Fresh Market Profit Rises, But Stock Tanks 11% On Weak Outlook

(RTTNews) - Specialty grocery retailer The Fresh Market Inc (TFM), Thursday reported an increase in profit for the second quarter, reflecting revenue growth and strong operating margins. Nonetheless, both earnings and revenues for the quarter fell short of Wall Street estimates.

Looking ahead, the company lowered its full-year outlook, sending its shares plunging over 10 percent in extended trading hours.

Greensboro, North Carolina-based Fresh Market's second-quarter profit rose to $17.5 million or $0.36 per share from $11.4 million or $0.24 per share last year. On average, twenty-four analysts polled by Thomson Reuters expected earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the second quarter rose 4.7 percent to $442.10 million from $422.23 million a year ago. Twenty-one analysts had a consensus revenue estimate of $458.34 million for the quarter.

On a same store basis, sales for the quarter were down 1.0 percent.

Gross margins for the quarter dropped 30 basis points to 33.7 percent, while operating margin improved to 6.4 percent from 4.5 percent last year.

Interim CEO Sean Crane said, "Our second quarter results reflect changes in our pricing and promotional investments, which were less effective than anticipated in a more challenging macro environment."

Looking forward to the full year 2015, the company now expect adjusted earnings of $1.55 to $1.65 per share on sales growth of 5 to 7 percent. Analysts currently estimate earnings of $1.85 per share on revenue growth of 10.90 percent for 2015.

Earlier, the company expected adjusted earnings of $1.85 to $1.93 per share on sales growth of 9 to 11 percent.

TFM closed Thursday's trading at $26.59, down $0.66 or 2.44%, on the NYSE. The stock further dropped $2.94 or 11.06% in after-hours trade.