Stock in Fairway Group Holdings was down by nearly 10% Friday, after the retailer reported a wider than expected quarterly loss and suspended financial guidance as a rebuilding commences under new CEO Jack Murphy.
Murphy, who was appointed to his role in September, in his first remarks to the financial community late Thursday said it was too early on to remark on specific strategies but intended to craft “very detailed marketing and merchandising plans” focused on improving same-store sales and enhancing processes for the New York-based specialty retailer. “There's a lot of work to do here at Fairway, but there's also a tremendous amount of opportunity,” Murphy said. He did not take questions from analysts.
As reported previously, Fairway’s sales in the second quarter improved by 5.9%, but comps were down by 3.9% as a result of new competition — in particular a Brooklyn Whole Foods store affecting sales at Fairway’s Red Hook store — and losses mounted to $17.2 million as a result of price investments, inflation that was not passed along to shoppers, and increased shrink. Earnings and revenue were below analyst predictions.
Ed Arditte, co-president and CFO, said, “We're actively reviewing all operational activities in the company and we believe that halting guidance is the appropriate action for us at this point.”
Fairway stock closed Friday at $2.46 per share, down by 9.56%, its lowest close since it began trading in April 2013.
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