Regional US retailer The Fresh Market has cut its forecast for annual earnings after a “challenging” third quarter.
The company expects to generate diluted earnings per share of US$1.42 to $1.47 for the year, down from its previous guidance of $1.50 to $1.55.
Earnings growth slowed in the third quarter to 27 October when compared to The Fresh Market’s second quarter.
Diluted earnings per share in the third quarter of fiscal 2013 were $0.23, flat on a year ago. Net income was up, increasing 1.8% to $11.1m. In the second quarter, net income grew 17.9% to $15.6m.
The Fresh Market’s SG&A costs grew, as healthcare claims costs pushed up staff expenses, and as the retailer opened ten stores.
Net sales increased 13.4% to $364.5m. Comparable-store sales grew 3.1%. On the second quarter, comp sales were up 3.4%.
President and CEO Craig Carlock said: “Our base business continues to perform well, although we experienced increasingly challenging economic conditions as the quarter progressed. Even under these conditions, comparable store sales growth exceeded three percent this quarter and gross margin continued to expand.”
Andrew Wolf, an analyst at BB&T Capital Markets, said lower shrink helped The Fresh Market’s gross margin.
However, Wolf said the retailer’s operating margins missed his forecasts amid a “a “steep slowing” sales in October and higher-than-anticipated store costs.
“From a macro perspective, top-line trends softened across all geographies in October due to weakening consumer sentiment,” he said.