There's some serious lettuce to be made in premium groceries. Upscale supermarket operator The Fresh Market (Nasdaq: TFM) posted healthy growth in its fiscal fourth quarter this morning.

Net sales climbed 16% to $320.8 million, as reasonable expansion and a 7% spike in comps -- the company's strongest store-level sales performance in five years -- pushed the high-end grocer's top line higher. Things get even better on the bottom line, as adjusted net income soared 26% to $0.38 a share.

There's not a whole lot of consensus around Fooldom when it comes to the stock. Bears aren't sold on The Fresh Market's lackluster sales-per-square-foot performance, trailing the industry average. However, the fast-growing chain delivers margins that make its larger rivals jealous. The Fresh Market scored net margins of 5.7% during the holiday quarter and 4.6% for all of fiscal 2011.

If that doesn't seem like much, you're probably not familiar with the supermarket industry. Net margins usually clock in from 1% to 3%, as grocers work on high turnover to offset meager markups. Whole Foods Market (Nasdaq: WFM) -- the upscale organic grocer -- posted net margins of 3.5% during the same holiday quarter that found The Fresh Market checking in at 5.7%.

Margins get even tinier when we turn our attention to traditional chains. Kroger (NYSE: KR) -- the country's largest stand-alone operator -- posted net margins of 0.7% last year. Sure, pension plan consolidation weighed down on the bottom line, but the prior year's net margins of 1.4% shouldn't impress you either.

The Fresh Market is still early in its growth cycle. It has just a third as many stores as Whole Foods, and The Fresh Market stores are just a little more than half the size of a typical Whole Foods. It opened 13 new locations last year, and currently has 115 boutique markets that specialize in fresh, premium-priced fare. Another 14 to 16 stores should open this year, and The Fresh Market sees comps climbing 4% to 6%. Adjusted earnings should climb 18% to 22%, but that brings us to the valuation argument.

If The Fresh Market lands in the middle of its bottom-line profit guidance of $1.26 a share to $1.31 a share, we're looking at a company trading at a hefty 35 times this year's earnings.

That certainly doesn't seem cheap. Whole Foods also happens to be fetching 35 times this year's income target, but sleepy Kroger is at a more reasonable multiple of 10.

Is it justified? As a high-end option with chunky margins to match, The Fresh Market deserves a market premium. Teavana (Nasdaq: TEA) -- the boutique mall retailer selling high-end teas -- commands a forward earnings multiple of 37.

Teavana is growing faster than The Fresh Market, but Blue Nile (Nasdaq: NILE) -- the upscale online jeweler that specializes in diamond engagement rings and trades at 38 times this year's net income target -- is not.

Weigh The Fresh Market as a premium retailer. Give it props for its expanding margins. The stock isn't cheap, but that doesn't mean it's expensive.

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