In its initial financial posting since becoming a publicly-traded company last April, Manhattan-based Fairway Group Holdings (Fairway Market) posted a $27.9 million loss in its first quarter, compared with a $3.9 million loss a year ago.
However, overall sales increased 21 percent to $187 million in the period ended June 30 and comparable store revenue was up 1.4 percent. Additionally, customer transactions were up 0.8 percent and basket size grew 0.5 percent.
“We are pleased to report strong operating results for the quarter, our first as a public company,” said Charles Santoro, Fairway’s executive chairman. “Fairway remains on track with our long-term strategy designed to expand our store count and increase our margins. We remain confident in our ability to execute these plans.”
CEO Officer Herb Ruetsch added, “We executed well this quarter with improved gross margin performance and good control of our operating expenses despite the added costs associated with being a public company.”
The company noted that its wider loss could be attributed to transaction expenses and fees related to the IPO, a change in the income tax provision and an increase in non-cash equity compensation. The adjusted net loss in the quarter was $2.4 million, compared to the adjusted net loss of $3.8 million in the first quarter of the prior year.
Fairway’s IPO issued approximately 15.7 million shares of common stock, including 2.3 million shares sold by existing stockholders. The high-volume merchant received approximately $158.8 million in net proceeds after the underwriting discount and expenses related to the IPO.
Fairway said it used the net proceeds to pay approximately $76.8 million of preferred dividends, $9.2 million to terminate a management agreement with Sterling Investment Partners and approximately $8.1 million to pay contractual bonuses. The remaining approximately $64.7 million is intended for new store growth and general corporate purposes. The retailer also charged $18.1 million of IPO related expenses to operating results in the first quarter of the current fiscal year.
Santoro and Ruetsch both addressed financial analysts about Fairway’s results and initiatives in a follow-up conference call on August 8.
Among the issues they commented on were the company’s newest store announcement (Hudson Yards), its recently opened store (July 24) in Chelsea, its upcoming new unit in Nanuet, NY this fall and the progress of its new 240,000 square foot central production facility in the Bronx.
Santoro noted that the he’s confident that despite its smaller footprint (17,000 square feet) the Chelsea store will perform well.
“We do expect that Chelsea’s productivity level will be very strong and fully on par with our other urban stores and well above our current company-wide sales average of approximately $1900 per square foot,” he stated.