 

 

 

115,377

 

Basic net income per share

 

$

2.53

 

 

$

2.41

 

 

$

2.12

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

Net income

 

$

258,856

 

 

$

261,164

 

 

$

244,157

 

Weighted average shares outstanding - basic

 

 

102,479

 

 

 

108,232

 

 

 

115,377

 

Dilutive effect of share-based awards:

 

 

 

 

 

 

 

 

 

Assumed exercise of options to purchase shares

 

 

343

 

 

 

337

 

 

 

215

 

RSUs

 

 

524

 

 

 

394

 

 

 

390

 

PSAs

 

 

44

 

 

 

176

 

 

 

95

 

Weighted average shares and
   equivalent shares outstanding - diluted

 

 

103,390

 

 

 

109,139

 

 

 

116,077

 

Diluted net income per share

 

$

2.50

 

 

$

2.39

 

 

$

2.10

 

 

For the year ended December 31, 2023, the Company had 0.2 million options and 0.4 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met. For the year ended January 1, 2023 the Company had 0.2 million options and 0.3 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met. For the year ended January 2, 2022, the Company had 0.5 million options and 0.3 million PSAs outstanding which were excluded from the computation of diluted net income per share as those awards would have been antidilutive or were performance awards with performance conditions not yet deemed met.

v3.24.0.1
Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

22. Derivative Financial Instruments

The Company did not have any outstanding interest rate swap agreements as of December 31, 2023 and January 1, 2023.

 

In December 2017, the Company entered into an interest rate swap agreement to manage its cash flow associated with variable interest rates. This forward contract was designated and qualified as a cash flow hedge, and its change in fair value was recorded as a component of other comprehensive income and reclassified into earnings in the same period or periods in which the forecasted transaction occurred.

The forward contract consisted of five cash flow hedges with a notional dollar amount of $250.0 million, and each had a length of one year and matured annually from 2018 to 2022.

 

The gain or loss on these derivative instruments was recognized in other comprehensive income, net of tax, with the portion related to current period interest payments reclassified to Interest expense, net on the consolidated statements of income. The following table summarizes these losses classified on the consolidated statements of income:

 

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Consolidated Statements of
   Income Classification

 

 

 

 

 

 

 

 

 

Interest expense, net

 

$

—

 

 

$

2,021

 

 

$

5,778

 
v3.24.0.1
Comprehensive Income
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Comprehensive Income

23. Comprehensive Income

 

The following table presents the changes in accumulated other comprehensive income (loss) for the year ended January 1, 2023:

 

 

 

Cash Flow
Hedges

 

Balance at January 2, 2022

 

$

(3,758

)

Other comprehensive income, net of tax

 

 

 

Unrealized gains on cash flow hedging activities, net of income tax of $1,819

 

 

5,259

 

Reclassification of net losses on cash flow hedges to net income, net of income
    tax of ($520)

 

 

(1,501

)

Total other comprehensive income

 

 

3,758

 

Balance at January 1, 2023

 

$

—

 

 

Amounts reclassified from accumulated other comprehensive income (loss) to net income were included within Interest expense, net on the consolidated statements of income.

v3.24.0.1
Fair Value Measurements
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements

24. 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, intangible assets, and long-lived assets.

The following tables present the Company’s fair value hierarchy for the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and January 1, 2023:

 

December 31, 2023

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Long-term debt

 

$

—

 

 

$

125,000

 

 

$

—

 

 

$

125,000

 

Total financial liabilities

 

$

—

 

 

$

125,000

 

 

$

—

 

 

$

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2023

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Long-term debt

 

$

—

 

 

$

250,000

 

 

$

—

 

 

$

250,000

 

Total financial liabilities

 

$

—

 

 

$

250,000

 

 

$

—

 

 

$

250,000

 

 

The determination of fair values of certain tangible and intangible assets for purposes of the Company’s goodwill or long-lived asset impairment evaluation as described above is based upon Level 3 inputs. When necessary, the Company uses third party market data and market participant assumptions to derive the fair value of its asset groupings, which primarily include right-of-use lease assets and property and equipment. For further details, see Note 3, “Significant Accounting Policies – Impairment of Long-lived Assets”.

Cash, cash equivalents, and restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and accrued salaries and benefits approximate fair value because of the short maturity of those instruments. Based on comparable open market transactions, the fair value of the long-term debt approximated carrying value as of December 31, 2023 and January 1, 2023.
v3.24.0.1
Segments
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Segments

25. Segments

The Company has one operating segment, and therefore, one reportable segment: healthy grocery stores.

The Company categorizes the varieties of products it sells as perishable and non-perishable. Perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives. Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

In accordance with ASC 606, the following table represents a disaggregation of revenue for 2023, 2022 and 2021:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Perishables

 

$

3,915,971

 

 

 

57.3

%

 

$

3,717,642

 

 

 

58.0

%

 

$

3,518,181

 

 

 

57.7

%

Non-Perishables

 

 

2,921,413

 

 

 

42.7

%

 

 

2,686,581

 

 

 

42.0

%

 

 

2,581,688

 

 

 

42.3

%

Net Sales

 

$

6,837,384

 

 

 

100.0

%

 

$

6,404,223

 

 

 

100.0

%

 

$

6,099,869

 

 

 

100.0

%
v3.24.0.1
Share-Based Compensation
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation

26. Share-Based Compensation

2022 Incentive Plan

In March 2022, the Company’s board of directors adopted the Sprouts Farmers Market, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Incentive Plan”), which became effective May 25, 2022, upon approval by the Company’s stockholders. The 2022 Incentive Plan provides team members of the Company, certain consultants and advisors who perform services for the Company, and non-employee members of the Company's board of directors with the opportunity to receive grants of equity awards, including stock options, RSUs, PSAs, and other stock-based awards. The 2022 Incentive Plan replaced the 2013 Incentive Plan (as described below).

Awards Granted under the 2022 Incentive Plan

The Company granted the following awards during 2023 and 2022 under the 2022 Incentive Plan:

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

March 14, 2023

 

 

491,729

 

 

 

172,059

 

 

 

221,085

 

May 1, 2023

 

 

2,931

 

 

 

—

 

 

 

—

 

June 7, 2023

 

 

1,271

 

 

 

—

 

 

 

—

 

September 5, 2023

 

 

6,408

 

 

 

—

 

 

 

—

 

September 11, 2023

 

 

10,204

 

 

 

—

 

 

 

—

 

October 30, 2023

 

 

1,512

 

 

 

—

 

 

 

—

 

Total

 

 

514,055

 

 

 

172,059

 

 

 

221,085

 

Weighted-average grant date fair value

 

$

33.21

 

 

$

32.95

 

 

$

12.63

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

$

32.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

June 7, 2022

 

 

58,057

 

 

 

—

 

 

 

—

 

September 7, 2022

 

 

21,598

 

 

 

—

 

 

 

—

 

October 10, 2022

 

 

6,506

 

 

 

—

 

 

 

—

 

Total

 

 

86,161

 

 

 

—

 

 

 

—

 

Weighted-average grant date fair value

 

$

27.74

 

 

$

—

 

 

$

—

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

 

—

 

The aggregate number of shares of common stock that may be issued to team members and directors under the 2022 Incentive Plan may not exceed 6,600,000, subject to the following adjustments. If any awards granted under the 2022 Incentive Plan, terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested or paid in shares, the shares will again be available for purposes of the 2022 Incentive Plan. In addition, the number of shares subject to outstanding awards under the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”) that terminate, expire, are paid in cash, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid in shares under the 2013 Incentive Plan after the effective date of the 2022 Incentive Plan will be available for issuance under the 2022 Incentive Plan. As of December 31, 2023, there were 855,911 stock awards outstanding and 5,874,286 shares remaining available for issuance under the 2022 Incentive Plan.

 

2013 Incentive Plan

Prior to the adoption of the 2022 Incentive Plan, the 2013 Incentive Plan served as the umbrella plan for the Company’s share-based and cash-based incentive compensation programs for its directors, officers and other team members. Upon stockholder approval of the 2022 Incentive Plan on May 25, 2022, no further awards will be granted under the 2013 Incentive Plan, but awards outstanding under the 2013 Incentive Plan will remain outstanding in accordance with their terms and the terms of the 2013 Incentive Plan.

The Company granted the following awards during 2022 under the 2013 Incentive Plan:

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

March 15, 2022

 

 

370,177

 

 

 

147,846

 

 

 

211,352

 

March 21, 2022

 

 

104,913

 

 

 

14,260

 

 

 

20,270

 

Total

 

 

475,090

 

 

 

162,106

 

 

 

231,622

 

Weighted-average grant date fair value

 

$

31.60

 

 

$

31.52

 

 

$

10.58

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

$

31.52

 

 

 

The RSUs generally vest either one-third each year for three years or one-half each year for two years for team members. RSUs granted to independent members of the Company’s board of directors cliff vest in one year. The options expire seven years from grant date. The PSAs are described below.

 

Stock Options

Outstanding options only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the grants are not continued or assumed by the acquirer on a substantially equivalent basis. If the options and awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following the change in control, such options or awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable award agreement.

Shares issued for option exercises are newly issued shares.

The estimated weighted average fair values of options granted during 2023, 2022 and 2021 were $12.63, $10.58 and $7.66, respectively, and were calculated using the following assumptions in the table below:

 

 

2023

 

 

2022

 

 

2021

 

Dividend yield

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Expected volatility

 

 

39.48

%

 

 

36.59

%

 

 

36.35

%

Risk free interest rate

 

 

3.78

%

 

 

2.12

%

 

 

0.83

%

Expected term, in years

 

 

4.50

 

 

 

4.50

 

 

 

4.50

 

The grant date weighted average fair value of the 0.4 million options issued but not vested as of December 31, 2023 was $10.84. The grant date weighted average fair value of the 1.0 million options issued but not vested as of January 1, 2023 was $6.66. The grant date weighted average fair value of the 1.1 million options issued but not vested as of January 2, 2022 was $5.81.

The following table summarizes grant date weighted average fair value of options granted and options forfeited:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Grant date weighted average fair value of options granted

 

$

12.63

 

 

$

10.58

 

 

$

7.66

 

Grant date weighted average fair value of options forfeited

 

$

10.98

 

 

$

8.66

 

 

$

7.10

 

 

Expected volatility for option grants and modifications are calculated based upon the Company’s historical volatility data over a time frame consistent with the expected life of the awards. The expected term is estimated based on the expected period that the options are anticipated to be outstanding after initial grant until exercise or expiration based upon various factors including the contractual terms of the awards and vesting schedules. The expected risk-free rate is based on the U.S. Treasury yield curve rates in effect at the time of the grant using the term most consistent with the expected life of the award. Dividend yield was estimated at zero as the Company does not anticipate making regular future distributions to stockholders. The total intrinsic value of options exercised was $12.2 million, $1.8 million, and $0.7 million for 2023, 2022 and 2021, respectively.

The following table summarizes option activity during 2023:

 

 

 

Number of
Options

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Life (In Years)

 

 

Aggregate
Intrinsic
Value

 

Outstanding at January 1, 2023

 

 

1,318,158

 

 

$

20.93

 

 

 

 

 

 

 

Granted

 

 

221,085

 

 

 

32.95

 

 

 

 

 

 

 

Forfeited

 

 

(47,481

)

 

 

30.87

 

 

 

 

 

 

 

Exercised

 

 

(637,387

)

 

 

17.97

 

 

 

 

 

$

12,151

 

Outstanding at December 31, 2023

 

 

854,375

 

 

 

25.70

 

 

 

4.53

 

 

$

19,938

 

Exercisable—December 31, 2023

 

 

424,598

 

 

 

20.82

 

 

 

3.61

 

 

$

11,983

 

Vested/Expected to vest—December 31, 2023

 

 

854,375

 

 

$

25.70

 

 

 

4.53

 

 

$

19,938

 

 

RSUs

Outstanding RSUs only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the awards are not continued or assumed by the acquirer on a substantially equivalent basis. If the awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following the change in control, such awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable award agreement.

Shares issued for RSU vesting are newly issued shares.

The fair value for restricted stock units is calculated based on the closing stock price on the date of grant. The total grant date fair value of RSUs vested during 2023, 2022 and 2021 was $13.3 million, $9.2 million and $8.8 million, respectively.

The following table summarizes the weighted average grant date fair value of RSUs awarded during 2023, 2022 and 2021:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

RSUs awarded

 

$

33.21

 

 

$

31.01

 

 

$

24.11

 

 

The following table summarizes RSU activity during 2023:

 

 

 

Number of
RSUs

 

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding at January 1, 2023

 

 

972,583

 

 

$

26.94

 

Awarded

 

 

514,055

 

 

 

33.21

 

Vested

 

 

(543,030

)

 

 

24.44

 

Forfeited

 

 

(75,412

)

 

 

31.84

 

Outstanding at December 31, 2023

 

 

868,196

 

 

$

31.79

 

 

PSAs

PSAs granted in 2019 were subject to the Company achieving certain earnings before interest and taxes ("EBIT") performance targets for the 2021 fiscal year. The criteria was based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. The performance conditions with respect to fiscal year 2021 EBIT were deemed to have been met, and the PSAs vested at the maximum pay out level on the third anniversary of the grant date (March 2022). During the year ended January 1, 2023, 208,172 of the 2019 PSAs vested. There were no outstanding 2019 PSAs as of December 31, 2023.

PSAs granted in 2020 were subject to the Company achieving certain earnings before taxes (“EBT”) performance targets for the 2022 fiscal year. The criteria was based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. The performance conditions with respect to fiscal year 2022 EBT were deemed to have been met, and the PSAs vested at the maximum pay out level on the third anniversary of the grant date (March 2023). During the year ended December 31, 2023, 268,699 of the 2020 PSAs vested. There were no outstanding 2020 PSAs as of December 31, 2023.

PSAs granted in 2021 are subject to the Company achieving certain EBIT performance targets for the 2023 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. Subsequent to December 31, 2023, the performance conditions with respect to 2023 EBIT were deemed not to have been met. Accordingly, no performance shares will vest on the third anniversary of the grant date (March 2024).

PSAs granted in 2022 are subject to the Company achieving certain EBIT performance targets for the 2024 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2025).

PSAs granted in 2023 are subject to the Company achieving certain EBIT performance targets for the 2025 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2026).

The PSAs only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the awards are not continued or assumed by the acquirer on a substantially equivalent basis. If the awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following the change in control, such awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable team member award agreement.

Shares issued for PSA vesting are newly issued shares.

The fair value for PSAs is calculated based on the closing stock price on the date of grant.

The total grant date fair value of PSAs granted during 2023 was $5.7 million. The total grant date fair value of PSAs vested during 2023 was $4.5 million. The total grant date fair value of performance shares forfeited or not earned during 2023 was $1.1 million. The total grant date fair value of the 0.4 million PSAs issued but not released as of December 31, 2023 was $12.9 million.

The total grant date fair value of PSAs granted during 2022 was $5.1 million. The total grant date fair value of PSAs vested during 2022 was $4.1 million. The total grant date fair value of performance shares forfeited or not earned during 2022 was $0.8 million. The total grant date fair value of the 0.5 million PSAs issued but not released as of January 1, 2023 was $11.1 million.

The total grant date fair value of PSAs granted during 2021 was $4.8 million. The total grant date fair value of PSAs vested during 2021 was $0.8 million. The total grant date fair value of performance shares forfeited or not earned during 2021 was $1.0 million. The total grant date fair value of the 0.4 million PSAs issued but not released as of January 2, 2022 was $8.9 million.

The following table summarizes PSA activity during 2023:

 

 

 

Number of
PSAs

 

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding at January 1, 2023

 

 

460,106

 

 

$

24.12

 

Awarded

 

 

172,059

 

 

 

32.95

 

Vested

 

 

(268,699

)

 

 

16.83

 

Forfeited

 

 

(34,954

)

 

 

32.18

 

PSAs earned

 

 

107,998

 

 

 

16.91

 

PSAs not earned

 

 

—

 

 

 

—

 

Outstanding at December 31, 2023

 

 

436,510

 

 

$

29.66

 

Share-Based Compensation Expense

The Company presents share-based compensation expense in Selling, general and administrative expenses on the Company’s consolidated statements of income. The amount recognized was as follows:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Share-based compensation expense

 

$

18,898

 

 

$

16,603

 

 

$

15,883

 

Income tax benefit

 

 

(3,007

)

 

 

(2,495

)

 

 

(2,450

)

Net share-based compensation expense

 

$

15,891

 

 

$

14,108

 

 

$

13,433

 

As of December 31, 2023, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:

 

 

 

Unrecognized
compensation
expense

 

 

Remaining
weighted
average
recognition
period

 

Options

 

$

2,845

 

 

 

1.4

 

RSUs

 

 

15,667

 

 

 

1.4

 

PSAs

 

 

4,611

 

 

 

1.2

 

Total unrecognized compensation expense at December 31, 2023

 

$

23,123

 

 

 

 

 

During 2023, 2022 and 2021, the Company received $11.5 million, $5.0 million and $2.2 million in cash proceeds from the exercise of options, respectively.

 

The Company recorded tax benefits of $5.0 million, $1.7 million and $0.2 million during 2023, 2022 and 2021, respectively, resulting from share-based awards.
v3.24.0.1
Store Closures
 12 Months Ended
Dec. 31, 2023
Store Closures [Abstract]  
Store Closure

27. Store Closures

In February 2023, the Company's board of directors approved the closing of 11 stores, all of which were closed during 2023. These stores, on average, were approximately 30% larger than the Company's current prototype format and were underperforming financially. The closure of these stores resulted in a charge of $27.8 million in 2023 related to the impairment of leasehold improvements and right-of-use assets and is reflected in Store closure and other costs, net on the consolidated statements of income. The impairment charge represented the excess of the carrying value over the estimated fair value of each store's asset group. Accelerated depreciation on the closed stores' assets during 2023 was $5.9 million, and is reflected in Depreciation and amortization on the consolidated statements of income. Severance expense was immaterial.

v3.24.0.1
Business Combination
 12 Months Ended
Dec. 31, 2023
Business Combination, Description [Abstract]  
Business Combination

28. Business Combination

On March 20, 2023, the Company completed its acquisition of Ronald Cohn, Inc., a corporation that owned two stores located in California operating under the ‘Sprouts Farmers Market’ name pursuant to a legacy trademark license arrangement. The aggregate consideration paid in the transaction consisted of 0.6 million of the Company’s common shares valued at $18.1 million using the closing price of the Company's common stock on March 20, 2023 and cash consideration of $13.0 million, subject to customary post-closing adjustments.

The Company accounted for this transaction as a business combination in accordance with the acquisition method of accounting, which requires that the purchase price be allocated to the assets and liabilities acquired based on their estimated fair values as of the acquisition date. Acquisition-related costs were immaterial and were expensed as incurred. The financial results of the acquired stores have been included in the Company’s consolidated financial statements from the date of acquisition. The acquired stores' results of operations were not material to the Company's consolidated results during the fiscal year ended December 31, 2023.

The net purchase price was allocated to the net tangible assets of ($4.9) million and a reacquired right intangible asset of $23.1 million based on their preliminary fair values on the acquisition date. The remaining unallocated net purchase price of $12.9 million was recorded as goodwill. Goodwill represents the future economic benefits to the Company from the acquisition, which include the Company's ability to fully control the Sprouts Farmers Market brand by termination of the legacy trademark license agreement and allowing further expansion opportunities in Southern California. The goodwill is not expected to be deductible for tax purposes. There have been no material changes to the purchase price allocation originally recorded in the first quarter of 2023. The provisional fair value estimates are subject to adjustment as additional information is obtained within the measurement period, which may not exceed twelve months from the acquisition date.
v3.24.0.1
Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2023
Accounting Policies [Abstract]  
Fiscal Years

Fiscal Years

The Company reports its results of operations on a 52- or 53-week fiscal calendar ending on the Sunday closest to December 31. Fiscal year 2023 ended on December 31, 2023 and included 52 weeks. Fiscal year 2022 ended on January 1, 2023 and included 52 weeks. Fiscal year 2021 ended on January 2, 2022 and included 52 weeks. Fiscal years 2023, 2022 and 2021 are referred to as 2023, 2022 and 2021, respectively.

Significant Accounting Estimates

Significant Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting estimates include inventories, lease assumptions, self-insurance reserves, goodwill and intangible assets, impairment of long-lived assets, and income taxes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The Company’s cash and cash equivalents are maintained at financial institutions in the United States of America. Deposits in transit include sales through the end of the period, the majority of which were paid with credit and debit cards and settle within a few days of the sales transactions. The amounts due from banks for these transactions at each reporting date were as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Due from banks for debit and credit card transactions

 

$

85,116

 

 

$

77,665

 
Restricted Cash

Restricted Cash

Restricted cash relates to the Company’s defined benefit plan forfeitures and the Company’s healthcare, general liability and workers’ compensation plan benefits of approximately $2.1 million and $2.0 million as of December 31, 2023 and January 1, 2023, respectively, and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.
Accounts Receivable

Accounts Receivable

Accounts receivable primarily represents billings to vendors for scan, advertising and other rebates, receivables from ecommerce partners, billings to landlords for tenant allowances and receivables for manufacturer coupons. Accounts receivable also includes receivables from the Company’s insurance carrier for payments expected to be made in excess of self-insured retentions. The Company provides an allowance for doubtful accounts when a specific account is determined to be uncollectible.
Inventories

Inventories

Inventories consist of merchandise purchased for resale, which are stated at the lower of cost or net realizable value. The cost method is used for distribution center and store perishable department inventories by assigning costs to each of these items based on a first-in, first-out (FIFO) basis (net of vendor discounts).

The Company’s non-perishable inventory is valued at the lower of cost or net realizable value using weighted averaging, the use of which approximates the FIFO method.

Inventories are reduced for estimated losses related to shrinkage. The Company believes that all inventories are saleable and no allowances or reserves for obsolescence were recorded as of December 31, 2023 and January 1, 2023.
Property and Equipment

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Expenditures for major additions and improvements to facilities as well as significant component replacements are capitalized. All other maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of income. Depreciation expense, which includes the amortization of assets recorded as finance leases, is computed using the straight-line method over the estimated useful lives of the individual assets. Terms of leases used in the determination of estimated useful lives may include renewal options if the exercise of the renewal option is determined to be reasonably certain.

The following table includes the estimated useful lives of certain of the Company’s asset classes:

Computer hardware and software

 

3 to 5 years

Furniture, fixtures and equipment

 

7 to 20 years

Leasehold improvements

 

up to 15 years

Buildings

 

40 years

 

Store development costs, which include costs associated with the selection and procurement of real estate sites, are also included in property and equipment. These costs are included in leasehold improvements and are amortized over the remaining lease term of the successful sites with which they are associated.

Self-Insurance Reserves

Self-Insurance Reserves

The Company uses a combination of insurance and self-insurance programs to provide for costs associated with general liability, workers’ compensation and team member health benefits. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. The Company utilizes various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. Amounts expected to be recovered from insurance companies are included in the liability, with a corresponding amount recorded in accounts receivable.
Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill represents the cost of acquired businesses in excess of the fair value of assets and liabilities acquired. The Company’s indefinite-lived intangible assets consist of trade names related to “Sprouts Farmers Market,” liquor licenses and reacquired rights recognized in connection with the acquisition of Ronald Cohn, Inc. in 2023. See Note 28, “Business Combination” for more information on this acquisition.

Goodwill and indefinite-lived intangible assets are evaluated for impairment on an annual basis during the fourth fiscal quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company’s impairment evaluation of goodwill consists of a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company’s qualitative assessment considered factors including changes in the competitive market, budget-to-actual performance, trends in market capitalization for the Company and its peers, turnover in key management personnel and overall changes in the macroeconomic environment. If this qualitative assessment indicates it is more likely than not that the estimated fair value of the reporting unit exceeds its carrying value, no further analysis is required, and goodwill is not impaired. Otherwise, the Company compares the estimated fair value of the reporting unit to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value.

The impairment evaluation for the Company’s indefinite-lived intangible assets consists of a qualitative assessment, similar to that for goodwill. If the qualitative assessment indicates it is more likely than not that the estimated fair value exceeds its carrying value, no further analysis is required, and the asset is not impaired. Otherwise, the Company compares the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value.

The Company has determined its business consists of a single reporting unit. The Company has had no goodwill impairment charges for the past three fiscal years. See Note 8, “Intangible Assets” and Note 9, “Goodwill” for further discussion.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property and equipment and right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. These events primarily include current period losses combined with a history of losses or a projection of continuing losses, a significant decrease in the market value of an asset or a decision to close or relocate a store. The Company groups and evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which independent identifiable cash flows are available. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the future undiscounted cash flows expected to be generated by that asset group. The Company’s impairment analysis contains management assumptions about key variables including sales growth rate, gross margin, payroll and other controllable expenses.

If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset group. The fair value of the asset group is estimated based on the discounted future cash flows using a discount rate commensurate with the related risk or comparable market values, if available. The Company recorded an impairment loss of $30.5 million in 2023, of which $27.8 million was in connection with the decision to close certain underperforming stores (see Note 27, "Store Closures") and $2.7 million was in the normal course of business primarily related to the write-down of right-of-use assets and leasehold improvements. The Company recorded an impairment loss of $8.1 million and $4.8 million in 2022 and 2021, respectively, as part of the normal course of business primarily related to the write-down of right-of-use assets and leasehold improvements. These charges are recorded as a component of Store closure and other costs, net in the accompanying consolidated statements of income.
Deferred Financing Costs

Deferred Financing Costs

The Company capitalizes certain fees and costs incurred in connection with the issuance of debt. Deferred financing costs are amortized to interest expense over the term of the debt using the effective interest method. For the Credit Agreement and Former Credit Facility (as defined in Note 13, “Long-Term Debt and Finance Lease Liabilities”), deferred financing costs are amortized on a straight-line basis over the term of the facility. Upon prepayment, redemption or conversion of debt, the Company accelerates the recognition of an appropriate amount of financing costs as loss on extinguishment of debt. The current and noncurrent portions of deferred financing costs are included in prepaid expenses and other current assets and other assets, respectively, in the accompanying consolidated balance sheets.

Lease

Leases

The Company leases its stores, distribution centers, and administrative offices. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets, current portion of operating lease liabilities and noncurrent portion of operating lease liabilities in the accompanying consolidated balance sheets. Finance leases are included in property, plant, equipment, net, current portion of finance lease liabilities, and long-term debt and finance lease liabilities in the accompanying consolidated balance sheets. Operating lease payments are charged on a straight-line basis to rent expense, a component of selling, general and administrative expenses, over the lease term and finance lease payments are charged to interest expense and depreciation and amortization expense using a debt model over the lease term.

The Company’s lease assets represent a right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities and the related rent expense are recognized at the lease commencement date (date on which the Company gains access to the property) based on the estimated present value of lease payments over the lease term, net of landlord allowances expected to be received. The Company accounts for the lease and non-lease components as a single lease component for all current classes of leases.

Most of the Company’s lease agreements include variable payments related to pass-through costs for common area maintenance ("CAM"), property taxes, and insurance. Additionally, some of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels. These variable payments are not included in the measurement of the lease liability or asset and are expensed as incurred.

As most of the Company’s lease agreements do not provide an implicit rate, the Company uses an estimated incremental borrowing rate, which is derived from third-party information available at the lease commencement date, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to twenty years or more. The exercise of lease renewal options is at the Company’s sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less (“short-term leases”) are not recorded on the balance sheet. The Company does not currently have any material short-term leases. Additionally, the Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

The Company subleases certain real estate to third parties, which have all been classified as operating leases. The Company recognizes sublease income on a straight-line basis.
Fair Value Measurements

Fair Value Measurements

The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with ASC 820. This framework establishes a three-level 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, intangible assets, and long-lived assets. Impairment losses related to store-level assets are calculated using significant unobservable inputs including the present value of future cash flows expected to be generated using a risk-adjusted market based weighted-average cost of capital, comparable store sales growth assumptions, and third party property appraisal data. Therefore, these inputs are classified as a level 3 measurement in the fair value hierarchy.

Derivative Financial Instruments

Derivative Financial Instruments

The Company records derivatives at fair value. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how the Company reflects the change in fair value of the derivative instrument in its financial statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the underlying hedged cash flows, and the Company fulfills the hedge documentation standards at the time it enters into the derivative contract. The Company designates its hedge based on the exposure it is hedging. For qualifying cash flow hedges, the Company records changes in fair value in other comprehensive income (“OCI”). The Company releases the derivative’s gain or loss from OCI to match the timing of the underlying hedged item’s effect on earnings.

The Company reviews the effectiveness of its hedging instruments quarterly. The Company recognizes changes in the fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. The Company discontinues hedge accounting for any hedge that is no longer evaluated to be highly effective.

The Company does not enter into derivative financial instruments for trading or speculative purposes, and it monitors the financial stability and credit standing of its counterparties in these transactions. The Company had no active derivative financial instruments as of December 31, 2023 or January 1, 2023.

Share-Based Compensation

Share-Based Compensation

The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes share-based compensation cost as expense over the vesting period. As share-based compensation expense recognized in the consolidated statements of income is based on awards ultimately expected to vest, the amount of expense has been reduced for actual forfeitures as they occur. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value for each option grant. See Note 26, “Share-Based Compensation” for a discussion of assumptions used in the calculation of fair values. Application of alternative assumptions could produce different estimates of the fair value of share-based compensation and, consequently, the related amounts recognized in the accompanying consolidated statements of income. The grant date fair value of restricted stock units (“RSUs”) and performance share awards (“PSAs”) is based on the closing price per share of the Company’s common stock on the grant date. The Company recognizes compensation expense for time-based awards on a straight-line basis and for performance-based awards on the graded-vesting method over the vesting period of the awards.

Revenue Recognition

Revenue Recognition

The Company’s performance obligations are satisfied upon the transfer of goods to the customer, which occurs at the point of sale, and payment from customers is also due at the time of sale. Proceeds from the sale of gift cards are recorded as a liability at the time of sale and recognized as sales when they are redeemed by the customer and the performance obligation is satisfied by the Company. The Company’s gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions and was not material in any period presented. A summary of the activity and balances in the gift card liability, net is as follows:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning Balance

 

$

10,906

 

 

$

12,586

 

 

$

15,888

 

Gift cards issued during the period but not redeemed(1)

 

 

4,271

 

 

 

4,291

 

 

 

5,711

 

Revenue recognized from beginning liability

 

 

(4,611

)

 

 

(5,971

)

 

 

(9,013

)

Ending Balance

 

$

10,566

 

 

$

10,906

 

 

$

12,586

 

(1) net of estimated breakage

 

The nature of goods the Company transfers to customers at the point of sale are inventories, consisting of merchandise purchased for resale.

The Company does not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current period from performance obligations satisfied in previous periods, any contract performance obligations, or any material costs to obtain or fulfill a contract as of December 31, 2023.
Cost of Sales

Cost of Sales

Cost of sales includes the cost of inventory sold during the period, including the direct costs of purchased merchandise (net of discounts and allowances), distribution and supply chain costs, and depreciation and amortization for distribution centers and supply chain related assets. The Company recognizes vendor allowances and merchandise volume related rebate allowances as a reduction of inventories during the period when earned and reflects the allowances as a component of cost of sales as the inventory is sold.

The Company’s largest supplier accounted for approximately 47%, 45% and 44% of total purchases during 2023, 2022 and 2021, respectively.
Selling, General and Administrative Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of salaries, wages and benefits costs, share-based compensation, occupancy costs (including rent, property taxes, utilities, CAM and insurance), advertising costs, buying costs, pre-opening and other administrative costs.

The Company charges certain vendors to place advertisements in the Company’s in-store guide and circulars under a cooperative advertising program. The Company records rebates received from vendors in connection with cooperative advertising programs as a reduction to advertising costs when the allowance represents a reimbursement of a specific incremental and identifiable cost. Advertising costs are expensed as incurred. Advertising expense, net of rebates, was $45.8 million, $49.2 million and $45.9 million for 2023, 2022 and 2021, respectively.

Depreciation and amortization

Depreciation and amortization

Depreciation and amortization expense (exclusive of depreciation included in cost of sales) primarily consists of depreciation and amortization for buildings, store leasehold improvements, and equipment.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company’s deferred tax assets are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income offset by deferred tax liabilities. Changes in recognition or measurement are reflected in the period in which the judgment occurs.

The Company files income tax returns for federal purposes and in many states. The Company’s tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three years, following the tax year to which those filings relate.

The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as part of income tax expense.

Share Repurchases

Share Repurchases

The Company has elected to retire shares repurchased to date. Shares retired become part of the pool of authorized but unissued shares. The Company has elected to record the purchase price of the retired shares in excess of par value directly as a reduction of retained earnings. The cost of common shares repurchased includes a 1% excise tax imposed as part of the Inflation Reduction Act of 2022.
Net Income per Share

Net Income per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the fiscal period.

Diluted net income per share is based on the weighted average number of shares outstanding, plus, where applicable, shares that would have been outstanding related to dilutive options, PSAs and RSUs.

Comprehensive Income

Comprehensive Income

Comprehensive income consists of net income and the unrealized gains or losses on derivative instruments that qualify for and have been designated as cash flow hedges, for all periods presented.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

 

Reference Rate Reform

 

In March 2020 and January 2021, the FASB issued ASU no. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform (Topic 848): Scope,” respectively. The amendments in these updates provide optional expedients and exceptions for a limited period of time to ease the potential burden in accounting for contracts, hedging relationships, and other transactions affected by reference rate reform. During 2022, the Company adopted certain optional expedients provided under Topic 848 that permitted its hedging relationships to continue without de-designation upon changes due to reference rate reform. The adoption of this guidance resulted in no material impact to the Company’s consolidated financial statements. See Note 22, “Derivative Financial Instruments” for more information on our hedging activities.

 

Income Taxes –Accounting for Income Taxes

 

In December 2019, the FASB issued ASU no. 2019-12, “Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes.” Among other things, the amendment removes certain exceptions for periods with operating losses, and reduces the complexity surrounding franchise tax, step up in tax basis of goodwill in conjunction with a business combination, and timing of enacting changes in tax laws during interim periods. The Company adopted this standard effective January 4, 2021 on a prospective basis. There was no impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

 

Segment Reporting – Improvements to Reportable Segment Disclosures

 

In November 2023, the FASB issued ASU no. 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures." The amendments in this update increase required disclosures about a public entity's reportable segments, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM. The guidance will be effective for the Company for its fiscal year 2024 and for interim periods starting in the first quarter of its fiscal year 2025. Early adoption is permitted, and the guidance is required to be applied retrospectively. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

 

Income Taxes – Improvements to Income Tax Disclosures

 

In December 2023, the FASB issued ASU no. 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures." The amendments in this update enhance a public entity's annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance will be effective for the Company for its fiscal year 2025. Early adoption is permitted, and the guidance should be applied prospectively, with an option to apply it retrospectively. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements and disclosures.

 

No other new accounting pronouncements issued or effective during 2023 had, or are expected to have, a material impact on the Company’s consolidated financial statements.
v3.24.0.1
Basis of Presentation (Tables)
 12 Months Ended
Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Summary of Sales by as Perishable and Non-Perishable

The following is a breakdown of the Company’s perishable and non-perishable sales mix:

 

 

2023

 

 

2022

 

 

2021

 

Perishables

 

 

57.3

%

 

 

58.0

%

 

 

57.7

%

Non-Perishables

 

 

42.7

%

 

 

42.0

%

 

 

42.3

%

 
v3.24.0.1
Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2023
Amounts Due from Banks The amounts due from banks for these transactions at each reporting date were as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Due from banks for debit and credit card transactions

 

$

85,116

 

 

$

77,665

 
Estimated Useful Lives of Asset Classes

The following table includes the estimated useful lives of certain of the Company’s asset classes:

Computer hardware and software

 

3 to 5 years

Furniture, fixtures and equipment

 

7 to 20 years

Leasehold improvements

 

up to 15 years

Buildings

 

40 years
Schedule of Estimated Breakage Revenue Recognized A summary of the activity and balances in the gift card liability, net is as follows:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning Balance

 

$

10,906

 

 

$

12,586

 

 

$

15,888

 

Gift cards issued during the period but not redeemed(1)

 

 

4,271

 

 

 

4,291

 

 

 

5,711

 

Revenue recognized from beginning liability

 

 

(4,611

)

 

 

(5,971

)

 

 

(9,013

)

Ending Balance

 

$

10,566

 

 

$

10,906

 

 

$

12,586

 

(1) net of estimated breakage
v3.24.0.1
Accounts Receivable (Tables)
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Summary of Accounts Receivable

A summary of accounts receivable is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Landlords

 

$

5,451

 

 

$

232

 

Vendors

 

 

3,168

 

 

 

3,544

 

Insurance

 

 

2,884

 

 

 

2,320

 

Ecommerce

 

 

7,682

 

 

 

6,988

 

Other

 

 

11,128

 

 

 

3,024

 

Total

 

$

30,313

 

 

$

16,108

 
v3.24.0.1
Prepaid Expenses and Other Current Assets (Tables)
 12 Months Ended
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Summary of Prepaid Expenses and Other Current Assets

A summary of prepaid expenses and other current assets is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Prepaid expenses

 

$

22,062

 

 

$

33,034

 

Restricted cash

 

 

2,076

 

 

 

1,959

 

Income tax receivable

 

 

23,559

 

 

 

18,155

 

Other current assets

 

 

770

 

 

 

770

 

Total

 

$

48,467

 

 

$

53,918

 
v3.24.0.1
Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Summary of Property and Equipment, Net

A summary of property and equipment, net is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Land and finance lease assets

 

$

16,562

 

 

$

15,753

 

Furniture, fixtures and equipment

 

 

1,002,824

 

 

 

850,357

 

Leasehold improvements

 

 

715,489

 

 

 

679,880

 

Construction in progress

 

 

92,066

 

 

 

110,106

 

Total property and equipment

 

 

1,826,941

 

 

 

1,656,096

 

Accumulated depreciation and amortization

 

 

(1,028,234

)

 

 

(933,855

)

Property and equipment, net

 

$

798,707

 

 

$

722,241

 
v3.24.0.1
Leases (Tables)
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Components of Lease Cost

Lease cost includes both the fixed and variable expenses recorded for leases. The components of lease cost are as follows:

 

 

 

 

 

Year Ended

 

 

 

Classification

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Operating lease cost

 

Selling, general and administrative expenses (1), (2)

 

$

232,745

 

 

$

204,559

 

 

$

196,602

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

 

 

Amortization of Property
   and Equipment

 

Depreciation and amortization

 

 

1,062

 

 

 

966

 

 

 

966

 

Interest on lease liabilities

 

Interest expense

 

 

816

 

 

 

852

 

 

 

906

 

Variable lease cost

 

Selling, general and administrative expenses (1), (2)

 

 

70,197

 

 

 

65,979

 

 

 

60,763

 

Sublease income

 

Selling, general and administrative expenses

 

 

(832

)

 

 

(833

)

 

 

(839

)

Total net lease cost

 

 

 

$

303,988

 

 

$

271,523

 

 

$

258,398

 

 

(1)
Supply chain-related amounts of $18.2 million, $12.4 million and $10.6 million were included in cost of sales for 2023, 2022 and 2021, respectively.

 

(2)
Lease cost related to closed store locations of $6.3 million, $1.3 million and $0.7 million were included in Store closure and other costs, net for 2023, 2022 and 2021, respectively.
Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases is as follows:

 

 

 

 

 

As Of

 

 

 

Classification

 

December 31, 2023

 

 

January 1, 2023

 

Assets

 

 

 

 

 

 

 

 

Operating

 

Operating lease assets

 

$

1,322,854

 

 

$

1,106,524

 

Finance

 

Property and equipment, net

 

 

7,127

 

 

 

7,285

 

Total lease assets

 

 

 

$

1,329,981

 

 

$

1,113,809

 

Liabilities

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

Operating

 

Current portion of operating lease liabilities

 

$

126,271

 

 

$

135,584

 

Finance

 

Current portion of finance lease liabilities

 

 

1,032

 

 

 

1,012

 

Noncurrent:

 

 

 

 

 

 

 

 

Operating

 

Long-term operating lease liabilities

 

 

1,399,676

 

 

 

1,145,173

 

Finance

 

Long-term debt and finance lease liabilities

 

 

8,685

 

 

 

8,902

 

Total lease liabilities

 

 

 

$

1,535,664

 

 

$

1,290,671

 

 

 

 

2023

 

 

2022

 

 

2021

 

Weighted average remaining lease term (years):

 

 

 

 

 

 

 

 

 

Operating leases

 

 

10.0

 

 

 

9.4

 

 

 

9.6

 

Finance leases

 

 

6.7

 

 

 

7.8

 

 

 

8.8

 

Weighted average discount rate:

 

 

 

 

 

 

 

 

 

Operating leases

 

 

7.2

%

 

 

7.1

%

 

 

6.7

%

Finance leases

 

 

8.3

%

 

 

8.4

%

 

 

8.4

%
Supplemental Cash Flow and Other Information Related to Leases

Supplemental cash flow and other information related to leases is as follows:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Cash paid for amounts included in measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows for operating leases

 

$

228,411

 

 

$

207,516

 

 

$

182,926

 

Operating cash flows for finance leases

 

 

816

 

 

 

852

 

 

 

906

 

 

 

 

 

 

 

 

 

 

 

Lease assets obtained in exchange for lease liabilities:

 

 

 

 

 

 

 

 

 

Finance leases

 

$

809

 

 

$

—

 

 

$

—

 

Operating leases

 

 

364,997

 

 

 

157,269

 

 

 

139,349

 
Summary of Maturities of Lease Liabilities

A summary of maturities of lease liabilities is as follows:

 

 

 

Operating Leases(1), (2)

 

 

Finance Leases

 

 

Total

 

2024

 

$

208,602

 

 

$

1,780

 

 

$

210,382

 

2025

 

 

267,082

 

 

 

2,107

 

 

 

269,189

 

2026

 

 

231,900

 

 

 

1,945

 

 

 

233,845

 

2027

 

 

215,856

 

 

 

2,032

 

 

 

217,888

 

2028

 

 

185,758

 

 

 

1,766

 

 

 

187,524

 

Thereafter

 

 

1,072,847

 

 

 

3,241

 

 

 

1,076,088

 

Total lease payments

 

 

2,182,045

 

 

 

12,871

 

 

 

2,194,916

 

Less: Imputed interest

 

 

(656,098

)

 

 

(3,154

)

 

 

(659,252

)

Total lease liabilities

 

 

1,525,947

 

 

 

9,717

 

 

 

1,535,664

 

Less: Current portion

 

 

(126,271

)

 

 

(1,032

)

 

 

(127,303

)

Long-term lease liabilities

 

$

1,399,676

 

 

$

8,685

 

 

$

1,408,361

 

 

(1)
Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.

 

(2)
These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Intangible Assets (Tables)
 12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Activity and Balances in Intangible Assets

A summary of the activity and balances in intangible assets is as follows:

 

 

Balance at January 2, 2022

 

 

Additions/Adjustments

 

 

Balance at January 1, 2023

 

Indefinite-lived trade names

 

$

182,937

 

 

$

—

 

 

$

182,937

 

Indefinite-lived liquor licenses

 

 

2,023

 

 

 

—

 

 

 

2,023

 

Total intangible assets

 

$

184,960

 

 

$

—

 

 

$

184,960

 

 

 

 

Balance at January 1, 2023

 

 

Additions/Adjustments

 

 

Balance at December 31, 2023

 

Indefinite-lived trade names

 

$

182,937

 

 

$

—

 

 

$

182,937

 

Indefinite-lived reacquired rights

 

 

—

 

 

 

23,100

 

 

 

23,100

 

Indefinite-lived liquor licenses

 

 

2,023

 

 

 

—

 

 

 

2,023

 

Total intangible assets

 

$

184,960

 

 

$

23,100

 

 

$

208,060

 

 
v3.24.0.1
Goodwill (Tables)
 12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Activity and Balance in Goodwill

A summary of the activity and balances in goodwill is as follows:

 

 

 

Balance at January 1, 2023

 

 

Additions

 

 

Balance at December 31, 2023

 

Goodwill

 

$

368,878

 

 

$

12,863

 

 

$

381,741

 
v3.24.0.1
Accrued Liabilities (Tables)
 12 Months Ended
Dec. 31, 2023
Payables and Accruals [Abstract]  
Summary of Accrued Liabilities

A summary of accrued liabilities is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Self-insurance reserves

 

$

25,012

 

 

$

23,954

 

Accrued occupancy related (CAM, property taxes, etc.)

 

 

23,935

 

 

 

24,981

 

Gift cards, net of breakage

 

 

10,566

 

 

 

10,906

 

Accrued sales, use and excise tax

 

 

14,296

 

 

 

13,820

 

Other accrued liabilities

 

 

91,078

 

 

 

77,645

 

Total

 

$

164,887

 

 

$

151,306

 
v3.24.0.1
Accrued Salaries and Benefits (Tables)
 12 Months Ended
Dec. 31, 2023
Payables and Accruals [Abstract]  
Summary of Accrued Salaries and Benefits

A summary of accrued salaries and benefits is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Bonuses

 

$

33,890

 

 

$

23,679

 

Payroll

 

 

20,652

 

 

 

19,873

 

Vacation

 

 

18,050

 

 

 

16,732

 

Severance and other

 

 

2,160

 

 

 

1,290

 

Total

 

$

74,752

 

 

$

61,574

 
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities (Tables)
 12 Months Ended
Dec. 31, 2023
Long Term Debt And Finance Lease Liabilities [Abstract]  
Summary of Long-Term Debt and Finance Lease Liabilities

A summary of long-term debt and finance lease liabilities is as follows:

 

 

 

 

 

 

 

As Of

 

Facility

 

Maturity

 

Interest Rate

 

December 31, 2023

 

 

January 1, 2023

 

Senior secured debt

 

 

 

 

 

 

 

 

 

 

$700.0 million Credit Agreement

 

March 25, 2027

 

Variable

 

$

125,000

 

 

$

250,000

 

Finance lease liabilities

 

Various

 

n/a

 

 

8,685

 

 

 

8,902

 

Long-term debt and finance lease liabilities

 

 

 

 

 

$

133,685

 

 

$

258,902

 

 
Summary of Maturities of Long-term Debt

A summary of maturities of long-term debt is as follows:

 

 

 

$700 million Credit Agreement

 

2024

 

$

—

 

2025

 

 

—

 

2026

 

 

—

 

2027

 

 

125,000

 

2028

 

 

—

 

Thereafter

 

 

—

 

Total

 

$

125,000

 
v3.24.0.1
Other Long-Term Liabilities (Tables)
 12 Months Ended
Dec. 31, 2023
Other Liabilities Disclosure [Abstract]  
Summary of Other Long-Term Liabilities

A summary of other long-term liabilities is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Long-term portion of self-insurance reserves

 

$

22,826

 

 

$

23,658

 

Other

 

 

13,444

 

 

 

12,682

 

Total

 

$

36,270

 

 

$

36,340

 
v3.24.0.1
Self-Insurance Programs (Tables)
 12 Months Ended
Dec. 31, 2023
Insurance [Abstract]  
Schedule of Changes in Self-insurance Reserves

The following table summarizes the changes in the Company's self-insurance reserves through December 31, 2023:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning Balance

 

$

47,612

 

 

$

50,529

 

 

$

48,518

 

Expenses, net of actuarial adjustments

 

 

85,148

 

 

 

76,720

 

 

 

85,892

 

Claim Payments

 

 

(84,922

)

 

 

(79,637

)

 

 

(83,881

)

Ending Balance

 

 

47,838

 

 

 

47,612

 

 

 

50,529

 

Less: Current portion

 

 

(25,012

)

 

 

(23,954

)

 

 

(27,136

)

Long-term portion

 

$

22,826

 

 

$

23,658

 

 

$

23,393

 
v3.24.0.1
Defined Contribution Plan (Tables)
 12 Months Ended
Dec. 31, 2023
Postemployment Benefits [Abstract]  
Total Expense Recorded for Matching under Defined Contribution Plans otal expense recorded for the matching under the Plan, which is reflected in Selling, general and administrative expenses on the consolidated statements of income:

 

Year Ended

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

$

8,496

 

 

$

7,820

 

 

$

7,517

 
v3.24.0.1
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Components of Income Tax Provision

The income tax provision consists of the following:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

U.S. Federal—current

 

$

67,898

 

 

$

66,398

 

 

$

60,329

 

U.S. Federal—deferred

 

 

(5,927

)

 

 

1,028

 

 

 

(1,663

)

U.S. Federal—total

 

 

61,971

 

 

 

67,426

 

 

 

58,666

 

State—current

 

 

21,902

 

 

 

19,823

 

 

 

19,715

 

State—deferred

 

 

1,011

 

 

 

900

 

 

 

(146

)

State—total

 

 

22,913

 

 

 

20,723

 

 

 

19,569

 

Total provision

 

$

84,884

 

 

$

88,149

 

 

$

78,235

 
Tax Rate Reconciliation

Income tax provision differed from the amounts computed by applying the U.S. federal income tax rate to pre-tax income as a result of the following:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

 

 

 

State income taxes, net of federal benefit

 

 

5.4

 

 

 

4.7

 

 

 

4.8

 

Enhanced charitable contribution impact

 

 

(1.0

)

 

 

(0.9

)

 

 

(1.5

)

Non-deductible Executive Compensation

 

 

1.4

 

 

 

0.9

 

 

 

0.3

 

Benefit of federal tax credit

 

 

(0.7

)

 

 

(0.5

)

 

 

(0.4

)

Excess tax benefits from share based payments

 

 

(1.2

)

 

 

(0.4

)

 

 

(0.1

)

Other, net

 

 

(0.2

)

 

 

0.4

 

 

 

0.2

 

Effective income tax rate

 

 

24.7

%

 

 

25.2

%

 

 

24.3

%

 
Components of Deferred Tax Assets and Deferred Tax Liabilities

Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

Deferred tax assets

 

 

 

 

 

 

Employee benefits

 

$

18,329

 

 

$

16,052

 

Tax credits

 

 

105

 

 

 

166

 

Operating leases

 

 

392,168

 

 

 

329,154

 

Other lease related

 

 

6,137

 

 

 

5,740

 

Other accrued liabilities

 

 

4,320

 

 

 

4,004

 

Charitable contribution carryforward

 

 

3,343

 

 

 

2,819

 

Inventories and other

 

 

2,905

 

 

 

2,605

 

Total gross deferred tax assets

 

 

427,307

 

 

 

360,540

 

Less: Valuation Allowance

 

 

(3,343

)

 

 

(917

)

Total deferred tax assets, net of valuation allowance

 

 

423,964

 

 

 

359,623

 

Deferred tax liabilities

 

 

 

 

 

 

Depreciation and amortization

 

 

(80,765

)

 

 

(83,091

)

Intangible assets

 

 

(64,668

)

 

 

(52,413

)

Operating leases

 

 

(339,973

)

 

 

(284,377

)

Asset retirement obligations

 

 

(939

)

 

 

(865

)

Total gross deferred tax liabilities

 

 

(486,345

)

 

 

(420,746

)

Net deferred tax liability

 

$

(62,381

)

 

$

(61,123

)

 
Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 

 

 

As Of

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Beginning balance

 

$

1,119

 

 

$

1,770

 

 

$

1,803

 

Additions based on tax positions related to the
   current year

 

 

58

 

 

 

43

 

 

 

16

 

Additions based on tax positions related to prior years

 

 

—

 

 

 

—

 

 

 

31

 

Reductions for settlements with taxing authorities

 

 

—

 

 

 

(694

)

 

 

—

 

Reduction due to lapse of applicable statute of limitations

 

 

(700

)

 

 

—

 

 

 

—

 

Reductions for tax positions for prior years

 

 

—

 

 

 

—

 

 

 

(80

)

Ending balance

 

$

477

 

 

$

1,119

 

 

$

1,770

 
v3.24.0.1
Capital Stock (Tables)
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Schedule of Options Exercised and Other Shares in Exchange for Issuance of Shares of Common Stock

The following table outlines the options exercised in exchange for the issuance of shares of common stock during 2023, 2022 and 2021:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Options exercised

 

 

637,387

 

 

 

218,509

 

 

 

115,123

 

Other share issuances under stock plans

 

 

811,729

 

 

 

636,955

 

 

 

462,173

 
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 (total cost in thousands):

 

Year Ended

 

 

December 31, 2023

 

 

January 1, 2023

 

Number of common shares acquired

 

5,864,246

 

 

 

6,897,082

 

Average price per common share acquired

$

35.00

 

 

$

28.99

 

Total cost of common shares acquired

$

205,262

 

 

$

199,980

 

 
Schedule of Share Repurchase Activiy The following table outlines the common stock share repurchase programs authorized by the Company’s board of directors and the related repurchase activity and available authorization as of December 31, 2023:

 

Effective date

 

Expiration date

 

Amount
authorized

 

 

Cost of
repurchases

 

 

Authorization
available

 

March 2, 2022

 

December 31, 2024

 

$

600,000

 

 

$

391,619

 

 

$

208,381

 
v3.24.0.1
Net Income Per Share (Tables)
 12 Months Ended
Dec. 31, 2023
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):

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

Net income

 

$

258,856

 

 

$

261,164

 

 

$

244,157

 

Weighted average shares outstanding - basic

 

 

102,479

 

 

 

108,232

 

 

 

115,377

 

Basic net income per share

 

$

2.53

 

 

$

2.41

 

 

$

2.12

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

Net income

 

$

258,856

 

 

$

261,164

 

 

$

244,157

 

Weighted average shares outstanding - basic

 

 

102,479

 

 

 

108,232

 

 

 

115,377

 

Dilutive effect of share-based awards:

 

 

 

 

 

 

 

 

 

Assumed exercise of options to purchase shares

 

 

343

 

 

 

337

 

 

 

215

 

RSUs

 

 

524

 

 

 

394

 

 

 

390

 

PSAs

 

 

44

 

 

 

176

 

 

 

95

 

Weighted average shares and
   equivalent shares outstanding - diluted

 

 

103,390

 

 

 

109,139

 

 

 

116,077

 

Diluted net income per share

 

$

2.50

 

 

$

2.39

 

 

$

2.10

 
v3.24.0.1
Derivative Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of Gains and Losses of Derivative Instruments

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Consolidated Statements of
   Income Classification

 

 

 

 

 

 

 

 

 

Interest expense, net

 

$

—

 

 

$

2,021

 

 

$

5,778

 
v3.24.0.1
Comprehensive Income (Tables)
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Schedule of Changes in Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) for the year ended January 1, 2023:

 

 

 

Cash Flow
Hedges

 

Balance at January 2, 2022

 

$

(3,758

)

Other comprehensive income, net of tax

 

 

 

Unrealized gains on cash flow hedging activities, net of income tax of $1,819

 

 

5,259

 

Reclassification of net losses on cash flow hedges to net income, net of income
    tax of ($520)

 

 

(1,501

)

Total other comprehensive income

 

 

3,758

 

Balance at January 1, 2023

 

$

—

 

 
v3.24.0.1
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present the Company’s fair value hierarchy for the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and January 1, 2023:

 

December 31, 2023

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Long-term debt

 

$

—

 

 

$

125,000

 

 

$

—

 

 

$

125,000

 

Total financial liabilities

 

$

—

 

 

$

125,000

 

 

$

—

 

 

$

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2023

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Long-term debt

 

$

—

 

 

$

250,000

 

 

$

—

 

 

$

250,000

 

Total financial liabilities

 

$

—

 

 

$

250,000

 

 

$

—

 

 

$

250,000

 
v3.24.0.1
Segments (Tables)
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Summary of Disaggregation of Revenue

In accordance with ASC 606, the following table represents a disaggregation of revenue for 2023, 2022 and 2021:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Perishables

 

$

3,915,971

 

 

 

57.3

%

 

$

3,717,642

 

 

 

58.0

%

 

$

3,518,181

 

 

 

57.7

%

Non-Perishables

 

 

2,921,413

 

 

 

42.7

%

 

 

2,686,581

 

 

 

42.0

%

 

 

2,581,688

 

 

 

42.3

%

Net Sales

 

$

6,837,384

 

 

 

100.0

%

 

$

6,404,223

 

 

 

100.0

%

 

$

6,099,869

 

 

 

100.0

%
v3.24.0.1
Share-Based Compensation (Tables)
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Estimated Fair Values of Options Granted

The estimated weighted average fair values of options granted during 2023, 2022 and 2021 were $12.63, $10.58 and $7.66, respectively, and were calculated using the following assumptions in the table below:

 

 

2023

 

 

2022

 

 

2021

 

Dividend yield

 

 

0.00

%

 

 

0.00

%

 

 

0.00

%

Expected volatility

 

 

39.48

%

 

 

36.59

%

 

 

36.35

%

Risk free interest rate

 

 

3.78

%

 

 

2.12

%

 

 

0.83

%

Expected term, in years

 

 

4.50

 

 

 

4.50

 

 

 

4.50

 
 
Summary of Grant Date Weighted Average Fair Value of Options Granted and Options Forfeited

The following table summarizes grant date weighted average fair value of options granted and options forfeited:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Grant date weighted average fair value of options granted

 

$

12.63

 

 

$

10.58

 

 

$

7.66

 

Grant date weighted average fair value of options forfeited

 

$

10.98

 

 

$

8.66

 

 

$

7.10

 
 
Summary of Option Activity

The following table summarizes option activity during 2023:

 

 

 

Number of
Options

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Life (In Years)

 

 

Aggregate
Intrinsic
Value

 

Outstanding at January 1, 2023

 

 

1,318,158

 

 

$

20.93

 

 

 

 

 

 

 

Granted

 

 

221,085

 

 

 

32.95

 

 

 

 

 

 

 

Forfeited

 

 

(47,481

)

 

 

30.87

 

 

 

 

 

 

 

Exercised

 

 

(637,387

)

 

 

17.97

 

 

 

 

 

$

12,151

 

Outstanding at December 31, 2023

 

 

854,375

 

 

 

25.70

 

 

 

4.53

 

 

$

19,938

 

Exercisable—December 31, 2023

 

 

424,598

 

 

 

20.82

 

 

 

3.61

 

 

$

11,983

 

Vested/Expected to vest—December 31, 2023

 

 

854,375

 

 

$

25.70

 

 

 

4.53

 

 

$

19,938

 

 

  
Summary of Weighted Average Grant Date Fair Value of RSUs Awarded

The following table summarizes the weighted average grant date fair value of RSUs awarded during 2023, 2022 and 2021:

 

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

RSUs awarded

 

$

33.21

 

 

$

31.01

 

 

$

24.11

 

 

  
Summary of RSUs Activity

The following table summarizes RSU activity during 2023:

 

 

 

Number of
RSUs

 

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding at January 1, 2023

 

 

972,583

 

 

$

26.94

 

Awarded

 

 

514,055

 

 

 

33.21

 

Vested

 

 

(543,030

)

 

 

24.44

 

Forfeited

 

 

(75,412

)

 

 

31.84

 

Outstanding at December 31, 2023

 

 

868,196

 

 

$

31.79

 
 
Summary of PSA Activity

The following table summarizes PSA activity during 2023:

 

 

 

Number of
PSAs

 

 

Weighted
Average
Grant Date
Fair Value

 

Outstanding at January 1, 2023

 

 

460,106

 

 

$

24.12

 

Awarded

 

 

172,059

 

 

 

32.95

 

Vested

 

 

(268,699

)

 

 

16.83

 

Forfeited

 

 

(34,954

)

 

 

32.18

 

PSAs earned

 

 

107,998

 

 

 

16.91

 

PSAs not earned

 

 

—

 

 

 

—

 

Outstanding at December 31, 2023

 

 

436,510

 

 

$

29.66

 
 
Summary of Share-Based Compensation Expense in Selling, General and Administrative Expenses

The Company presents share-based compensation expense in Selling, general and administrative expenses on the Company’s consolidated statements of income. The amount recognized was as follows:

 

 

Year Ended

 

 

 

December 31, 2023

 

 

January 1, 2023

 

 

January 2, 2022

 

Share-based compensation expense

 

$

18,898

 

 

$

16,603

 

 

$

15,883

 

Income tax benefit

 

 

(3,007

)

 

 

(2,495

)

 

 

(2,450

)

Net share-based compensation expense

 

$

15,891

 

 

$

14,108

 

 

$

13,433

 
 
Summary of Total Unrecognized Compensation Expense and Remaining Weighted Average Recognition Period Related to Outstanding Share-Based Awards

As of December 31, 2023, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:

 

 

 

Unrecognized
compensation
expense

 

 

Remaining
weighted
average
recognition
period

 

Options

 

$

2,845

 

 

 

1.4

 

RSUs

 

 

15,667

 

 

 

1.4

 

PSAs

 

 

4,611

 

 

 

1.2

 

Total unrecognized compensation expense at December 31, 2023

 

$

23,123

 

 

 

 
 
Awards Granted Under the 2022 Incentive Plan [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Summary of Share-Based Compensation Awards Granted

The Company granted the following awards during 2023 and 2022 under the 2022 Incentive Plan:

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

March 14, 2023

 

 

491,729

 

 

 

172,059

 

 

 

221,085

 

May 1, 2023

 

 

2,931

 

 

 

—

 

 

 

—

 

June 7, 2023

 

 

1,271

 

 

 

—

 

 

 

—

 

September 5, 2023

 

 

6,408

 

 

 

—

 

 

 

—

 

September 11, 2023

 

 

10,204

 

 

 

—

 

 

 

—

 

October 30, 2023

 

 

1,512

 

 

 

—

 

 

 

—

 

Total

 

 

514,055

 

 

 

172,059

 

 

 

221,085

 

Weighted-average grant date fair value

 

$

33.21

 

 

$

32.95

 

 

$

12.63

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

$

32.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

June 7, 2022

 

 

58,057

 

 

 

—

 

 

 

—

 

September 7, 2022

 

 

21,598

 

 

 

—

 

 

 

—

 

October 10, 2022

 

 

6,506

 

 

 

—

 

 

 

—

 

Total

 

 

86,161

 

 

 

—

 

 

 

—

 

Weighted-average grant date fair value

 

$

27.74

 

 

$

—

 

 

$

—

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

 

—

 
 
Awards Granted Under the 2013 Incentive Plan [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Summary of Share-Based Compensation Awards Granted  

The Company granted the following awards during 2022 under the 2013 Incentive Plan:

 

Grant Date

 

RSUs

 

 

PSAs

 

 

Options

 

March 15, 2022

 

 

370,177

 

 

 

147,846

 

 

 

211,352

 

March 21, 2022

 

 

104,913

 

 

 

14,260

 

 

 

20,270

 

Total

 

 

475,090

 

 

 

162,106

 

 

 

231,622

 

Weighted-average grant date fair value

 

$

31.60

 

 

$

31.52

 

 

$

10.58

 

Weighted-average exercise price

 

 

—

 

 

 

—

 

 

$

31.52

 

 
v3.24.0.1
Organization and Description of Business - Additional Information (Detail)
Dec. 31, 2023
Store
State
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Operating stores | Store 407
Number of states entity operates | State 23
v3.24.0.1
Basis of Presentation - Additional Information (Detail)
 12 Months Ended
Dec. 31, 2023
Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Number of operating segment 1
v3.24.0.1
Basis of Presentation - Summary of Sales by as Perishable and Non-Perishable (Detail) - Sales Revenue, Goods, Net [Member] - Product Concentration Risk [Member]
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Revenue from External Customer [Line Items]      
Percentage of supplier accountability on total purchase 100.00% 100.00% 100.00%
Perishables [Member]      
Revenue from External Customer [Line Items]      
Percentage of supplier accountability on total purchase 57.30% 58.00% 57.70%
Non-Perishables [Member]      
Revenue from External Customer [Line Items]      
Percentage of supplier accountability on total purchase 42.70% 42.00% 42.30%
v3.24.0.1
Significant Accounting Policies - Additional Information (Detail) - USD ($)
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Summary Of Significant Accounting Policy [Line Items]      
Fiscal period duration 364 days 364 days 364 days
Impairment, goodwill $ 0 $ 0 $ 0
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] Increase (Decrease) in Other Operating Assets    
Impairment, long lived assets $ 30,500,000 8,100,000 4,800,000
Option to extend lease term, Description The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option.    
Advertising expense, net of rebates $ 45,800,000 49,200,000 45,900,000
Percentage of income tax to be realized 50.00%    
Store closing charges $ 30,500,000 8,100,000 $ 4,800,000
Leasehold Improvements, Gross 715,489,000 679,880,000  
Operating lease assets 1,322,854,000 1,106,524,000  
Operating lease liabilities [1],[2] 1,525,947,000    
Increased retained earnings $ 373,612,000 $ 320,012,000  
Minimum [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Renewal term of lease 1 year    
Maximum [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Renewal term of lease 20 years    
Underperforming Stores [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Impairment, long lived assets $ 27,800,000    
Operating Segments [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Impairment, long lived assets $ 2,700,000    
Operating Segments [Member] | Cost of Goods, Total [Member] | Supplier Concentration Risk [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Percentage of supplier accountability on total purchase 47.00% 45.00% 44.00%
Inventory Valuation Reserve [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Allowances or reserves for inventories $ 0 $ 0  
Prepaid Expenses and Other Current Assets [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Restricted cash related to defined benefit plan forfeitures and healthcare, general liability and workers’ compensation plan benefits $ 2,100,000 $ 2,000,000  
[1] Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.
[2] These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Significant Accounting Policies - Amounts Due from Banks (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Cash and Cash Equivalents [Abstract]    
Due from banks for debit and credit card transactions $ 85,116 $ 77,665
v3.24.0.1
Significant Accounting Policies - Estimated Useful Lives of Asset Classes (Detail)
Dec. 31, 2023
Computer hardware and software [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 3 years
Computer hardware and software [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 5 years
Furniture, fixtures and equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 7 years
Furniture, fixtures and equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 20 years
Leasehold improvements [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 15 years
Buildings [Member]  
Property, Plant and Equipment [Line Items]  
Estimated useful lives 40 years
v3.24.0.1
Significant Accounting Policies - Schedule of Estimated Breakage Revenue Recognized (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Disaggregation Of Revenue [Line Items]      
Beginning Balance $ 10,906 $ 12,586 $ 15,888
Gift cards issued during the period but not redeemed [1] 4,271 4,291 5,711
Revenue recognized from beginning liability (4,611) (5,971) (9,013)
Ending Balance $ 10,566 $ 10,906 $ 12,586
[1] net of estimated breakage
v3.24.0.1
Accounts Receivable - Summary of Accounts Receivable (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Receivables [Abstract]    
Landlords $ 5,451 $ 232
Vendors 3,168 3,544
Insurance 2,884 2,320
Ecommerce 7,682 6,988
Other 11,128 3,024
Total $ 30,313 $ 16,108
v3.24.0.1
Accounts Receivable - Additional Information (Detail) - USD ($)
$ in Millions
Dec. 31, 2023
Jan. 01, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Allowance for vendor receivables $ 1.3 $ 1.4
v3.24.0.1
Prepaid Expenses and Other Current Assets - Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Prepaid expenses $ 22,062 $ 33,034
Restricted cash 2,076 1,959
Income tax receivable 23,559 18,155
Other current assets 770 770
Total $ 48,467 $ 53,918
v3.24.0.1
Property and Equipment - Summary of Property and Equipment, Net (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Property, Plant and Equipment, Net [Abstract]    
Land and finance lease assets $ 16,562 $ 15,753
Furniture, fixtures and equipment 1,002,824 850,357
Leasehold improvements 715,489 679,880
Construction in progress 92,066 110,106
Total property and equipment 1,826,941 1,656,096
Accumulated depreciation and amortization (1,028,234) (933,855)
Property and equipment, net $ 798,707 $ 722,241
v3.24.0.1
Property and Equipment - Additional Information (Detail) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Property, Plant and Equipment, Net [Abstract]      
Depreciation expense $ 136.6 $ 125.7 $ 124.1
Assets Impairment expense $ 30.5 $ 8.1 $ 4.8
v3.24.0.1
Leases - Components of Lease Cost (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Finance lease cost:      
Total net lease cost $ 303,988 $ 271,523 $ 258,398
Selling, General and Administrative Expenses [Member]      
Lessee Lease Description [Line Items]      
Operating lease cost [1],[2] 232,745 204,559 196,602
Finance lease cost:      
Variable lease cost [1],[2] 70,197 65,979 60,763
Sublease income (832) (833) (839)
Depreciation and Amortization [Member]      
Finance lease cost:      
Amortization of Property and Equipment 1,062 966 966
Interest Expense [Member]      
Finance lease cost:      
Interest on lease liabilities $ 816 $ 852 $ 906
[1] Lease cost related to closed store locations of $6.3 million, $1.3 million and $0.7 million were included in Store closure and other costs, net for 2023, 2022 and 2021, respectively.
[2] Supply chain-related amounts of $18.2 million, $12.4 million and $10.6 million were included in cost of sales for 2023, 2022 and 2021, respectively.
v3.24.0.1
Leases - Components of Lease Cost (Parenthetical) (Detail) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Cost of Sales [Member]      
Lessee Lease Description [Line Items]      
Supply chain-related amounts $ 18.2 $ 12.4 $ 10.6
Store closure and other costs [Member]      
Lessee Lease Description [Line Items]      
Lease Cost Related To Closed Stores $ 6.3 $ 1.3 $ 0.7
v3.24.0.1
Leases - Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Leases [Abstract]      
Operating lease assets $ 1,322,854 $ 1,106,524  
Finance, Assets $ 7,127 $ 7,285  
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] Property and equipment, net of accumulated depreciation Property and equipment, net of accumulated depreciation  
Total lease assets $ 1,329,981 $ 1,113,809  
Operating, Current 126,271 [1],[2] 135,584  
Finance, Current 1,032 1,012  
Operating, Noncurrent 1,399,676 [1],[2] 1,145,173  
Finance, Noncurrent $ 8,685 $ 8,902  
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] Long-term debt and finance lease liabilities Long-term debt and finance lease liabilities  
Total lease liabilities $ 1,535,664 $ 1,290,671  
Weighted average remaining lease term (years)      
Operating leases 10 years 9 years 4 months 24 days 9 years 7 months 6 days
Finance leases 6 years 8 months 12 days 7 years 9 months 18 days 8 years 9 months 18 days
Weighted average discount rate      
Operating leases 7.20% 7.10% 6.70%
Finance leases 8.30% 8.40% 8.40%
[1] Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.
[2] These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Leases - Supplemental Cash Flow and Other Information Related to Leases (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Cash paid for amounts included in measurement of lease liabilities:      
Operating cash flows for operating leases $ 228,411 $ 207,516 $ 182,926
Operating cash flows for finance leases 816 852 906
Lease assets obtained in exchange for lease liabilities:      
Finance leases 809 0 0
Operating leases $ 364,997 $ 157,269 $ 139,349
v3.24.0.1
Leases - Summary of Maturities of Lease Liabilities (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Operating Leases    
2024 [1],[2] $ 208,602  
2025 [1],[2] 267,082  
2026 [1],[2] 231,900  
2027 [1],[2] 215,856  
2028 [1],[2] 185,758  
Thereafter [1],[2] 1,072,847  
Total lease payments [1],[2] 2,182,045  
Less: Imputed interest [1],[2] (656,098)  
Total lease liabilities [1],[2] 1,525,947  
Less: Current portion (126,271) [1],[2] $ (135,584)
Long-term operating lease liabilities 1,399,676 [1],[2] 1,145,173
Finance Leases    
2024 1,780  
2025 2,107  
2026 1,945  
2027 2,032  
2028 1,766  
Thereafter 3,241  
Total lease payments 12,871  
Less: Imputed interest (3,154)  
Total lease liabilities 9,717  
Less: Current portion (1,032) (1,012)
Finance lease liabilities 8,685 $ 8,902
Total    
2024 210,382  
2025 269,189  
2026 233,845  
2027 217,888  
2028 187,524  
Thereafter 1,076,088  
Total lease payments 2,194,916  
Less: Imputed interest 659,252  
Total lease liabilities 1,535,664  
Less: Current portion 127,303  
Long-term lease liabilities $ 1,408,361  
[1] Operating lease payments include $62.5 million related to periods covered by options to extend lease terms that are reasonably certain of being exercised and exclude $584.1 million of legally binding minimum lease payments for leases executed but not yet commenced.
[2] These amounts include rental income related to subtenant agreements under which we will receive $1.1 million in 2024, $0.9 million in 2025, $0.8 million in 2026, $0.7 million in 2027, $0.3 million in 2028 and $0.1 million thereafter.
v3.24.0.1
Leases - Summary of Maturities of Lease Liabilities (Parenthetical) (Detail)
$ in Millions
Dec. 31, 2023
USD ($)
Leases [Abstract]  
Operating lease option to extend reasonably certain of being exercised $ 62.5
Operating lease legally binding minimum payments for leases that have not yet commenced 584.1
Lessee Operating Lease Liability Subtenant Due Next Twelve Months 1.1
Lessee Operating Lease Liability Subtenant Due YearTwo 0.9
Lessee Operating Lease Liability Subtenant Due Year Three 0.8
Lessee Operating Lease Liability Subtenant Due Year Four 0.7
Lessee Operating Lease Liability Subtenant Due Year Five 0.3
Lessee Operating Lease Liability Subtenant Due After Year Five $ 0.1
v3.24.0.1
Intangible Assets - Summary of Activity and Balances in Intangible Assets (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Intangible Assets [Line Items]    
Indefinite-lived Gross Intangible Assets, Beginning Balance $ 184,960  
Indefinite-lived Gross Intangible Assets, Additions/Adjustments 23,100 $ 0
Indefinite-lived Gross Intangible Assets, Ending Balance 208,060 184,960
Gross Intangible Assets, Beginning Balance 184,960 184,960
Gross Intangible Assets, Ending Balance   184,960
Indefinite-lived trade names [Member]    
Intangible Assets [Line Items]    
Indefinite-lived Gross Intangible Assets, Beginning Balance 182,937 182,937
Indefinite-lived Gross Intangible Assets, Additions/Adjustments 0 0
Indefinite-lived Gross Intangible Assets, Ending Balance 182,937 182,937
Indefinite-lived reacquired rights [Member]    
Intangible Assets [Line Items]    
Indefinite-lived Gross Intangible Assets, Beginning Balance 0  
Indefinite-lived Gross Intangible Assets, Additions/Adjustments 23,100  
Indefinite-lived Gross Intangible Assets, Ending Balance 23,100 0
Indefinite-lived liquor licenses [Member]    
Intangible Assets [Line Items]    
Indefinite-lived Gross Intangible Assets, Beginning Balance 2,023 2,023
Indefinite-lived Gross Intangible Assets, Additions/Adjustments 0 0
Indefinite-lived Gross Intangible Assets, Ending Balance $ 2,023 $ 2,023
v3.24.0.1
Intangible Assets - Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Finite-Lived Intangible Assets, Net [Abstract]      
Amortization expense $ 0 $ 0 $ 0
v3.24.0.1
Goodwill - Additional Information (Detail) - USD ($)
Dec. 31, 2023
Jan. 01, 2023
Goodwill and Intangible Assets Disclosure [Abstract]    
Goodwill $ 381,741,000 $ 368,878,000
Accumulated goodwill impairment losses $ 0 $ 0
v3.24.0.1
Goodwill - Summary of Activity and Balance in Goodwill (Detail)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill beginning balance $ 368,878
Additions 12,863
Goodwill ending balance $ 381,741
v3.24.0.1
Other Assets - Additional Information (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Other assets $ 12,294 $ 13,973
v3.24.0.1
Accrued Liabilities - Summary of Accrued Liabilities (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Jan. 03, 2021
Payables and Accruals [Abstract]        
Self-insurance reserves $ 25,012 $ 23,954 $ 27,136  
Accrued occupancy related (CAM, property taxes, etc.) 23,935 24,981    
Gift cards, net of breakage 10,566 10,906 $ 12,586 $ 15,888
Accrued Sales Use And Excise Tax 14,296 13,820    
Other accrued liabilities 91,078 77,645    
Total $ 164,887 $ 151,306    
v3.24.0.1
Accrued Salaries and Benefits - Summary of Accrued Salaries and Benefits (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Payables and Accruals [Abstract]    
Bonuses $ 33,890 $ 23,679
Payroll 20,652 19,873
Vacation 18,050 16,732
Severance and other 2,160 1,290
Total $ 74,752 $ 61,574
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities - Summary of Long-Term Debt and Finance Lease Liabilities (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Long Term Debt And Finance Lease Liabilities [Line Items]    
Long-term debt $ 125,000  
Finance lease liabilities 8,685 $ 8,902
Long-term debt and finance lease liabilities 133,685 258,902
Senior Lien [Member] | Secured Debt [Member] | $700.0 million Credit Agreement [Member]    
Long Term Debt And Finance Lease Liabilities [Line Items]    
Long-term debt $ 125,000 $ 250,000
Debt instrument maturity Mar. 25, 2027  
Debt instrument, Interest Rate Variable  
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities - Summary of Long-Term Debt and Finance Lease Liabilities (Parenthetical) (Detail)
$ in Millions
Dec. 31, 2023
USD ($)
Senior Lien [Member] | Secured Debt [Member] | $700.0 million Credit Agreement [Member]  
Long Term Debt And Finance Lease Liabilities [Line Items]  
Debt instrument face amount $ 700.0
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities - Summary of Maturities of long -term debt (Details)
$ in Thousands
Dec. 31, 2023
USD ($)
Long Term Debt And Finance Lease Liabilities [Abstract]  
2024 $ 0
2025 0
2026 0
2027 125,000
2028 0
Thereafter 0
Total $ 125,000
v3.24.0.1
Long-Term Debt and Finance Lease Liabilities - Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Mar. 25, 2022
Mar. 27, 2018
Long Term Debt And Finance Lease Liabilities [Line Items]          
Borrowings during the period $ 0 $ 62,500 $ 0    
Change in line of credit during period   62,500      
Amended And Restated Credit Agreement [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Borrowings under credit facilities 125,000 250,000      
Borrowings during the period $ 0 $ 0      
Participation fee 0.95%        
Issuance fee 0.125%        
Credit facility termination date Mar. 25, 2027        
Principal payments on the Credit Facility $ 125,000        
Amended And Restated Credit Agreement [Member] | Minimum [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Total net leverage ratio 100.00%        
Interest coverage ratio 1.00%        
Amended And Restated Credit Agreement [Member] | Maximum [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Total net leverage ratio 375.00%        
Interest coverage ratio 3.00%        
Secured Debt [Member] | Current Credit Facility Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Interest rate spread on base rate 1.00%        
Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Interest rate spread on base rate 0.10%        
Senior Lien [Member] | Secured Debt [Member] | Current Credit Facility Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Interest rate spread on base rate 0.10%        
Senior Lien [Member] | Secured Debt [Member] | Current Credit Facility Agreement [Member] | Secured Overnight Financing Rate [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Interest rate spread on base rate 0.95%        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Debt instrument face amount $ 70,000        
Letters of credit issued $ 21,500        
Interest rate spread on base rate 0.05%        
Line of Credit Facility Commitment Fee Percentage Subject to Upward or Downward Adjustments 0.01%        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Prime Plus [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Interest rate spread on base rate 0.00%        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Line of credit interest rate terms at the Company's option, either at the Term SOFR (with a floor of 0.00%) plus a 0.10% SOFR adjustment and 1.00% per annum or base rate (with a floor of 0.00%) plus 0.00% per annum        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Minimum [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Credit facility unused commitment fee percentage 0.10%        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Maximum [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Credit facility unused commitment fee percentage 0.225%        
Senior Lien [Member] | Secured Debt [Member] | Amended And Restated Credit Agreement [Member] | Swingline Loan Subfacility [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Debt instrument face amount $ 50,000        
Senior Lien [Member] | Secured Debt [Member] | $700.0 million Credit Facility [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Debt instrument face amount $ 700,000        
Senior Lien [Member] | Secured Debt [Member] | $700.0 million Credit Facility [Member] | Amended And Restated Credit Agreement [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Credit facility maximum borrowing capacity       $ 700,000  
Capitalized debt issuance costs       $ 3,400  
Senior Lien [Member] | Secured Debt [Member] | Former Credit Facility [Member]          
Long Term Debt And Finance Lease Liabilities [Line Items]          
Capitalized debt issuance costs         $ 500
v3.24.0.1
Other Long-Term Liabilities - Summary of Other Long-Term Liabilities (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Other Liabilities Disclosure [Abstract]      
Long-term portion $ 22,826 $ 23,658 $ 23,393
Other 13,444 12,682  
Total $ 36,270 $ 36,340  
v3.24.0.1
Self-Insurance Programs - Additional Information (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Jan. 03, 2021
Insurance [Line Items]        
Accounts receivables $ 30,313 $ 16,108    
General liability, worker’s compensation and team member health benefit liabilities 47,838 47,612 $ 50,529 $ 48,518
Insurance Receivable [Member]        
Insurance [Line Items]        
Accounts receivables 1,300 1,200    
General liability, worker’s compensation and team member health benefit liabilities $ 47,800 $ 47,600    
v3.24.0.1
Self-Insurance Programs - (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Insurance [Abstract]      
Self insurance reserve beginning balance $ 47,612 $ 50,529 $ 48,518
Expenses, net of actuarial adjustments 85,148 76,720 85,892
Claim Payments (84,922) (79,637) (83,881)
Self insurance reserve ending balance 47,838 47,612 50,529
Less: Current portion (25,012) (23,954) (27,136)
Long-term portion $ 22,826 $ 23,658 $ 23,393
v3.24.0.1
Defined Contribution Plan - Additional Information (Detail)
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Matching contribution by employer 50.00%
Percentage of eligible compensation for which employer makes matching contribution 6.00%
v3.24.0.1
Defined Contribution Plan - Total Expense Recorded for Matching under Defined Contribution Plans (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Retirement Benefits [Abstract]      
Total expenses for matching under defined contribution plans $ 8,496 $ 7,820 $ 7,517
v3.24.0.1
Income Taxes - Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Income Tax Contingency [Line Items]      
Corporate federal income tax rate 21.00% 21.00% 21.00%
Effective income tax rate 24.70% 25.20% 24.30%
Tax benefit resulting from shares-based awards $ 5,000 $ 1,700 $ 200
Valuation allowance 3,343 917  
Unrecognized tax benefits (tax effected) that would impact the effective tax rate if recognized 500 $ 1,100  
Anticipated decrease in total unrecognized tax benefits during next twelve months $ 200    
Federal [Member] | Earliest Tax Year [Member]      
Income Tax Contingency [Line Items]      
Open year for general statute of limitations 2017    
Federal [Member] | Latest Tax Year [Member]      
Income Tax Contingency [Line Items]      
Open year for general statute of limitations 2022    
State [Member] | Earliest Tax Year [Member]      
Income Tax Contingency [Line Items]      
Open year for general statute of limitations 2018    
State [Member] | Latest Tax Year [Member]      
Income Tax Contingency [Line Items]      
Open year for general statute of limitations 2022    
v3.24.0.1
Income Taxes - Components of Income Tax Provision (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Income Tax Disclosure [Abstract]      
U.S. Federal—current $ 67,898 $ 66,398 $ 60,329
U.S. Federal—deferred (5,927) 1,028 (1,663)
U.S. Federal—total 61,971 67,426 58,666
State—current 21,902 19,823 19,715
State—deferred 1,011 900 (146)
State—total 22,913 20,723 19,569
Total provision $ 84,884 $ 88,149 $ 78,235
v3.24.0.1
Income Taxes - Tax Rate Reconciliation (Detail)
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Abstract]      
Federal statutory rate 21.00% 21.00% 21.00%
State income taxes, net of federal benefit 5.40% 4.70% 4.80%
Enhanced charitable contribution impact (1.00%) (0.90%) (1.50%)
Excess tax benefits from share based payments (1.20%) (0.40%) (0.10%)
Non-deductible Executive Compensation 1.40% 0.90% 0.30%
Benefit of federal tax credit (0.70%) (0.50%) (0.40%)
Other, net 0.20% 0.40% 0.20%
Effective income tax rate 24.70% 25.20% 24.30%
v3.24.0.1
Income Taxes - Components of Deferred Tax Assets and Deferred Tax Liabilities (Detail) - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Deferred tax assets    
Employee benefits $ 18,329 $ 16,052
Tax credits 105 166
Operating leases 392,168 329,154
Other lease related 6,137 5,740
Other accrued liabilities 4,320 4,004
Charitable contribution carryforward 3,343 2,819
Inventories and other 2,905 2,605
Total gross deferred tax assets 427,307 360,540
Less: Valuation Allowance (3,343) (917)
Total deferred tax assets, net of valuation allowance 423,964 359,623
Deferred tax liabilities    
Depreciation and amortization (80,765) (83,091)
Intangible assets (64,668) (52,413)
Operating leases (339,973) (284,377)
Asset retirement obligations (939) (865)
Total gross deferred tax liabilities (486,345) (420,746)
Net deferred tax liability $ (62,381) $ (61,123)
v3.24.0.1
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Beginning balance $ 1,119 $ 1,770 $ 1,803
Additions based on tax positions related to the current year 58 43 16
Additions based on tax positions related to prior years 0 0 31
Reductions for settlements with taxing authorities 0 (694) 0
Reduction due to lapse of applicable statute of limitations (700) 0 0
Reductions for tax positions for prior years 0 0 (80)
Ending balance $ 477 $ 1,119 $ 1,770
v3.24.0.1
Related-Party Transactions - Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Related Party Transaction [Line Items]    
Related Party Transactions $ 0  
Purchases from supplier   $ 3,400
v3.24.0.1
Commitments and Contingencies - Additional Information (Detail)
$ in Millions
Apr. 13, 2010
Defendant
Dec. 31, 2023
USD ($)
Other Commitments [Line Items]    
Operating lease legally binding minimum payments for leases that have not yet commenced   $ 584.1
Total future purchase commitments   $ 28.6
Superior Court of State of California and County of Los Angeles [Member]    
Other Commitments [Line Items]    
Number of defendants | Defendant 80  
v3.24.0.1
Capital Stock - Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Mar. 02, 2022
Class of Stock [Line Items]        
Common stock issued 101,211,984 105,072,756    
Common stock shares outstanding 101,211,984 105,072,756    
Common stock shares repurchased and retired 5,864,246 6,897,082    
Common stock repurchased, value $ 205,262 $ 199,980 $ 188,343  
Preferred stock shares authorized 10,000,000 10,000,000    
March 2, 2022 Share Repurchase Program [Member]        
Class of Stock [Line Items]        
Shares authorized to be repurchased $ 600,000      
Shares remained available for repurchase 208,381      
March 3, 2021 Share Repurchase Program [Member]        
Class of Stock [Line Items]        
Shares authorized to be repurchased $ 300,000     $ 300,000
Shares remained available for repurchase       $ 99,800
Awards Granted Under the 2022 Incentive Plan [Member]        
Class of Stock [Line Items]        
Common stock reserved for issuance 5,874,286      
v3.24.0.1
Capital Stock - Schedule of Options Exercised in Exchange for Issuance of Shares of Common Stock (Detail) - shares
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Equity [Abstract]      
Options exercised 637,387 218,509 115,123
Other share issuances under stock plans 811,729 636,955 462,173
v3.24.0.1
Capital Stock - Schedule of Share Repurchase Activity (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Mar. 02, 2022
March 3, 2021 Share Repurchase Program [Member]    
Class of Stock [Line Items]    
Authorised amount of share $ 300,000 $ 300,000
Authorization available   $ 99,800
March 2, 2022 Share Repurchase Program [Member]    
Class of Stock [Line Items]    
Authorised amount of share 600,000  
Cost of Repurchases 391,619  
Authorization available $ 208,381  
Expiration date Dec. 31, 2024  
Effective date Mar. 02, 2022  
v3.24.0.1
Capital Stock - Schedule of Share Repurchase Activity under Share Repurchase Programs (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Equity [Abstract]      
Number of common shares acquired 5,864,246 6,897,082  
Average price per common share acquired $ 35 $ 28.99  
Total cost of common shares acquired $ 205,262 $ 199,980 $ 188,343
v3.24.0.1
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
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Basic net income per share:      
Net Income (Loss) $ 258,856 $ 261,164 $ 244,157
Weighted average shares outstanding - basic 102,479 108,232 115,377
Basic net income per share $ 2.53 $ 2.41 $ 2.12
Diluted net income per share:      
Net Income (Loss) $ 258,856 $ 261,164 $ 244,157
Weighted average shares outstanding - basic 102,479 108,232 115,377
Dilutive effect of equity-based awards:      
Assumed exercise of options to purchase shares 343 337 215
Weighted average shares and equivalent shares outstanding - diluted 103,390 109,139 116,077
Diluted net income per share $ 2.5 $ 2.39 $ 2.1
Restricted Stock Units [Member]      
Dilutive effect of equity-based awards:      
Dilutive effect 524 394 390
Performance Share Awards [Member]      
Dilutive effect of equity-based awards:      
Dilutive effect 44 176 95
v3.24.0.1
Net Income Per Share - Additional Information (Detail) - shares
shares in Millions
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Employee Stock Option      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities 0.2 0.2 0.5
PSAs [Member]      
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]      
Antidilutive securities 0.4 0.3 0.3
v3.24.0.1
Derivative Financial Instruments - Additional Information (Detail) - Forward Contract [Member]
$ in Millions
 1 Months Ended
Dec. 31, 2017
USD ($)
Hedge
Dec. 31, 2023
Swap
Jan. 01, 2023
Swap
Derivative [Line Items]      
Derivative, number of cash flow hedges | Hedge 5    
Number of outstanding swaps | Swap   0 0
Cash Flow Hedges [Member]      
Derivative [Line Items]      
Derivative, notional amount of outstanding swaps | $ $ 250.0    
Derivative, cash flow swaps length period 1 year    
Cash flow swaps mature annually, starting year 2018    
Cash flow swaps mature annually, ending year 2022    
v3.24.0.1
Derivative Financial Instruments - Summary of Gains and Losses of Derivative Instruments (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Derivative Instruments Gain Loss [Line Items]      
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] Interest Income (Expense), Net Interest Income (Expense), Net Interest Income (Expense), Net
Interest expense, net $ 0 $ 2,021 $ 5,778
v3.24.0.1
Comprehensive Income - Changes In Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Accumulated Other Comprehensive Income Loss [Line Items]      
Beginning Balance $ 1,046,462 $ 959,876 $ 881,293
Other comprehensive income, net of tax      
Unrealized gains on cash flow hedging activities, net of income tax of $1,819 and $3,116 in fiscal 2022 and fiscal 2021 0 5,259 9,009
Reclassification of net losses on cash flow hedges to net income, net of income tax of ($520) and ($1,485) in fiscal 2022 and fiscal 2021 0 (1,501) (4,293)
Total other comprehensive income 0 3,758 4,716
Ending Balance 1,148,547 1,046,462 959,876
Cash Flow Hedges [Member]      
Accumulated Other Comprehensive Income Loss [Line Items]      
Beginning Balance $ 0 (3,758)  
Other comprehensive income, net of tax      
Unrealized gains on cash flow hedging activities, net of income tax of $1,819 and $3,116 in fiscal 2022 and fiscal 2021   5,259  
Reclassification of net losses on cash flow hedges to net income, net of income tax of ($520) and ($1,485) in fiscal 2022 and fiscal 2021   (1,501)  
Total other comprehensive income   3,758  
Ending Balance   $ 0 $ (3,758)
v3.24.0.1
Comprehensive Income - Changes In Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Jan. 01, 2023
Jan. 02, 2022
Accumulated Other Comprehensive Income Loss [Line Items]    
Income tax expenses (Benefit) on cash flow hedging activities $ 1,819 $ 3,116
Income tax expenses (Benefit) for reclassification of net gains (losses) on cash flow hedges (520) $ 1,485
Cash Flow Hedges [Member]    
Accumulated Other Comprehensive Income Loss [Line Items]    
Income tax expenses (Benefit) on cash flow hedging activities 1,819  
Income tax expenses (Benefit) for reclassification of net gains (losses) on cash flow hedges $ (520)  
v3.24.0.1
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Recurring [Member] - USD ($)
$ in Thousands
Dec. 31, 2023
Jan. 01, 2023
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Long-term debt $ 125,000 $ 250,000
Total financial liabilities 125,000 250,000
Level 2 [Member]    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Long-term debt 125,000 250,000
Total financial liabilities $ 125,000 $ 250,000
v3.24.0.1
Segments - Additional Information (Detail)
 12 Months Ended
Dec. 31, 2023
Segment
Segment Reporting [Abstract]  
Number of operating segment 1
v3.24.0.1
Segments - Summary of Disaggregation of Revenue (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Disaggregation Of Revenue [Line Items]      
Net Sales, amount $ 6,837,384 $ 6,404,223 $ 6,099,869
Sales Revenue, Goods, Net [Member] | Product Concentration Risk [Member]      
Disaggregation Of Revenue [Line Items]      
Net Sales, percentage 100.00% 100.00% 100.00%
Perishables [Member]      
Disaggregation Of Revenue [Line Items]      
Net Sales, amount $ 3,915,971 $ 3,717,642 $ 3,518,181
Perishables [Member] | Sales Revenue, Goods, Net [Member] | Product Concentration Risk [Member]      
Disaggregation Of Revenue [Line Items]      
Net Sales, percentage 57.30% 58.00% 57.70%
Non-Perishables [Member]      
Disaggregation Of Revenue [Line Items]      
Net Sales, amount $ 2,921,413 $ 2,686,581 $ 2,581,688
Non-Perishables [Member] | Sales Revenue, Goods, Net [Member] | Product Concentration Risk [Member]      
Disaggregation Of Revenue [Line Items]      
Net Sales, percentage 42.70% 42.00% 42.30%
v3.24.0.1
Share-Based Compensation - Summary of Stock-Based Compensation Awards Granted (Detail) - $ / shares
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Weighted-average grant date fair value $ 12.63 $ 10.58 $ 7.66
Weighted-average exercise price 32.95    
Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Weighted-average grant date fair value $ 12.63 $ 10.58 $ 7.66
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 514,055 86,161  
Weighted-average grant date fair value $ 33.21 $ 27.74  
Weighted-average exercise price $ 0 $ 0  
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | June 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   58,057  
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | September 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   21,598  
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | October 10, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   6,506  
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | March 14, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 491,729    
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | May 1, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 2,931    
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | June 7, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 1,271    
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | September 5, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 6,408    
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | September 11, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 10,204    
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member] | October 30, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 1,512    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 172,059 0  
Weighted-average grant date fair value $ 32.95 $ 0  
Weighted-average exercise price $ 0 $ 0  
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | June 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | September 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | October 10, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | March 14, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 172,059    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | May 1, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | June 7, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | September 5, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | September 11, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member] | October 30, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 221,085 0  
Weighted-average grant date fair value $ 12.63 $ 0  
Weighted-average exercise price $ 32.95 $ 0  
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | June 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | September 7, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | October 10, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   0  
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | March 14, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 221,085    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | May 1, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | June 7, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | September 5, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | September 11, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2022 Incentive Plan [Member] | Options [Member] | October 30, 2023 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock 0    
Awards Granted Under the 2013 Incentive Plan [Member] | RSUs [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   475,090  
Weighted-average grant date fair value   $ 31.6  
Weighted-average exercise price   $ 0  
Awards Granted Under the 2013 Incentive Plan [Member] | RSUs [Member] | March 15, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   370,177  
Awards Granted Under the 2013 Incentive Plan [Member] | RSUs [Member] | March 21, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   104,913  
Awards Granted Under the 2013 Incentive Plan [Member] | PSAs [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   162,106  
Weighted-average grant date fair value   $ 31.52  
Weighted-average exercise price   $ 0  
Awards Granted Under the 2013 Incentive Plan [Member] | PSAs [Member] | March 15, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   147,846  
Awards Granted Under the 2013 Incentive Plan [Member] | PSAs [Member] | March 21, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   14,260  
Awards Granted Under the 2013 Incentive Plan [Member] | Options [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   231,622  
Weighted-average grant date fair value   $ 10.58  
Weighted-average exercise price   $ 31.52  
Awards Granted Under the 2013 Incentive Plan [Member] | Options [Member] | March 15, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   211,352  
Awards Granted Under the 2013 Incentive Plan [Member] | Options [Member] | March 21, 2022 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Shares of common stock   20,270  
v3.24.0.1
Share-Based Compensation - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Jan. 03, 2021
Dec. 29, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value $ 12.63 $ 10.58 $ 7.66    
Aggregate Intrinsic Value, Exercised $ 12,151        
Proceeds from exercise of stock options 11,454 $ 5,041 $ 2,170    
Tax benefit resulting from shares-based awards $ 5,000 1,700 200    
Employee Termination [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 24 months        
RSUs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Total grant date fair value vested $ 13,300 $ 9,200 $ 8,800    
Number of Shares, Vested 543,030        
Number of shares, outstanding 868,196 972,583      
Number of shares forfeited 75,412        
RSUs [Member] | Minimum [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 2 years        
RSUs [Member] | Maximum [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 3 years        
Employee Stock Option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value $ 12.63 $ 10.58 $ 7.66    
Grant date weighted average options issued 400,000 1,000,000 1,100,000    
Grant date weighted average fair value of options issued but not vested $ 10.84 $ 6.66 $ 5.81    
Aggregate Intrinsic Value, Exercised $ 12,200 $ 1,800 $ 700    
PSAs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Total grant date fair value vested $ 4,500 $ 4,100 800    
Number of Shares, Vested 268,699        
Number of shares, outstanding 436,510 460,106      
Total grant date fair value granted $ 5,700 $ 5,100 4,800    
Total grant date fair value forfeited or not earned $ 1,100 $ 800 $ 1,000    
Total grant date fair value issued 400,000 500,000 400,000    
Total grant date fair value issued but not released $ 12,900 $ 11,100 $ 8,900    
Number of shares forfeited 34,954        
PSAs [Member] | Minimum [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards payout percentage of shares granted 0.00% 0.00% 0.00% 0.00% 0.00%
PSAs [Member] | Maximum [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards payout percentage of shares granted 200.00% 200.00% 200.00% 200.00% 200.00%
PSAs [Member] | 2019 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards description The criteria was based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted.        
Number of Shares, Vested   208,172      
Number of shares, outstanding 0        
PSAs [Member] | 2020 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards description The criteria was based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted        
Number of Shares, Vested 268,699        
Number of shares, outstanding 0        
PSAs [Member] | 2021 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards description The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted.        
PSAs [Member] | 2022          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards description The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted.        
PSAs [Member] | 2023 [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Performance stock awards description The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted.        
PSAs [Member] | Employee Termination [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 24 months        
Officers, Directors and Team Members [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Options expire period from grant date 7 years        
Independent Directors [Member] | RSUs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Vesting period 1 year        
Awards Granted Under the 2022 Incentive Plan [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of shares authorized for issuance under plan 6,600,000        
Stock awards outstanding 855,911        
Remaining shares available for issuance 5,874,286        
Awards Granted Under the 2022 Incentive Plan [Member] | RSUs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value $ 33.21 $ 27.74      
Awards Granted Under the 2022 Incentive Plan [Member] | Employee Stock Option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value 12.63 0      
Awards Granted Under the 2022 Incentive Plan [Member] | PSAs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value $ 32.95 0      
Awards Granted Under the 2013 Incentive Plan [Member] | RSUs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value   31.6      
Awards Granted Under the 2013 Incentive Plan [Member] | Employee Stock Option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value   10.58      
Awards Granted Under the 2013 Incentive Plan [Member] | PSAs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Weighted-average grant date fair value   $ 31.52      
v3.24.0.1
Share-Based Compensation - Estimated Fair Values of Options Granted (Detail)
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-Based Payment Arrangement [Abstract]      
Dividend yield 0.00% 0.00% 0.00%
Expected volatility 39.48% 36.59% 36.35%
Risk free interest rate 3.78% 2.12% 0.83%
Expected term, in years 4 years 6 months 4 years 6 months 4 years 6 months
v3.24.0.1
Share-Based Compensation - Summary of Grant Date Weighted Average Fair Value of Options Granted and Options Forfeited (Detail) - $ / shares
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-Based Payment Arrangement [Abstract]      
Grant date weighted average fair value of options granted $ 12.63 $ 10.58 $ 7.66
Grant date weighted average fair value of options forfeited $ 10.98 $ 8.66 $ 7.1
v3.24.0.1
Share-Based Compensation - Summary of Option Activity (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-Based Payment Arrangement [Abstract]      
Number of Options, Outstanding, Beginning Balance 1,318,158    
Number of Options, Granted 221,085    
Number of Options, Forfeited (47,481)    
Number of Options, Exercised (637,387) (218,509) (115,123)
Number of Options, Outstanding, Ending balance 854,375 1,318,158  
Number of Options, Exercisable 424,598    
Number of Options, Vested/Expected to vest 854,375    
Weighted Average Exercise Price, Outstanding, Beginning balance $ 20.93    
Weighted Average Exercise Price, Granted 32.95    
Weighted Average Exercise Price, Forfeited 30.87    
Weighted Average Exercise Price, Exercised 17.97    
Weighted Average Exercise Price, Outstanding, Ending balance 25.7 $ 20.93  
Weighted Average Exercise Price, Exercisable 20.82    
Weighted Average Exercise Price, Vested/Expected to vest $ 25.7    
Weighted Average Remaining Contractual Life (In Years), Outstanding 4 years 6 months 10 days    
Weighted Average Remaining Contractual Life (In Years), Exercisable 3 years 7 months 9 days    
Weighted Average Remaining Contractual Life (In Years), Vested/Expected to vest 4 years 6 months 10 days    
Aggregate Intrinsic Value, Exercised $ 12,151    
Aggregate Intrinsic Value, Outstanding 19,938    
Aggregate Intrinsic Value, Exercisable 11,983    
Aggregate Intrinsic Value, Vested/Expected to vest $ 19,938    
v3.24.0.1
Share-Based Compensation - Summary of Weighted Average Grant Date Fair Value of RSUs Awarded (Detail) - $ / shares
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
RSUs [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
RSUs awarded $ 33.21 $ 31.01 $ 24.11
v3.24.0.1
Share-Based Compensation - Summary of RSUs Activity (Detail) - RSUs [Member] - $ / shares
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Number of Shares, Outstanding, Beginning Balance 972,583    
Number of Shares, Awarded 514,055    
Number of Shares, Vested (543,030)    
Number of Shares, Forfeited (75,412)    
Number of Shares, Outstanding, Ending Balance 868,196 972,583  
Weighted Average Grant Date Fair Value, Beginning Balance $ 26.94    
Weighted Average Grant Date Fair Value, Awarded 33.21 $ 31.01 $ 24.11
Weighted Average Grant Date Fair Value, Vested 24.44    
Weighted Average Grant Date Fair Value, Forfeited 31.84    
Weighted Average Grant Date Fair Value, Ending balance $ 31.79 $ 26.94  
v3.24.0.1
Share-Based Compensation - Summary of PSAs Activity (Detail) - PSAs [Member]
 12 Months Ended
Dec. 31, 2023
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of Shares, Outstanding, Beginning Balance | shares 460,106
Number of Shares, Awarded | shares 172,059
Number of Shares, Vested | shares (268,699)
Number of Shares, Forfeited | shares (34,954)
Number of Shares, Earned | shares 107,998
Number of Shares, Not Earned | shares 0
Number of Shares, Outstanding, Ending Balance | shares 436,510
Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares $ 24.12
Weighted Average Grant Date Fair Value, Awarded | $ / shares 32.95
Weighted Average Grant Date Fair Value, Vested | $ / shares 16.83
Weighted Average Grant Date Fair Value, Forfeited | $ / shares 32.18
Weighted Average Grant Date Fair Value, Earned | $ / shares 16.91
Weighted Average Grant Date Fair Value, Not Earned | $ / shares 0
Weighted Average Grant Date Fair Value, Ending balance | $ / shares $ 29.66
v3.24.0.1
Share-Based Compensation - Summary of Share-Based Compensation Expense in Selling, General and Administrative Expenses (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Share-Based Payment Arrangement [Abstract]      
Share-based compensation expense $ 18,898 $ 16,603 $ 15,883
Income tax benefit (3,007) (2,495) (2,450)
Net share-based compensation expense $ 15,891 $ 14,108 $ 13,433
v3.24.0.1
Share-Based Compensation - Summary of Total Unrecognized Compensation Expense and Remaining Weighted Average Recognition Period Related to Outstanding Share-Based Awards (Detail)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Total unrecognized compensation expense at January 1, 2023 $ 23,123
Options [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation expense related to outstanding options $ 2,845
Remaining weighted average recognition period 1 year 4 months 24 days
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 $ 15,667
Remaining weighted average recognition period 1 year 4 months 24 days
PSAs [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized compensation expense related to outstanding equity-based awards other than options $ 4,611
Remaining weighted average recognition period 1 year 2 months 12 days
v3.24.0.1
Quarterly Financial Data (Unaudited) Additional Information (Detail) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
Jan. 01, 2023
Jan. 02, 2022
Quarterly Financial Information [Line Items]      
Proceeds from revolving credit facilities $ 0 $ 62,500 $ 0
Payments on revolving credit facilities 125,000 62,500 $ (0)
Amended and Restated Credit Agreement [Member]      
Quarterly Financial Information [Line Items]      
Proceeds from revolving credit facilities $ 0 $ 0  
v3.24.0.1
Subsequent Events (Additional Information) (Details)
 12 Months Ended
Dec. 31, 2023
Store
Subsequent Event [Line Items]  
Number of store closures 11
v3.24.0.1
Store Closures (Additional Information) (Details)
$ in Millions
 1 Months Ended 12 Months Ended
Feb. 28, 2023
Dec. 31, 2023
USD ($)
Store
Jan. 01, 2023
USD ($)
Jan. 02, 2022
USD ($)
Store Closures [Line Items]        
Number of store closures | Store   11    
Store Performance Capacity Rate 30.00%      
Assets Impairment expense   $ 30.5 $ 8.1 $ 4.8
Other Depreciation and Amortization   5.9    
Underperforming Stores [Member]        
Store Closures [Line Items]        
Assets Impairment expense   $ 27.8    
v3.24.0.1
Business Combination (Additional Information) (Details) - USD ($)
$ in Thousands, shares in Millions
Mar. 20, 2023
Dec. 31, 2023
Jan. 01, 2023
Business Acquisition [Line Items]      
Goodwill   $ 381,741 $ 368,878
Ronald Cohn, Inc      
Business Acquisition [Line Items]      
Date of Acquisition Mar. 20, 2023    
Business Acquisition, Name of Acquired Entity Ronald Cohn, Inc    
Business combination, Common shares, Value $ 18,100    
Cash consideration 13,000    
Allocation to Net Tangible Assets (4,900)    
Reacquired right of intangible asset 23,100    
Goodwill $ 12,900    
Ronald Cohn, Inc | Common Stock [Member]      
Business Acquisition [Line Items]      
Business acquisition, Common shares, Aggregate consideration paid 0.6