The Real Deal New York

Middling results but Fairway plans to add more stores

February 10, 2014 01:26PM

Fairway's newly-reopened Red Hook location at 480-500 Van Brunt St

480-500 Van Brunt Street

Grocery store Fairway, one of the biggest retail leasers of 2013, hit a financial snag in the year’s final quarter.

Fairway Group Holdings Corp., which went public in an IPO in April, has since sputtered along with worse-than-expected losses every quarter, according to Bloomberg data. In the most recent three-month period, ending Dec. 29, the grocery chain reported a net loss of $31 million, or 74 cents per share. Same-store sales also fell by 1.7 percent in the quarter, though overall quarterly revenues jumped 23 percent to $206 million. Fairway attributed the rise in sales to the opening of several new store locations and the reopening of the Sandy-damaged Red Hook store.

Over the last year Fairway has picked up a number of leases, including one for 46,000 square feet of space at the Related Companies’ Hudson Yards and 52,000 square feet at 255 Greenwich Street, near the World Trade Center and competitor Whole Foods’ Tribeca outpost. But the growth comes amid increasing competition, including the opening of a Whole Foods store in Brooklyn near Fairway’s Red Hook location.

In a conference call cited by Crain’s, Fairway Executive Chairman Charles Santoro called the Q4 environment “difficult” and noted that holiday sales were slower than usual. Still, he said Fairway will continue growing its presence in and around New York City. Currently, the market has 14 locations. [Crain's]Julie Strickland

3 Responses to “Middling results but Fairway plans to add more stores”

  1. February 10, 2014 at 2:07 pm, Conscience_of_a_conservative said:

    Can’t see how they add stores when they continue to bleed red ink, announce cost cuttings(which really means fire employees as they mention severence) and undoubtably are in a worse position than ever to borrow funds.

    • February 11, 2014 at 12:08 am, Victor said:

      As difficult as things are at least they are not a government run business or things would be 10 times worse. If they cannot get their act together then what’s left of a free market will do the rest and efficiencies will take over. I’m just happy not to be a stockholder. Supermarkets are about the hardest day to day business I know to exist. Very profitable and well run companies are lucky to have 5% net margins. I never did my research here but some big issues are gross margins, debt( a “no no”), rent, ect… Forget about their high debt which shouldn’t exist EVER, they can barely(and sometimes not) even have an operating problem. This company is a dog. The stockholders are real suckers. I would bet (but don’t know) that the fix is in. There must be some nice kickbacks someone’s getting. The stock is $8??? Honestly it’s not worth 8 cents and I’m not joking. I wish I heard about this stocks months ago. I’m not trying to be a Monday morning quarterback but this would’ve been the biggest short position in my life and I’d be now in St. Barts with 2 hookers living the good life.

      • February 11, 2014 at 5:26 am, Conscience_of_a_conservative said:

        Text book case of failure.
        Company states they want to increase margins which means price increases, and only works short term until customers figure it out and seek cheaper alternatives. The store openings are often too close to other stores and cannibalize business from existing locations, example East Side opening reduced Harlem drive-thru traffic from East siders. The insiders were supposed to cash-out at the IPO and soon after. They did expect it to fall apart, but I think they were shocked at how quickly it unraveled. The founding guys sold out, but the private equity firm probably is still knee deep.

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