This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fresh Market's Stock Gets Rancid

NEW YORK (TheStreet) -- As with the duopoly that exists in home-improvement retailers, Lowe's (LOW) and Home Depot (HD), the rising popularity of organic and natural foods have spurred a heated rivalry between Whole Foods (WFM), whose name has always been associated with health and wellness and The Fresh Market (TFM), who now wants to take that title.

However, in the wake of Fresh Market's disappointing third-quarter earnings results, aspirations of dethroning Whole Foods -- which at one point seemed very realistic -- will now have to wait. After posting a 3% miss, relative to consensus revenue estimates, I believe management has to rethink not only about its aggressive growth strategy, but of ways to improve operational efficiency.

Factoring the pricing pressure that the company has begun to face from conventional retailers like Wal-Mart (WMT) and Kroger (KR), which have scaled their organic offerings, Fresh Market does not look like a great buy today -- even with the recent 20% decline that it has been suffering since November.

To be fair, the growing pains -- that Fresh Market is now suffering from -- are not new. Neither should this have come as a surprise to anyone who has been in this market for the last decade. Since the company's initial public offering (IPO) three years ago, Fresh Market has made a strong name for itself by operating a business that feeds the hunger of affluent consumers by providing high-quality produce shoppers can hardly find anywhere else.

Management not only executed the business to perfection, but timing helped Fresh Market to capitalize on what seemed like an overnight shift by many Americans who adopted new healthy-eating lifestyles.

The company, after having IPOed at price of $22 per share 2010, immediately became a Wall Street darling after posting close to a 40% increase (cumulative) in annual revenues between 2009 and 2012. All this, while management tripled earnings to more than $60 million in the same period.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,878.84 -36.23 -0.21%
S&P 500 1,963.10 -1.58 -0.08%
NASDAQ 4,405.6260 +9.4220 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs