Given the success of Whole Foods, it was inevitable that companies like The Fresh Market Inc (NASDAQ:TFM) would come along to try to replicate its success. So far, the growth path that The Fresh Market has followed has been impressive, but can it keep up the pace long enough to reach critical mass as a serious threat to its rival? Let’s take an early look at what’s been happening with The Fresh Market Inc (NASDAQ:TFM) over the past quarter and what we’re likely to see in its quarterly report.
Stats on The Fresh Market
| Analyst EPS Estimate | $0.44 |
| Change From Year-Ago EPS | 10% |
| Revenue Estimate | $369.69 million |
| Change From Year-Ago Revenue | 13.8% |
| Earnings Beats in Past 4 Quarters | 2 |
Source: Yahoo! Finance.
Will The Fresh Market have healthy earnings this quarter?
Analysts have reined in their expectations of The Fresh Market Inc (NASDAQ:TFM)’s earnings lately, cutting a nickel per share from their April-quarter projections and cutting more than twice that from their full-year consensus for the current year. The stock has also languished, falling about 5% since late February.
The key reason for The Fresh Market’s challenges lately was its last quarterly report back in March. In that report, the grocery retailer said same-store sales rose only 1.9%, less than half what analysts had expected. Moreover, the company guided down estimates for the full year, with most of its planned new-store growth coming in the second half of 2013. As Whole Foods has also been moving aggressively to boost its store count, investors worry that The Fresh Market Inc (NASDAQ:TFM) could be hitting a point of diminishing returns within the high-end grocery industry.
But more recently, investors seem to have realized that what’s good news for Whole Foods is also good news for The Fresh Market Inc (NASDAQ:TFM). When Whole Foods reported favorable earnings earlier this month, The Fresh Market also gained ground, as it indicated a general willingness among customers to spend more on premium-quality food. In particular, as The Fresh Market gears up to challenge Whole Foods in the key markets of California and Texas, the grocer stands to get a lot of new growth opportunities. If the company can focus more on winning business from The Kroger Co. (NYSE:KR), Safeway Inc. (NYSE:SWY) , and other traditional grocers rather than on trying to crush Whole Foods, then The Fresh Market Inc (NASDAQ:TFM) should be able to find its niche and keep its prospects moving in the right direction. Even as Safeway Inc. (NYSE:SWY) and The Kroger Co. (NYSE:KR) have tried to embrace organics and other healthy products, they can’t match The Fresh Market’s margins, and that’s a key advantage The Fresh Market should maintain for a while.
In The Fresh Market Inc (NASDAQ:TFM)’s report, look for the company to follow up on its guidance from last quarter. If the grocer can’t report improving conditions among its customer base, then it could have further problems keeping its share price up.
The article Why The Fresh Market Must Grow Faster originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends The Fresh Market and Whole Foods Market, Inc. (NASDAQ:WFM) and owns shares of Whole Foods Market, Inc. (NASDAQ:WFM).
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