The Fresh Market Earnings: Fifth Consecutive Quarter of Double-Digit Revenue Growth

The Fresh Market Inc. (NASDAQ:TFM) reported net income above Wall Street’s expectations for the first quarter. Fresh Market is a specialty food retailer. The company operates a chain of stores that retail fresh premium perishable food items. Fresh Market operates in the southeastern, midwestern and mid-Atlantic states.

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The Fresh Market Inc. Earnings Cheat Sheet

Results: Net income for The Fresh Market Inc. rose to $19.3 million (40 cents per share) vs. $13.5 million (30 cents per share) in the same quarter a year earlier. This marks a rise of 43.2% from the year-earlier quarter.

Revenue: Rose 22.8% to $324.8 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: The Fresh Market Inc. beat the mean analyst estimate of 35 cents per share. It beat the average revenue estimate of $310.3 million.

Quoting Management: “We are proud and excited to report another strong quarter of both sales and earnings growth,” said Craig Carlock, President and Chief Executive Officer. “Our comparable store sales grew a robust 8.2% in the first quarter, continuing the strong performance we saw in the second half of last year. During the quarter we also opened three new stores, we grew our merchandise margin, and we increased our operating margin to 9.6%. We grew our net income by 43% from our fiscal 2011 first quarter net income, and as we look at the remainder of fiscal 2012 we continue to be enthusiastic about our business and our growth prospects. Given the strong first quarter performance and our current expectations for the remainder of fiscal 2012, we now expect fiscal 2012 earnings growth of approximately 20% to 25% from fiscal 2011’s $1.07 per share to a range of $1.28 to $1.34 per share, comparable store sales growth of 4.5% to 6.5% and the addition of 14 to 16 new stores. We also expect operating margin expansion of between 20 and 40 basis points, which includes the effect of the Company’s anticipated operating expense investments related to our growth plans, especially in connection with establishing and then expanding our west coast store base.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 15.8%, with the biggest boost coming in the most recent quarter when revenue rose 22.8% from the year earlier quarter.

After two quarters of falling short, the company beat estimates last quarter. In the fourth quarter of the last fiscal year, it missed the mark by one cent, and in the third quarter of the last fiscal year, it came in under estimates by one cent.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 26 cents per share, down from 27 cents ninety days ago. At $1.30 per share, the average estimate for the fiscal year has fallen from $1.32 ninety days ago.

Competitors to Watch: Whole Foods Market, Inc., Safeway Inc., The Kroger Co., Ruddick Corporation, Ingles Markets, Inc., Winn-Dixie Stores, Inc., SUPERVALU INC., The Great Atlantic & Pacific Tea Co., Weis Markets, Inc., and Arden Group, Inc.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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