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Fresh Market (TFM) 3Q Profit Rises As Sales Jump, Margins Improve

 November 28, 2012 06:37 AM


(By Balachander) Fresh Market Inc. (NASDAQ: TFM) posted a rise in quarterly profit as sales jumped and margins expanded and the grocery retailer backed its forecast for the full year. Earnings missed market expectations, while sales topped consensus.

Net income increased to $10.9 million or 23 cents per share for the third quarter from $9.15 million or 19 cents per share in the same period of last year.

Net sales jumped 22 percent to $321.5 million. Comparable store sales rose 5.6 percent, driven by a 3.3 percent rise in the number of transactions and a 2.3 percent gain in average transaction size.

Wall Street analysts, on average, expected earnings per share (EPS) of 26 cents on sales growth of 21.0 percent.

[Related -The Fresh Market Inc (TFM) Q4 Earnings Preview: A Few Pennies Here a Few Pennies There]

Gross margin improved 110 basis points to 33.1 percent. Operating margin expanded 10 basis points to 5.6 percent.

Looking ahead for the full year, the Greensboro, North Carolina-based company still expects EPS in the range of $1.33 to $1.38 on comparable store sales growth between 5.5 percent and 6.5 percent. Analysts expect EPS of $1.38 for the 12-months ending Jan 2013.

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.

[Related -The Fresh Market Inc (TFM): Highest-Margin Food Retailer At A Decent Multiple]

As of Nov. 28, 2012, the company operated 128 stores in 25 states.

TFM ended Tuesday's regular trading at $60.24. The stock has been trading in the 52-week range between $33.82 and $65.69.

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