US: Annual profits down at The Fresh Market
Annual earnings at The Fresh Market fell despite higher sales thanks to higher SG&A costs and impairment charges.
Impairments linked to stores in California and Texas hit the US retailer's profits in the fourth quarter of its financial year, dragging down full-year profits.
However, The Fresh Market's shares rose today (7 March) after the retailer said it would close four stores and focus expansion on its core markets.
The US retailer posted net income of US$50.8m for the year to 26 January, down from $64.1m a year earlier. Net income included a pre-tax charge of $27.6m, or $0.35 per diluted share, related to impairment charges. Excluding the impairment charges, adjusted diluted earnings per share were $1.40 for fiscal 2013.
Income from operations dropped from $101.5m, against $83.4m.
Net sales jumped 13.7% to $1.51bn. Comparable store sales increased 3.2%.
In the fourth quarter, net income reached $2m, compared to $20.6m the year before. Operating income was $3.2m, down sharply from $30.8m a year earlier. The fall in profits was thanks to the impairment charges.
Operating income as a percentage of sales for the fourth quarter 0.7%, compared to 8.3% for the corresponding period of fiscal 2012. Excluding the impairment charges, adjusted operating income as a percentage of sales was 7.2% for the quarter.
Net sales increased 15.1% to $425.8m. Comparable-store sales were up 3.1%.
BB&T Capital Markets' Andrew Wolf said The Fresh Market's fourth-quarter earnings missed the consensus forecast among analysts.
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