The Fresh Market gives Q1 boost to Cencosud

The Fresh Market is churning out solid sales for Chilean parent company Cencosud, which acquired a majority stake in the U.S. specialty grocer last year.

For the fiscal 2023 first quarter, The Fresh Market generated sales of about $503.4 million (converted from Chilean pesos), Las Condes, Chile-based Cencosud reported late Wednesday. That total accounted for 11.3% of Cencosud’s Q1 consolidated revenue of $4.35 billion and 10.5% of its adjusted EBITDA.

Cencosud noted that the first quarter marked the consolidation of The Fresh Market, as well as Brazilian cash-and-carry supermarket chain GIGA Atacado, into its operations. In May 2022, Cencosud purchased 67% of The Fresh Market from private-equity firm Apollo Global Management in a deal valued at $676 million. The deal marked Cencosud’s first U.S. venture.

With the integration of The Fresh Market, Cencosud also is taking advantage of the U.S. grocer’s strong own-brands portfolio. Starting in March, Cencosud’s Jumbo stores in Chile began carrying The Fresh Market private-brand products. During the first quarter, The Fresh Market tallied 30.7% private-label penetration, the Chilean retailer reported.

Cencosud also said it has fine-tuned The Fresh Market’s commercial strategy to improve price perception in the marketplace amid high food inflation, with bundled promotional activity driving sequential growth in same-stores sales, which finished the quarter up 2.4%.

On the digital side, Cencosud said it renewed The Fresh Market’s partnership with Instacart “in the first months of the year” and promoted commercial initiatives through the Firework live-shopping video platform. Last week, Firework said it was working with The Fresh Market to pilot the platform’s artificial intelligence engine.

The Fresh Market’s online sales represented 5.5% of the chain’s revenue for the first quarter, according to Cencosud.

Currently, The Fresh Market operates 159 stores in 22 states, mainly in Florida, North Carolina, Virginia and Georgia. At the time of The Fresh Market acquisition, Cencosud said the chain had 2021 revenue of $1.93 billion, and the company said in March that The Fresh Market totaled about $658.2 million in revenue (converted from CLP) for Q4 2022. Hopes are high for the chain’s expansion. Cencosud said in its Q4 presentation that it sees the potential to triple the size of The Fresh Market’s business, including the opportunity to open 75 “new low-risk” stores, for a possible $900 million in added sales.

Overall, Cencosud operates more than 900 retail locations—including supermarkets, home improvement stores and department stores—under a variety of banners, as well as shopping centers, in Chile, Argentina, Brazil, Peru, Colombia and the United States. The company holds a put option to buy the remaining 33% of The Fresh Market.

“We continue to move towards our goal of becoming e-grocery leaders in the region, focusing on providing the best mobile experience and continuously improving our last mile,” Cencosud CEO Matías Videla said in a statement on first-quarter results. “It is for this and other reasons that we continue to drive efficiency measures, investing in the businesses and formats preferred by our customers, and leveraging omnichannel as a complement to our strength and physical presence in the region.”