Fairway Group Holdings Corp. Reports Fourth Quarter Results

NEW YORK, May 29, 2014 (GLOBE NEWSWIRE) -- Fairway Group Holdings Corp. ("Fairway") (Nasdaq:FWM), the parent company of Fairway Market, today announced financial results for its fiscal 2014 fourth quarter ended March 30, 2014.
  • Net sales increased to $200.3 million
  • Adjusted EBITDA was $12.7 million
  • Began working with Google Express to launch online shopping platform with same-day delivery throughout Manhattan

"During the quarter we made progress on a number of operational initiatives, including leveraging our Central Service expense and reducing direct store expenses through enhanced cost disciplines. Sales and Adjusted EBITDA were in-line with our expectations," said William Sanford, Interim Chief Executive Officer. "We are looking forward to transitioning into our new production facility this summer as well as the opening of our new store in Lake Grove, New York. We are also excited to begin working with Google to provide Fairway with omni-channel capabilities through the Google Express shopping service with same-day delivery service throughout Manhattan."

Co-President and Chief Operating Officer Kevin McDonnell added, "Fairway's broad offering, which combines fresh, natural and organic products with hard to find specialty items and a full selection of conventional groceries, remains a unique platform in the market. Our commitment for delivering quality, selection and value to our customers leaves us well positioned to leverage the growing population of health conscious and value oriented consumers."

Fairway to Provide Same-Day Delivery through Google Express Shopping Service

During the 1 st quarter of fiscal 2015 the Company began working with Google Express to launch an online shopping platform with same-day delivery throughout Manhattan. The shopping interface allows consumers to shop approximately 12,000 Fairway SKUs seamlessly across multiple devices, providing an added level of convenience for existing customers while simultaneously exposing the Fairway brand to new customers. The integration of Google Express allows Fairway to leverage Google's technology and distribution network to increase delivery capacity and expand the Fairway footprint.

Operating Results for the Fourth Quarter of Fiscal 2014

For the fourth quarter of fiscal 2014, net sales increased $21.6 million, or 12.1%, to $200.3 million from $178.7 million in the fourth quarter of fiscal 2013. Net sales growth in the quarter was driven primarily by the new stores opened subsequent to April 1, 2013 and three months of net sales from the Red Hook, Brooklyn location ("Red Hook"), which was closed for the first nine weeks of the fourth quarter in the prior year. On a pro-forma basis to include the estimated lost sales from the Red Hook store in the fourth quarter of fiscal 2013, net sales increased 4.8% in the quarter.
 
Pro forma Net Sales and Adjusted EBITDA Margin 1
     
(Dollars in millions) Thirteen Weeks Ended Thirteen Weeks Ended
  March 31,  March 30, 
  2013 2014
  Actual Pro forma Actual Pro forma
Net Sales  $ 178.7  $ 191.0  $ 200.3  $ 200.3
% growth 18.9% 27.1% 12.1% 4.8%
         
Central Services  $ 10.8  $ 10.8  $ 10.7  $ 10.7
% margin 6.0% 5.7% 5.3% 5.3%
         
Adjusted EBITDA  $13.5 $13.5 $12.7 $12.7
% margin 7.6% 7.1% 6.4% 6.4%

(1) The pro-forma adjustments are made to account for the temporary closing of the Company's Red Hook, Brooklyn store due to Hurricane Sandy and therefore make more meaningful comparisons between periods. The Red Hook, Brooklyn store was closed beginning October 29, 2012 and re-opened on March 1, 2013.  Pro forma net sales for the quarter ended March 31, 2013 reflect an  adjustment of $12.3 million based on the Red Hook location's net sales during the same 9 week period in the prior fiscal year. The actual adjusted EBITDA includes business interruption insurance proceeds of $2.5 million for the fourth quarter. As a result, no pro-forma adjustment is needed for adjusted EBITDA.

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