Skip navigation

The Fresh Market Cites Sales Slowdown

GREENSBORO, N.C. — Stock in The Fresh Market here slid to a 52-week low after the fast-growing company reported lackluster sales growth in the fourth quarter.

“Though we executed well in the fourth quarter, we experienced a sudden slowdown in customer traffic and resultant comparable-store sales that were consistent across our network,” said Craig Carlock, president and chief executive officer. “These effects were most pronounced during the holidays, and our business improved modestly as we moved into the New Year.”

He also noted that the fourth-quarter slowdown came “in spite of a robust and disciplined planning process in which we spent a tremendous amount of time and energy preparing for the winter holidays, including selecting unique seasonal products to build traffic and maximize sales.”

Edward Aaron, a Denver-based analyst with RBC Capital Markets, said that although the slight uptick in sales trends at the end of the fourth quarter, which ended Jan. 27, was encouraging, the overall sales slowdown was troubling.

“Even when measured on a two-year basis to account for the difficult comparison [with year-ago results], The Fresh Market saw more slowing than its peers,” he said in a research note.

The chain of small-format, high-end specialty stores reported that net income for the fourth quarter rose 12.6%, to $20.6 million, on a 15.3% increase in sales, to $369.9 million. Comparable-store sales rose 1.9%, vs. Aaron’s estimate of 4.3%.

For the full year, the company reported that net income rose 24.7%, to $64.1 million, on a 20% gain in sales, to $1.33 billion. Comparable-store sales for the year were up 5.7%, indicating a sequential slowdown at the end of 2012.

The company said its average transaction size grew by 2% in the fourth quarter, but traffic in terms of number of transactions was down 0.1%. For the full year the company reported a 3.4% increase in the number of transactions and a 2.3% increase in average transaction size.

The Fresh Market said it expected to continue to expand its new-store development at a pace of about 15% annually, and said it plans adding 19 to 22 new locations in fiscal 2013.

Read more: The Fresh Market Goes Coast to Coast

During the fourth quarter, The Fresh Market opened two new stores in Daphne, Ala., and Pensacola, Fla., and relocated one store in Spartanburg, S.C. It operated 129 stores in 25 states as of its fiscal year-end.

It has signed leases for nine additional new stores in: Sacramento, Calif. (two locations); Lynchburg, Va.; Ashburn, Va.; South Naples, Fla.; Brandon, Fla.; Saratoga Springs, N.Y.; Woodbury, N.Y.; and Kansas City, Kan.

The Fresh Market projected earnings-per-share growth of about 14% to 19% in 2013, and comps between 2% and 4%.

When asked by an analyst during a conference call discussing earnings if the slowdown in the fourth quarter portends an ongoing shift in the company’s metrics, Carlock said, “I think our view is that over the long haul, we expect to comp in the 3% to 5% range. But based on the trends we saw in the fourth quarter, we should come out of the gate more conservatively in the 2% to 4% range.”

Suggested Categories More from Supermarketnews


Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.