GREENSBORO, N.C. — The Fresh Market here last week said profits fell in the first fiscal quarter due to tax-accounting changes, although sales were up 10% and comparable-store sales rose 4.1%.
The company reported net income of $13.5 million, down about 32% from $19.9 million a year ago, when it reported taxes differently. Pro forma net income for the year-ago quarter was $12.2 million. The company also said it incurred about $1.1 million in expenses in the recent quarter related to a recent stock offering.
Sales in the most recent quarter totaled $264.5 million. The 4.1% comp-sales increase resulted from a 1.7% increase in transactions and a 2.4% increase in average basket size, the company said, marking its fifth consecutive quarter of positive growth in both number of transactions and basket size.
Gross margins for the high-end specialty retailer, which focuses on fresh and gourmet products in a relatively small box, rose about 50 basis points, to 33.9% of sales.
Craig Carlock, president and chief executive officer, said the company is experiencing food-cost pressures but is managing them through various “levers.”
“We continue to believe that our highly desirable demographics, our purchasing power and our centralized tools and processes allow us to manage cost increases effectively,” he said in a conference call discussing the results.
The company operated 101 locations in 20 states at the end of the quarter, and it said it expects to open 12 to 14 new stores in the current fiscal year, weighted toward the back end of the year.
The Fresh Market had an initial public offering last year and a follow-on offering earlier this year. The stock plunged almost 13% following the earnings release.
