Moody's downgrades The Fresh Market

A Supermarket News story last month reported that The Fresh Market's effort to increase store traffic through investments in price have not been successful, and same-store sales are expected to decline for the rest of the year. Supermarket News cited Moody's Investor Service as the information source.

Moody's recently categorized The Fresh Market's corporate family credit rating as a very high credit risk and gave it a negative outlook.

According to a Moody's analyst, increasing pricing pressure and new store openings in The Fresh Market's operating areas will "make it very challenging to meaningfully improve profitability in the next 12 months." The analyst quoted cited potential pressure from Amazon-Whole Foods.

In addition to the credit rating downgrade, Moody's also downgraded the rating on The Fresh Market's $100 million revolving credit facility, as well as the rating of its $800 million senior secured notes.

The company was acquired last year by Apollo Global Management for about $1.4 billion. The Fresh Market currently has 176 stores in 24 states.

Fresh Market trying to become a more mainstream grocer

The Fresh Market announced in late April that it plans to close five stores. At the same time, the company is continuing its effort to become a more mainstream grocer with the rollout of new stores in South Carolina and Florida that feature an updated look and more everyday grocery items.

The stores slated for closure are in Northern New Jersey, New York, Virginia, Florida and Illinois.

The Fresh Market debuted its new format last year in three North Carolina stores, and one earlier this year in Florida. These stores include an increased selection of local products and traditional grocery offerings like pet and baby products. The company said the stores also include an emphasis on "sharp pricing."

Private investment firm Apollo Global Management acquired The Fresh Market last year for $1.36 billion.

The Fresh Market moving away from its gourmet roots

The Fresh Market debuted lower prices, expanded product offerings and a new logo late last month at three stores in the Triad region of North Carolina. The new look and offerings will expand to 13 more stores in North Carolina on November 30, and then to the company's remaining stores nationwide through early 2018.

Among the changes in effect at the three NC stores, The Fresh Market has doubled the number of aisles and added 1,300 everyday grocery products, including items from Campbell's and Kellogg's, as well as organic and natural brands like Annie's Homegrown and Nature's Path. The company's intention is to transition from being known as a "gourmet specialty chain."

"The reinvention of our stores will place an emphasis on delicious fresh fare, convenience, and health and wellness options," said CEO Rick Ancetti.

Apollo Global Management acquired The Fresh Market in March (see story here:  Apollo Global to purchase The Fresh Market) and shortly thereafter closed 13 stores and delayed the opening of four others.

Apollo Global Management to buy The Fresh Market

The Fresh Market announced last month that it would be acquired by Apollo Global Management for about $1.36 billion. In addition, The Fresh Market Chairman Ray Berry, along with his son Brett, will roll over "the vast majority" of their company holdings with Apollo. The Berry's currently own about 9.8% of the company stock.

Apollo had previously owned Sprouts Farmers Market, which is now a leading player in the organic and fresh foods grocery market.

According to reports, The Fresh Market had seen its results suffer in recent years, as demand for fresh offerings at lower prices has hurt higher priced retailers. The company operates 187 stores in 26 states with estimated annual sales of nearly $2 billion.

Supermarket News reported that Apollo would fund the deal with $800 million in new debt and $525 million in new equity, including the Berry's contribution.