The Fresh Market plunges 14.7% AH on Q3 miss, outlook cut

The Fresh Market (TFM) shares are getting crushed, down 14.7% AH, after the company heavily missed expectations in Q3 and reduced its full-year outlook.

Q3 sales grew 13.4% Y/Y to $364.5M, with comparable store sales up 3.1% on a 2.8% increase in transactions and a 0.3% bump in transaction size. Management noted that "during the latter part of the quarter, the Company experienced an unanticipated sales slowdown across its store base, which it attributes to changing economic conditions and softening consumer confidence." It also stated that sales from stores in new markets were "mixed."

Gross profit expanded 40 bp from Q3 2012 to 14.8% ($15.7M) due to improved merchandising margin rates as a result of reduced shrink expense, which was partially offset by increasing occupancy costs as a % of sales.

Management now sees FY2013 EPS of $1.42-$1.47 (vs. consensus of $1.53) with comps at 3%-3.5% and 22 new store openings for the full year.

Conference call at 5pm ET

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