The Fresh Market, Inc (NASDAQ: TFM)
The Fresh Market reported earnings on Thursday, August 20th after the closing bell that weren’t so “refreshing” according to the reaction the market had immediately after the news hit. The earnings were well below what had been expected for the fiscal second quarter. Earnings were 36 cents a share; well below analysts’ estimates of 40 cents a share. While revenues did grow by 4.7 percent year-over-year, it missed analysts estimates of $458 million by about 16 million dollars. Shares were lower by $3.18 (11.96%) to $23.41 as of the close of after hours trading at 8pm EST. Shares closed at $26.59 as of the regular trading session at 4pm EST.
If the poor earnings weren’t bad enough already, the analysts came out of the woodworks to downgrade the stock and their price projections. Bank of America/Merrill Lynch downgraded from Neutral to Underperform. BMO Capital downgraded from Outperform to Market Perform. BMO’s analyst Kelly Bania added ,”While we continue to see longer-term potential in the TFM story given its compelling unit economics and not-so-organic niche of providing high-quality fresh foods in a convenient/high-service setting, we believe one of TFM’s weaknesses could be exposed in the current environment, which could… weigh on the stock’s valuation.”
Seeking Alpha had this very ominous report filed hours before the market opened on Thursday August 20,2015
“Despite the steady sell-off this year, we are still not attracted to TFM at this valuation. We are becoming increasingly interested in the stock, but believe the intrinsic value is still south current market value. As you can see above, we expect revenues to miss this quarter, and believe shares will depreciate following that revenue miss”.
One common concern amongst all of the analysts is the absence of a permanent Chief Executive Officer. This poses a dilemma of a less focused environment which could be harmful to a strategic focus plan going forward.
The Fresh Market’s CEO Comments
“Our second quarter results reflect changes in our pricing and promotional investments, which were less effective than anticipated in a more challenging macro environment,” Interim CEO Sean Crane said in a statement. Thestreet.com
Shares have fallen by roughly 35 percent since the beginning of 2015. Notice the down-trend price channel it has respected even up until today’s trading. Whether today’s earnings report and subsequent reaction will create a new more significant angle of trend only time will tell. We will be closely watching this one for volatility in the coming days as daytraders.
About The Fresh Market, Inc.
The Fresh Market, Inc. operates as a specialty grocery retailer in the United States. The company offers various food products that focus on perishable product categories, including meat, seafood, produce, deli, bakery, floral, sushi, and prepared foods; and on non-perishable product categories, such as traditional grocery, frozen, and dairy products, as well as bulk, coffee and candy, beer and wine, and health and beauty products. As of April 14, 2015, it operated 168 stores in 27 states. The company was founded in 1982 and is headquartered in Greensboro, North Carolina. Yahoo! Finance