The Fresh Market to close 15 stores

The Fresh Market announced yesterday that it plans to close 15 stores in nine states. None of the closings are in Pennsylvania, New Jersey or Delaware.

The closings are expected to take place in the next two to four weeks. Four of the stores are in Illinois, two in Georgia, two in Virginia, and one each in Indiana, Kentucky, North Carolina, New Hampshire and Tennessee.

There are currently five Fresh Market stores in Pennsylvania, two in New Jersey and one in Delaware.

"Over the last eight months, our company has been executing a turnaround plan, and we've seen great progress," said CEO Larry Appel. "However, for a variety of reasons unique to each retail location, that progress is not evenly distributed and, as a result, we have decided to close these long-term under-performing stores."

The Fresh Market, which currently operates 176 stores in 24 states, has had several stores closings in recent years as competition - both online and brick-and-mortar - has adversely impacted sales.

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.

Competition gaining on Whole Foods as organic and natural markets grow

Whole Foods officials told analysts last month during the company's earnings conference call to expect profits to be under pressure for the next couple years. The company cited growing competition for sales of natural and organic products, and what could be a prolonged period of price investments and internal cost reductions.

"I think it's important to understand that competition has accelerated, there's no question about it," said Co-CEO John Mackey. "We've seen the conventional supermarket companies like Kroger and Wegmans and H-E-B, they certainly have upped their game in natural and organic foods. We've seen new entrants get public money such as Sprouts, Fresh Market, Natural Grocers, and they're expanding more rapidly. Trader Joe's continues to expand."

"We still remain the market leader in this category, I think by a significant margin," he added. "And the market continues to expand, which is why all these guys are jumping into it... I think for a long time Whole Foods had the field to ourselves pretty much. That was nice. But we don't any longer."

It should be noted that Whole Foods is still gaining market share and same-store sales continue to climb. However, their market share gains are at half the rate they used to be, and same-store sales have gone from high single digits to mid-single digits. Wall Street doesn't like that, nor do Whole Foods executives.

Perhaps most disturbing to Whole Foods, although they won't admit it, is Walmart's entrance into the organic food arena. Walmart's buying power and value-pricing may bring lower prices to natural and organic foods overall, and could lead to price competition typically reserved for the conventional supermarkets.

As Analyst Neil Stern of McMillan Doolittle pointed out, "even Aldi has a private label for natural and organic."

Despite these challenges, Mackey pointed out that Whole Foods has a record 114 new stores in its development pipeline and was poised to approach 500 stores by 2017.

Analyst Chuck Grom of Sterne Agee believes a more tepid store development approach is required, and expressed concern over Whole Foods' ability to communicate a lower price image, stating that the company "will need to get very loud with its price message, which would almost certainly lead to lower operating margins."

The Fresh Market to limit expansion to existing markets

The Fresh Market announced earlier this month that they plan to increase penetration in existing markets while slowing the pace of expansion in new markets. The company also announced the upcoming closures of four stores, three in Sacramento, CA and one in Houston, TX.

The Fresh Market, which operates more than 150 stores nationwide, entered the California market in 2012 and the Houston market last year (through an acquisition). As of this evening, the company's website says that it operates two stores in California and four in Houston, one of which has a location in Turtle Creek listed as "TBD."

There are four Fresh Market stores in Pennsylvania and two in New Jersey.

Walmart Neighborhood Market fastest growing U.S. supermarket

A report from Chainlinks Retail Advisors recently listed what they believe to be the 10 fastest growing supermarkets (excluding warehouse clubs) in the U.S. They are listed here along with the number of new stores planned for the next year:

1. Walmart Neighborhood Market: 95 - 115
2. Aldi: 80 - 100
3. Save-A-Lot: 60
4. Whole Foods: 50
5. Trader Joe's: 30
6. Food Lion: 22
7. Fresh Market: 20
8. Sunflower Farmers Market: 20
9. Grocery Outlet / Amelia's: 20
10. Food 4 Less: 16

The Fresh Market posts sales, profit gains in Q1

The Fresh Market announced last week that it rebounded from a disappointing fourth quarter by posting strong sales, comps and profits in the company's first quarter, which ended April 28.

Sales for the quarter were $366.6 million, a 12.9% increase as compared to the same quarter one year ago. Comparable-store sales improved by 3%, and net income for the quarter improved 14.8% to $22.1 million.

Fresh Market CEO Craig Carlock said the company is learning from a business intelligence platform launched a year ago that helps them craft promotions based on an analysis of basket contents. It has provided Fresh Market with "a level of sophistication and timeliness that we previously lacked," according to Carlock.

The Fresh Market operates 131 stores in 25 states. Philadelphia area stores are located in Center Valley, Glen Mills and Horsham.

Redner's 6th on list of small chains and independents

Last year The Fresh Market and Grocery Outlet were the top two grocers on Supermarket News' list of Top 50 Small Chains and Independents, but their growth has lifted them off the list and on to the Top 75 list of the largest food retailers and wholesalers in the U.S. and Canada. Last year Grocery Outlet, based in Berkeley, CA, purchased Amelia's, a chain based in Southeastern PA.

Redner's Markets, seventh on last year's list, moved up to sixth due to the addition of three stores. Brown's Super Stores, a ShopRite operator that's part of the Wakefern cooperative, is 35th on this year's list.

Fareway Stores (Boone, Iowa) operates 102 stores and tops the list, while PAQ, Inc. of Stockton, CA is second.

The Fresh Market reports increases in sales, income

The Fresh Market reported an excellent third quarter yesterday, although analysts had hoped for better results.

• Net income for the quarter grew to $10.9 million, a 19% gain as compared to the same period one year ago.
• Sales reached $321.5 million, a 22.1% gain.
• Income per share was $0.23, compared to analysts expectations of $0.26.
• Year-to-date net income was $43.5 million on sales of $959.3 million. Both figures represent significant increases (31.2% and 21.8%, respectively) compared to the same period a year ago.
• Comparable-store sales were up 5.6% for the quarter and 7.3% year-to-date.

As of the close of business yesterday, The Fresh Market's shares were down 12% since analysts expectations were not met.

Store growth for The Fresh Market set at 15% annually

The Fresh Market, which operates 121 stores in 24 states, said it plans to open 14-16 new stores next year and plans to maintain a 15% growth rate for the foreseeable future.

The company opened 11 stores so far this year and has three to five openings planned in the second half of the year. For the first half of the year, The Fresh Market saw net income increase 35.9% to $32.6 million, while sales increased 21.7% to $637.8 million.

According to President and CEO Craig Carlock, the company is doing well "because we aren't in quite a price-sensitive position. We sell to folks who are there not for the price but for the quality, the service, the cleanliness and the ease of getting in and out."

Led by Whole Foods, food retailers ahead of Dow Jones pace

Supermarket News tracks the stock prices of food retailers, and they reported last Friday that Whole Foods Market was the industry leader for the first half of the year with a 37.69% gain in price. The Fresh Market, a similar store to Whole Foods in that it's a high-end market, was next with a 34.41% gain in its share price.

Stock prices for most of the traditional supermarket operators fell during the first half of the year. Supervalu (Acme, Save-A-Lot) fell 34.18%, Safeway (Safeway, Genuardi's) fell 12.23% and Ahold (Giant, Stop & Shop) fell 4.18%. On the other hand, large retailers like Walmart, Target and Costco all gained. Overall, the Supermarket News Index was up 13.25%, which is well above the gains for the Dow Jones Index (5.42%) and S&P 500 Index (8.31%) during the same period.

Here are how some of the food retailers closed at the end of June:

Winners
Costco - closed at $95.00; up 14.72%
Target Corp. - closed at $58.19; up 14.89%
The Fresh Market - closed at $53.63; up 34.41%
Village Super Market (ShopRite operator) - closed at $32.58; up 16.44%
Wal-Mart Stores - closed at $69.72; up 18.25%
Weis Markets - closed at $44.52; up 12.99%
Whole Foods - closed at $95.32; up 37.69%

Losers

Ahold (Giant, Stop & Shop) - closed at $12.39; down 4.18%
Delhaize (Food Lion, Bottom Dollar) - closed at $36.71; down 30.93%
Safeway (Safeway, Genuardi's) - closed at $18.15; down 12.23%
Supervalu (Acme, Save-A-Lot) - closed at $5.18; down 34.18%

The Fresh Market reports significant first quarter gains

Last week The Fresh Market, which operates 116 stores in 21 states - including three in Greater Philadelphia, announced a first quarter net income increase of 43% over the same quarter one year ago.

• Net income for the fiscal first quarter, which ended April 29, 2012, was $19.3 million.
• Sales totaled $324.8 million, up 22.8%.
• Comparable-store sales gained 8.2%, including a 5.7% increase in transaction count and a 2.5% increase in basket size.

The company expects to open 14-16 new stores in this fiscal year.

Traditional supermarkets lost stores in 2011, high-end grocers added stores

Supermarket powers Safeway, Kroger and Supervalu closed more traditional stores than they opened last year, while higher- and lower-end stores continued to add stores.

• Safeway, which includes Genuardi's in the Greater Philadelphia region, ended 2011 with 1,678 stores, a net decrease of 16 locations (22 closures and 6 openings).
• Kroger, the only chain of the three traditional markets mentioned here that has increased capital expenditures in 2012, had 2,435 stores at the end of last year, representing a net decrease of 25 units (41 closures, 16 openings).
• Supervalu, which includes Acme and Save-A-Lot in Greater Philly, ended 2011 with 2,434 locations, which is actually a net increase of 40 stores. However, taking discount grocer Save-A-Lot out of the equation and it's a net decrease of 12 traditional supermarkets. 

On the other hand, The Fresh Market added 13 new stores last year and currently operates 116 in total. Earlier this week at the annual International Council of Shopping Centers conference in Las Vegas, a company representative said their long-term goal is at least 500 stores nationwide. A significant capital investment is underway this year, representing approximately 8-9% of sales, and 14-16 new stores are expected.

Whole Foods, which added 12 net new stores last year and has about 300 current locations, has 63 stores in the planning stage and says it may eventually reach 1,000. In 2012, 24-27 new stores may open.

The Fresh Market to add 14-16 new stores this year

The Fresh Market, which has three stores in the Greater Philadelphia Region (Center Valley, Glen Mills, Horsham; all in PA), announced last week that it plans to add 14 to 16 new stores in fiscal 2012. It is expected the expansion will take place within their existing markets, and possibly even California, where they do not have any stores. The Fresh Market currently has 115 locations in 21 states throughout the Southeast, Midwest, Mid-Atlantic and Northeast.

The company, which describes itself as a high-end specialty retailer whose stores are like old world European markets with an open air feel, opened six new stores in the fourth quarter of 2011, and two stores have already opened in 2012.

The Fresh Market recently completed its first full year as a public company. Net income for the year was $51.4 million, compared to $21.3 million in 2010 (which included IPO-related charges). Sales for 2011 were up 13% from the previous year.

The Fresh Market reports profits and growth

Earlier this week, The Fresh Market reported strong sales and profits for the 13-week period ending July 31.  Net income for the company during the period was $10.5 million, and sales totaled $259.5 million. With comparable store sales up 4.6%, it was their seventh consecutive quarter of 4%-plus comps.

In addition to income and sales growth, operating margins increased to 6.5%, according to The Fresh Market President and CEO Craig Carlock. According to its website, the company currently has 116 stores in 21 states, with three Pennsylvania stores, all of which are in the Philadelphia market.

Five new stores opened during the second quarter and current plans call for 12 to 14 new store openings before year-end.