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What Stopped a Further Fall in The Fresh Market’s Stock Price?

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Mar. 15 2016, Updated 11:04 p.m. ET

TFM’s performance

A falling trend in sales comps, failed expansion attempts in the West, and concerns over rising competition resulted in a 40% fall in The Fresh Market’s (TFM) stock price in 2015. Whole Foods Market’s stock also fell 33%, mostly due to the same story line of declining sales comps and rising competition. Sprouts Farmers Market (SFM), despite a strong fundamental performance, fell 25% during the year.

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However, in 2016, Kroger (KR) (along with other private equity firms) came to TFM’s relief. On February 11, 2016, Reuters reported Kroger’s interest in acquiring TFM. Although none of the parties confirmed the news, TFM’s stock rose ~22% on the day of the news. TFM, which had fallen 21% from January 1, 2016, to February 10, 2016, has fallen only 1% year-to-date as of February 29, 2016. Read the next part of this series to learn about the details of Kroger’s bidding for TFM.

Dividends and share repurchase

The Fresh Market does not offer any dividends. Whole Foods Market (WFM) and Kroger (KR), however, do offer healthy dividends. Their one-year forward dividend yields are 1.8% and 1.1%, respectively, as of February 29, 2016.

TFM’s Board of Directors authorized a $200 million stock repurchase program in August 2015. The company bought back 1.6 million shares for $37.6 million in fiscal 3Q16 and has $162.4 million remaining for future stock repurchases.

ETF exposure

The Fresh Market (TFM), Kroger (KR), Whole Foods Market (WFM), and Sprouts Farmers Market (SFM) are part of the SPDR S&P Retail ETF (XRT) and together account for 4.4% of the ETF’s holdings.

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