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Will The Fresh Market Meet Its Updated Fiscal 2016 Guidance?

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TFM tightens lowered outlook on poor comps

After weak fiscal 3Q16 results, The Fresh Market (TFM) tightened its previously issued guidance on sales and earnings for fiscal 2016. The company revised its annual revenue growth target to 5.5%–6.5% as compared to the earlier guidance of 7% growth. Comparable-store sales are now expected to decline by between -2.6% and -2%, as compared to the earlier guidance of a decline of 1%–2.5%. The Fresh Market expects fiscal 2016 EPS to be in the range of $1.55–$1.60.

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TFM’s store count to rise by 18 stores in fiscal 2016

The company opened 14 new stores in the first three quarters of fiscal 2016 and had plans to add four stores in the fourth quarter. The addition of these 18 stores during fiscal 2016 would bring the total store count to 187 by the end of the year. In comparison, Whole Foods (WFM) operates more than 430 stores, while Sprouts Farmers Market (SFM) operates around 224 stores. Both companies have a vision of expanding their store base to 1,200 stores in the United States. Kroger (KR), the biggest supermarket chain in the country, operates around 2,700 stores.

Strategic and financial review

In October 2015, The Fresh Market announced that it would conduct a strategic and financial review of its business. The company mentioned in the press release that this review might result in TFM pursuing value-enhancing initiatives as a stand-alone company, capital structure optimization, or a sale of the company or other business combination.

Rick Anicetti, president and chief executive officer, commented during the 3Q16 earnings call, “The Fresh Market is a unique brand with enormous untapped potential and I am excited about the opportunity to guide the company’s future direction. As our management team and Board conduct a comprehensive strategic and financial review of the business, we are simultaneously moving forward aggressively with a number of initiatives to strengthen our foundation, increase productivity, drive store traffic, and regain operating momentum.”

The SPDR S&P Retail ETF (XRT) has ~1% exposure to TFM, while the Barron’s 400 ETF (BFOR) has 0.27% exposure to the company.

In the next part of this series, we’ll look at TFM’s Market performance.

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