NEW YORK (TheStreet) -- Fairway Group (FWM) opened Friday's trading session down almost 30% after reporting third-quarter earnings. TheStreet's Jim Cramer, who co-manages the Action Alerts PLUS portfolio, was not very pleased with the company.
"This is the beginning of the shakeout," he said. The company reported "horrendous same-store sales" and is going through a "total management shakeup."
He added there's always a debate about which company is going to dominate the fresh and organic market, Fairway Group or Whole Foods Markets (WFM). He said Whole Foods' earnings could be a bit soft but they definitely won't be as bad as Fairway's.
This should be put to rest any debate that Fairway Group is eating into Whole Foods Markets' business, Cramer said.
Turning to the home improvement sector, Goldman Sachs downgraded Lowe's (LOW) on a weakening housing market. Cramer said Lowe's seemed to be turning the corner but said its previous earnings report was not that impressive when compared to Home Depot's (HD).
Cramer concluded that if Home Depot and Lowe's both report worse-than-expected earnings, the home improvement group could start to sell off with the rest of the retail sector.
-- Written by Bret Kenwell in Petoskey, Mich.