Supermarkets in April: Recap and Precap



Apollo closes its deal with The Fresh Market

The Fresh Market (TFM), which entered into a definitive agreement with Apollo Global Management (APO) on March 14, 2016, has entered the next stage of the acquisition deal.  The “go-shop” period for The Fresh Market, which ended April 2, 2016, expired without any new bidders stepping in. This gave Apollo the green light to close the deal.

Apollo Global, an American private equity firm, announced its interest in acquiring TFM for $1.4 billion in an all-cash deal. Apollo agreed to pay $28.50 per share to TFM shareholders, which includes a premium of 24% to the closing share price on the day prior to the announcement of the deal. The deal, if successful, is expected to close in the second quarter of 2016.

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April results recap

SuperValu (SVU) reported its fourth-quarter 2016 results on April 26, 2016. The company beat analysts’ earnings estimates by $0.04 and reported adjusted diluted earnings per share of $0.23. The company, however, missed on revenue estimates for the third consecutive quarter, reporting total sales of $4.0 billion. All of its segments reported a revenue decline. The company’s better-than-expected earnings were primarily a result of lower income tax expenses and a decline in interest costs.

What’s in store for supermarkets in May?

Whole Foods Market (WFM) is all set to launch its first 365 stores in Los Angeles on May 25. The new concept will follow a smaller store format, housing private label products that will be cheaper than those offered in the traditional Whole Foods stores. These budget-friendly stores are one of the company’s most important initiatives to stay afloat in the highly competitive organic food space.

WFM is set to report its financial results for the second quarter of fiscal 2016 on May 4, 2016. After WFM, Sprouts Farmers Market will release its 1Q16 results on May 5, 2016. While Wall Street is expecting WFM’s earnings per share to fall by 5.3% year-over-year, it is expecting SFM’s to rise by 14%. ETF investors seeking to gain exposure to Whole Foods could consider the VanEck Vectors Retail ETF (RTH), which invests 1.5% of its portfolio in the company. Investors looking to invest in SFM through ETFs could opt for the iShares S&P Mid-Cap 400 Growth ETF (IJK). SFM makes up 0.54% of IJK’s holdings. Continue on to the next section to read about the five supermarkets’ stock market performance.


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