(By Balachander) Fresh Market Inc. (NASDAQ:TFM) raised its earnings guidance after the grocery retailer reported stronger-than-forecast quarterly results amid improvement in margins.
Net income increased to $13.3 million or 28 cents per share for the second quarter from $10.5 million or 22 cents per share in the same period of last year.
Net sales jumped 21 percent to $313 million. Comparable store sales rose 8.0 percent, driven by a 5.3 percent rise in the number of transactions and a 2.7 percent gain in average transaction size.
Wall Street analysts, on average, expected earnings per share (EPS) of 27 cents on sales growth of 18.7 percent.
Gross margin improved 140 basis points to 34.17 percent. Operating margin expanded 40 basis points to 6.9 percent.
Looking ahead for the full year, the Greensboro, North Carolina-based company now expects EPS in the range of $1.33 to $1.38 from prior expectations of $1.28 to $1.34. Comparable store sales growth is currently projected to be between 5.5 percent and 6.5 percent from 4.5 percent to 6.5 percent projected earlier. Analysts expect EPS of $1.32 per share.
Fresh Market offers various perishable product categories, including meat, seafood, produce, deli, bakery, floral, sushi, and prepared foods; and non-perishable product categories, such as grocery and dairy products, as well as specialty foods, which include bulk, coffee and candy, and beer and wine.
As of July 29, 2012, the company operated 121 stores in 24 states.
TFM ended Tuesday's regular trading at $61.69. The stock has been trading in the 52-week range between $33.50 and $62.48.