Fresh Market’s Quarter Looks Fresh and Healthy
Himanshu is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Here is another grocery retailer, The Fresh Market (NASDAQ: TFM), which has joined the league of specialty grocers such as Whole Foods Market (NASDAQ: WFM) by posting better than expected results. Both the retailers cater to upscale market customers who are generally health conscious. Their products are generally higher priced compared to retailers such as Kroger (NYSE: KR) and Supervalu (NYSE: SVU) which cater to customers who are highly price sensitive and look to make the most of their available dollars. But a positive point to note here is that these higher priced specialty retailers have managed to perform much better than the cheaper priced competitors this quarter.
This comes as good news since the economy has not yet recovered for customers to spend lavishly. Let’s take a closer look at Fresh Market's first quarter earnings announced recently.
Into The Quarter
Revenue for the quarter surged 22.8% reaching $325 million and net income stood at 40 cents per share, a jump of 32% on an adjusted basis. The same store sales rose 8.2%, boosted by an increase in frequency of customers and their transaction size. Also, the 3 new stores added to the sales of the perishable goods retailer. Moreover, this performance came in when the company experienced an increase in costs of almost 22%. In fact, these costs as a proportion of sales have decreased mainly due to higher sales in the quarter. This highlights how strong the first quarter was.
Some key specialties of the company is that it offers high margin products such as cheese and also offers additional services to its customers such as butchers in the stores. Another point to note here is Fresh Market’s stores, when compared to general supermarkets, are smaller in size. This lowers their cost to a great extent.
Plans for Growth and Expansion
The organic food grocer has a number of expansion plans for the fiscal year 2012. It plans to open 14 new stores, relocate 1 and renovate 2 existing stores. The company is also looking forward to expand its foothold in the West Coast region. Fresh Market has already made a lot of real estate investments and plans to spend another $100 million on the same. Despite such expensive plans in place, the company has raised its outlook for the year.
My Takeaway
The specialty food sector has been doing well recently which is evident by the quarter results of the players in the market. Also, it’s not the first time that the Greensboro based company has witnessed growth in revenues. With 116 stores doing well in 21 states and plans of further growth, this company looks fresh and fruitful for the investors.
justhimanshu has no positions in the stocks mentioned above. The Motley Fool owns shares of SUPERVALU INC. and Whole Foods Market. Motley Fool newsletter services recommend The Fresh Market and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
