The Fresh Market (TFM, Financial) has successfully identified the changing consumer shopping trend with consumers preferring shopping through several retailers and channels for getting access to greater variety, impulsive shopping and prefer ease of exploring various eating destinations. There’s an encouraging feedback from a group of TFM and non-TFM shoppers which illustrates the increasing acceptance of its fresh variety of products with superior quality along with its exclusive and pleasant shopping experience.
The growth opportunities
The newer and innovative promotional events introduced by The Fresh Market are believed to drive enhanced customer traction for its products and thus expanding the top line, benefiting the shareholders.
The accelerated launch of new stores coupled with the right understanding of customer taste has led to increasing customer traction with greater customer footfall at its new stores.
Going forward, there’s tremendous opportunity to enhance the store visit frequency of its active customers and for appealing new customers by greater brand awareness mainly in the holiday season which allows several key opportunities for extraordinary food occasions.
Looking into 2015, The Fresh Market seems confident in its ability to create double-digit store unit growth, concreted by the solid real estate growth in the southeast. It expects to register yearly store unit growth in 12% to 15% range.
The significant efforts of The Fresh Market to expand its products portfolio and reach newer customers through the opening of new stores is forecasted to benefit the company in a long-run and transform it into a market leader.
The company targets on adding 23 to 25 stores during the fiscal year and is pausing growth external to major markets to just 7 to 8 stores. Management expects to distribute new store launching throughout the year. The company estimates comp-store sales to be in 1.5% to 3.5% range during the year, including the downside affect of extreme competition and poor weather during the first quarter.
The solid implementation of business expansion plans and strategic execution of process improvements are expected to contribute hugely to the company growth, moving ahead.
Conclusion
Overall, the investors are advised to invest into The Fresh Market Inc. looking at an impressive valuation with the trailing P/E and forward P/E ratios of 41.62 and 21.27 respectively. The PEG ratio of 1.48 is better than the industry’s average of 1.74 and suggests healthier company growth. The profit margin of 2.64% is satisfactory. But the company needs to optimize its expenditures targeted on the company expansion depicted by the huge total debt level of $29.97 million compared to smaller total cash reserve of merely $19.86 million.
