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What: Shares of specialty grocery store chain The Fresh Market (NASDAQ:TFM) vaulted higher by as much as 11% after the company reported its second-quarter earnings results after the closing bell Thursday.

So what: For the quarter, The Fresh Market reported a 19% year-over-year increase to $422.2 million in total revenue as comparable-store sales (which cover those locations that were open for at least 12 months) rose 2.9%. Excluding $0.13 per share in store closure costs, adjusted diluted earnings per share totaled $0.36 per share. By comparison, the consensus estimate on Wall Street had only called for The Fresh Market to earn $0.35 in EPS on $411.3 million in sales.

On the flip side, gross margin for the quarter fell 20 basis points to 34%, which the company attributed to higher rent (occupancy) costs and food cost inflation. It should be noted, though, that this decline was in line with management's previous projection.

Looking ahead, The Fresh Market reaffirmed its full-year comparable-store sales guidance of 1.5% to 3.5% growth, stood behind its adjusted previous adjusted EPS forecast of $1.56 to $1.66, and noted that it was still on track to open 22 stores in 2014, six of which are slated to open in the third quarter and five of which are scheduled to open in the fourth quarter.

Now what: It was a solid quarter of expansion for The Fresh Market, but it's important to remember that long-term gains spring from many years of outperformance and aren't solely dependent on a single quarter's results.

What should shareholders be looking for in the future? Store expansion will be key in order for The Fresh Market to build its brand and compete against peers with considerably deeper pocketbooks.

As CEO Craig Carlock pointed out in the earnings press release: "The performance of our new stores exceeded our expectations and we see tremendous expansion opportunities in our core markets. Based on a recent white space analysis, we are raising our store growth potential in the Southeastern United States to double our current store base in this region." Investors will want to monitor not only the pace of expansion, but also the sales levels of new stores.

Another factor to monitor is food cost inflation. Grocery stores traditionally run on very thin margins, so their ability to thread the needle of luring consumers in with attractive pricing while passing along price hikes when the cost of select food items go up is paramount to the success of the industry.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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