The Fresh Market (TFM, Financial) finished the fiscal year with strong growth in revenue and earnings. The company delivered terrific performance mainly on the back of profitable strategies that it undertook in the past. The strategies, including a mailing campaign and improving margins, have contributed well to it, and TFM continues to benefit even now.
Management of the company is pleased with its results and it is looking to continue this momentum in the future as well. The company can gain much market share in the future on the back of its strong results. The stock also has been impressive in the past and has gained much after these strong results. The stock is also trading close to its 52-week. However, there are certain factors that can hurdle its growth. Let us find out.
Focusing on better times ahead
The company is now focusing on various aspects to be profitable in the future. It is pleased with its initiative of full-scale mailing campaign that it introduced in the fourth quarter. This has seen tremendous progress and is showing some concrete signs of getting better and benefiting the company in the future as well. The main focus of the company revolves around attracting more and more customers to its stores. To facilitate this, The Fresh Market is carrying out aggressive marketing strategies which will result in improving comp sales, also increasing traffic in its stores.
The Fresh Market is now looking for strengthening its market presence. It is therefore looking for expanding its footprints to other potential areas. It already has its stores at many locations across the nation including five new stores it opened in the recently reported quarter. After solid results, the company has also extended its store count with two new stores showing company’s positive commitment towards achieving profitability.
Moving on, The Fresh Market has also brought changes in its expansion strategy. To secure more margins at lower costs, the company is selling its non-core offerings and is focusing mainly on the high yielding units. Under this initiative, it has already sold three of its underperforming stores namely Palo Alto, Santa Barbara and Laguna Hills. The company has gained good cash out of this sale which it is planning to invest in some of the profitable ventures to develop its brand image and efficiencies.
The Fresh Market, in order to attract more customers to its stores its now planning foe remodelling its stores. It has already announced that it will remodel ten of its major stores in the first half of fiscal 2015. This strategy will surely attract new customers to the camp leading to better sales and strengthening of its market position.
Whole Foods can be a threat
Whole Foods Market (WFM, Financial) is a company that is also in good shape which is clearly evident by the strong results it posted. An impressive 9% growth in sales indicates good market image of the company, and it is also seeing good traction in the market. It can be a tough competitor for The Fresh Market as it has expanded its footprints at some of the prime locations, signing 12 leases in three new markets.
Conclusion
Moving to the fundamentals, with a trailing P/E of 31.75 the stock is reasonable and a forward P/E of 20.13 shows good earnings growth in future. A profit margin of 3.60% currently can also attract investors helping it to further improve its market share. The stock can also be a good long term holding as its earnings are growing at a CAGR of 16.00% which is more than the industry average of 13.01%. Considering all these points, The Fresh Market is definitely a good pick as of now.
