NEW YORK — Fairway Group Holdings Corp. here on Thursday reported a loss of $6.7 million for the fourth quarter and $62.9 million for the year in its first earnings report as a public company, citing the impact of investments to ramp up expansion.
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The parent of the Fairway Market chain the New York City area said sales for both the quarter and year, which ended March 31, were up 19% over year-ago results. Sales for the quarter totaled $179 million, and sales for the year were $661 million. Same-store sales were up 2.4% in the quarter, excluding results from a store in Red Hook, Brooklyn, that had been severely flooded during Hurricane Sandy last year and did not reopen until March 1.
“This performance tells us the secular growth story is on track,” said John Heinbockel, an analyst with Guggenheim Securities, New York, in a research note. The comp-store performance was “impressive given the absence of food inflation,” he added.
Heinbockel, who initiated coverage of the 13-store retailer with a “buy” rating shortly after its recent initial public offering, noted in particular that Fairway’s adjusted EBITDA, including pre-opening costs, rose 19% for the quarter, to $11.1 million.
“We are pleased to report strong results for the fourth quarter of fiscal 2013. Fairway’s board of directors, management and employees are excited about our growth outlook and the opportunities ahead,” said Charles Santoro, Fairway’s executive chairman.
Read more: Fairway Stock Soars in IPO
For the year, Fairway said comparable-store sales declined 1.9% due to cannibalization from newly opened stores and a price initiative.
Fairway completed its initial public offering on April 22, garnering net proceeds of $158.8 million. The company used approximately $76.8 million to pay dividends, $9.2 million to terminate a management agreement and approximately $8.1 million to pay contractual bonuses. The remaining approximately $64.7 million is intended for new store growth and general corporate purposes.
The company said it plans to open two new stores and a new central production facility in fiscal 2014, and an additional three to four stores per year in the next few years in the New York City area. It currently has 13 locations in New York, New Jersey and Connecticut.
“There is a strong case for at least 150% unit growth over the next five years,” said Heinbockel in his initial report on Fairway. “There are sections of Greater New York where [Fairway] is still under-stored. In addition, the IPO brings valuable capital and additional ‘buzz’ with which to secure more sites.”
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