Why Fresh Market Shares Got Trashed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of high-end grocery chain Fresh Market (NASDAQ: TFM  ) were looking wilted today, falling as much as 14% after a subpar earnings report.

So what: The Whole Foods-competitor said that comparable sales grew just 1.9% in the last quarter, well below the 4.2% rate that analysts expected. Overall sales grew 15.3% to $369.9 million, largely driven by new store additions, though that figure also missed expectations by about $10 million. Earnings per share of $0.43 missed estimates by a penny. CEO Craig Carlock noted a "sudden slowdown in customer traffic" around the holidays, but did not offer any explanation.

Now what: Looking ahead to 2013, Fresh Market plans to add between 19 and 22 stores, increasing its total store count by about 16%. Since most of the new stores will be opened in the second half of the year, the company expects earnings to be slower in the first half. For the year, it guided EPS at $1.51 to $1.58, below expectations of $1.68.

With comparable sales expected to grow by just 2% to 4%, investors have to be wondering if Fresh Market is now saturating the market for its product, especially with Whole Foods expanding as well. Shares are priced for growth, but expansion alone isn't enough. Pay close attention to the current quarter to see if the grocery chain can break the "sudden slowdown" we saw recently.

You can receive automatic updates by adding the Fresh Market to your Watchlist here.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2298177, ~/Articles/ArticleHandler.aspx, 11/25/2014 7:24:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement