Boston, MA 05/23/2014 (wallstreetpr) – Harsh weather conditions did not prevent specialty retailer, The Fresh Market Inc. (NASDAQ:TFM), from registering solid results for the first quarter. The Company, as a result, is surging in mid-morning trading session. Increase in Comparable store sales and steady customer traffic accelerated on promotional successes and decisions that offset higher food costs.
Fresh Market Opens New Stores
The Fresh Market Inc. (NASDAQ:TFM) focused on increasing its store penetration consequently opening new stores in core geographies like Florida and North Carolina. Going forward, Fresh Market remains encouraged on its business growth prospects. Net sales for Q1 were up by 17.6% to $431 million with comparable store sales also increasing by 2.5%.
Increase in comparable store sales was, as a result of an increase in transaction volumes of 1.8%, as well as a 0.7% increase in the transaction size. Increased activity during the Easter festivities also had a big impact on the company’s earnings, partially offset by winter storms. Gross profit as a result of improved sales increased by 14.6% to a high of $148.2 million.
Gross Margin Drops
The first quarter gross margin dropped to 34.4% from a high of 35.3% a year earlier. A drop in gross margin reflects a decline in merchandise margins as a result of a decision to absorb inflation costs and favorable responses by sales promotions.
The first quarter expenses, on the other hand, increased as a result of higher store labor costs, as well as expenses associated with the opening of the new stores. More stores were opened in the quarter compared to the same quarter a year earlier. Operating income for the quarter came in at $27.6 million compared to $35.4 million a year earlier.
The first quarter operating income included $7 million exit costs related to certain lease liabilities recognition and other costs associated with earlier store closures. The Fresh Market Inc. (NASDAQ:TFM) generated $56.2 million in cash flow and invested $24.4 million in capital expenditures. Fresh Market revolving credit facility as of the end of the quarter came in at $0.5 million representing a decline of 98% from $24.7 million as of the end of last year.
