The Fresh Market Inc (
TFM)
Q2 2011 Earnings Call Transcript
August 31 2011 9:00 a. m. ET
Executives
Craig Carlock - President, Chief Executive Officer
Lisa Klinger - Chief Financial Officer, Executive Vice President
Brian Nicholson – Vice President, Financial Planning and Analysis
Analysts
Sean Naughton - Piper Jaffray & Co
Kelly Bania - BofA Merrill Lynch
Karen Short - BMO Capital Markets
Ed Aaron - RBC Capital Markets
Ken Goldman - JPMorgan Chase & Co.
Mark Wiltamuth - Morgan Stanley
Stephen Grambling - Goldman Sachs
Mark Miller - William Blair & Company
Presentation
Operator
Good morning, ladies, gentlemen, and welcome to The Fresh Market, Second quarter, 2011, Earnings Conference call. At this time, all participants are in a listen only mode. Then we will open up a question and answer session and instructions will be given at that time. If anyone should require assistance during today’s conference, please press star and then zero on your touch-tone telephone. As a reminder today, the conference call is being recorded and we now turn you over to the hosts of this conference Mr. Brian Nicholson. Sir, you may begin.
Brian Nicholson
Thank you very much, and good morning everyone I am Brian Nicholson, Vice President, Financial Planning and Analysis for The Fresh Market, and I am joined by Craig Carlock our President and CEO,and Lisa Klinger our Executive Vice President and CFO, our speakers for today’ s call.
Welcome to our second quarter 2011 earnings conference call. For those of you who have not already seen the copy of this morning’s second quarter and first half fiscal 2011 earnings release. It is available on our website under the corporate information section. This call is also being webcast from our corporate website. For those who cannot listen to the entire web broadcast, a replay will be available for thirty days on our website: www.thefreshmarket.com.
Before we begin, I would first like to draw your attention to the fact that certain matters discussed in this conference call will constitute forward-looking statements within the meaning of the United States securities laws. These statements reflect our current views with respect to future events or financial performance that are based on management’s current assumptions and information currently available.
Actual results and the timing of certain events could differ materially from those projected or contemplated by the forward-looking statements, in a numerous factors, including without limitation those sent forth with our filing with the Securities and Exchange Commission, including our annual report on 4-10, 10K under the heading risk factors and in today’s earnings release.
As a reminder, it is the company’s policy not to comment on the quarter today trends within the normal course of business. So today’s comments will be limited to second quarter and first-half-fiscal 2011 results. Now I will turn the call over to Craig.
Craig Carlock
Thanks Brain, and thank all of you for joining us today. We are please to share our second quarter results, first half results with you, and we look forward to today’s discussion. Let me begin by saying I very pleased to announce another quarter of solid revenue and exceptional earnings growth for The Fresh Market.
The Company’s second quarter diluted earnings per share increased 52.1% to $0.22 compared to last year second quarter pro-forma diluted earnings per share of $0.14. Our comparable store sales increased 4.6% in the quarter and our total net sales grew 13.6% to $259.5 million. Additionally during the quarter, we opened five stores in Vienna Virginia, Evansville Indiana, Boca Raton Florida, Pawleys Island South Carolina and Montvale, New Jersey, which is our first store in the state of New Jersey.
We also relocated our existing store in Williamsburg, Virginia. Finally, we opened our seventh store for fiscal 2011, in Towson Maryland last Wednesday.
We are generally pleased with our results so far in these new store openings and continue to be encouraged by our new store performance in both existing and new markets. Our new store pipeline is robust and we remain on track to open twelve to fourteen stores in fiscal 2011. Our gross margin rate increased approximately 100 basis points in the quarter from a blended merchandise margin expansion that gives supply costs as percentage of sales and leverage in occupancy costs, due primarily to the timing of new store openings this year versus last year.
While balancing the strong performance we have achieved so far for in fiscal 2011, with current macro economic conditions. We are pleased to announce that we are increasing our fiscal 2011 earnings guidance to the range of $ 1.03 to $1.06 per share including the absorption of $0.02 per share in equity issuance costs incurred earlier this year.
