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TheStreet Open House

The Fresh Market, Inc. Reports Second Quarter And First Half Fiscal 2012 Earnings

Average inventory on a FIFO basis per store at the end of the second quarter of fiscal 2012 increased 5.9%, compared to the corresponding period in fiscal 2011. The increase resulted from commodity cost increases in certain departments such as Meat, Produce and Grocery and increased inventory investments in new product assortments and faster growing categories to support our overall sales growth.

On a trailing four quarter basis for the period ended July 29, 2012, the Company's return on assets was 18.7%, after-tax return on invested capital, excluding excess cash, was 26.7%, and return on equity was 37.0%. These financial return measures are non-GAAP financial measures. The schedules attached to this press release include a discussion of these non-GAAP measures, as well as the details of our calculations of these financial return measures.

Growth and Development

During the second quarter of fiscal 2012, the Company opened five new stores in Wichita, Kansas; Tulsa, Oklahoma; Bedford, New Hampshire; New Orleans, Louisiana and Rogers, Arkansas. As of July 29, 2012, the Company operated 121 stores in 24 states as we added our first stores in the states of Kansas, Oklahoma and New Hampshire.

The Company announced the signing of leases for two new stores in: Winter Park, FL and Charlottesville, VA, during the period ended August 29, 2012. These stores are currently scheduled to open after fiscal 2012.

The following table provides additional information about the Company's real estate and store opening activities through the second quarter of fiscal 2012 and leases announced as signed as of August 29, 2012 for stores scheduled to open during or after fiscal 2012.

Store Information for Stores Opened in FY 2012 Opened As of July 29, 2012 Current Leases Signed for Future Stores 1
Number of new leased stores 7 14
Number of relocations 1
Number of ground leases and owned properties 1 2
Average capital cost per store 2 $3.8 million  
Store Information for All Open Stores    
Average store size (gross square feet) 21,083  
Total rentable square footage (at end of period) 2.6 million  

Note 1: The Company may also be party from time to time to other leases and real estate transaction documents that it has not yet announced. The Company's website sets forth the most current list of announced leases and stores that are coming soon.

Note 2: Net of capital contributions, if any, received from landlords, and including building costs but excluding cost of land for owned stores.

Fiscal 2012 Outlook

For fiscal 2012, management now expects the Company to:

  • Open 14 to 16 new stores
  • Relocate one store
  • Spend approximately $95 million to $105 million in capital expenditures, primarily related to real estate investments
  • Increase comparable store sales 5.5% to 6.5%
  • Increase operating margin, as a percentage of sales, by 30 to 50 basis points, including the impact of the Company's equity offering costs and legal settlement costs incurred in the second quarter
  • Generate diluted earnings per share of $1.33 to $1.38

2012 Second Quarter Earnings Conference Call

The Company will host a conference call today at 9:00 a.m. Eastern Time hosted by President and Chief Executive Officer, Craig Carlock and Executive Vice President and Chief Financial Officer, Lisa Klinger. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed. 

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