Fresh Market Profit Falls, But Tops View; Stock Up 8%

(RTTNews) - Specialty grocery retailer The Fresh Market Inc (TFM), Thursday reported a decline in profit for the second quarter, hurt mainly by store closures and exit costs that offset a double-digit growth in revenues. Nonetheless, both earnings and revenues for the quarter came in ahead of Wall Street estimates.

Looking ahead, the company maintained its full-year adjusted earnings outlook. Shares of the company were up 8 percent, following the news.

Greensboro, North Carolina-based Fresh Market's second-quarter profit dropped to $11.4 million or $0.24 per share from $15.6 million or $0.32 per share last year.

Excluding store closure costs of $0.13 per share, earnings for the second quarter were $0.36 per share. On average, 21 analysts polled by Thomson Reuters expected earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the second quarter jumped 19 percent to $422.23 million from $354.76 million last year. Nineteen analysts had a consensus revenue estimate of $411.85 million for the quarter. On a same store basis, sales for the quarter were up 2.9 percent.

Gross margins for the quarter dropped to 34.0 percent from 34.2 percent last year, reflecting higher occupancy costs and LIFO expense associated with the continuation of product cost inflation.

Commenting on the results, CEO Craig Carlock said "We are pleased with our second quarter results which demonstrate our ability to drive solid sales and expand merchandise margins in an increasingly competitive retail environment. The performance of our new stores exceeded our expectations and we see tremendous expansion opportunities in our core markets."

Looking forward the company continues to expect adjusted earnings of $1.56 to $1.66 per share. Analysts currently expect full-year earnings of $1.56 per share.

TFM closed Thursday's trading at $30.43, down $0.52 or 1.68%, on the NYSE. The stock, however, gained $2.47 or 8.12%, in the after-hours trade.