The Not So Fresh Market
Small Cap Insight
After disappointing guidance, The Fresh Market (TFM) slumped 13% due in a large point to very high expectations for the grocery chain. Sure the organic and fresh grocer plays in a compelling secular trend, but it also faces a tough competitive environment with several companies raising significant funds to expand regional footprints. Not to mention the sector leader has made a big deal about driving down prices to produce growth.
The company operates 136 stores in 26 states and expects to open 21 to 22 stores this year with a high concentration in Q3. With the U.S. supermarket listed as a $600 billion industry, Fresh Market has plenty of room to grow. The Nutrition Business Journal estimates that spending on the natural and organic sector has been growing at a rate of 10% annually with sales only reaching $43 billion in 2011. That growth rate would produce a total of just over $51 billion in 2013, but a number that wouldn't even reach 10% of the total grocery sector spending.
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