Fresh Market Rebounds, Posts Earnings, Sales Gains in Q1

GREENSBORO, N.C. — The Fresh Market here on Wednesday said it has rebounded from a disappointing sales performance in the fourth quarter, posting year-over-year gains in sales, comps and profits for the first quarter ended April 28.

Sales of $366.6 million over the 13-week quarter improved by 12.9% from the first quarter last year, while comparable-store sales improved by 3%. The figures showed a marked sequential improvement from the fourth quarter, when comps of 1.9% fell well short of analyst and company expectations.

Net income for the first quarter of $22.1 million improved by 14.8%, as gross margin as a percent of sales gained 60 basis points to 35.3%.

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Stock in The Fresh Market was up by more than 6% Wednesday afternoon.

Craig Carlock, Fresh Market’s chief executive officer, in a conference call discussing results said the fourth-quarter slowdown — confined mainly to the November-December period — came as a result of consumer uncertainty stemming from events including Hurricane Sandy, the presidential election and tax-rate fears. Sales patterns improved again in January, he said.

“Even though our performance was solid this quarter, we did not take lightly the pullback we experienced in Q4,” Carlock said. “We are a disciplined company and committed to thoroughly understanding our business and growing our customer base.”

Read more: The Fresh Market Goes Coast to Coast

Carlock said the company was beginning to cycle the first metrics captured by a business intelligence platform launched a year ago, providing The Fresh Market with “a level of sophistication and timeliness that we previously lacked.” He said the company for example is using the system to craft promotions based on analysis of basket contents.

The Fresh Market opened two stores during the quarter and now operates 131 stores in 25 states. The company is on track to open between 19 and 21 stores during the fiscal year, Carlock said, including its second store in California, in Palo Alto, set to open next week.

Most of the company’s new stores will open in the second half of the year. This schedule will create some near-term expense headwinds, Carlock explained, noting that pre-opening expenses, rents and headcount increases arrive before the stores will generate revenues.

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