Fairway Group Loss Narrows on Cost Cutting

By Maria ArmentalDow Jones Newswires

Fairway Group Holdings Inc. (NASDAQ:FWM) said its fiscal fourth-quarter loss narrowed as the grocery-store operator cut costs in key areas.

"During the quarter we made progress on a number of operational initiatives," interim Chief Executive William Sanford said. "Sales and Adjusted EBITDA were in line with our expectations."

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The niche supermarket chain, which traces its roots to a produce stand founded in 1933 on New York's Upper West Side, had warned in February sales for the period would be hurt as the Easter and Passover holidays this year fell in the first quarter instead of the fourth quarter. The company also announced a corporate shakeup topped by the departure of chief executive Herb Ruetsch.

The New York chain said it is working with Google Express to launch an online shopping platform that would offer same-day delivery in Manhattan.

Fairway competes with such natural-foods-oriented retailers as Whole Foods Market Inc. (WFM), Fresh Market Inc. (TFM) and Trader Joe's.

For the fiscal period that ended March 30, Fairway reported a loss of $8.8 million, or 21 cents a share, from a year-earlier loss of $14.4 million, or $1.17 a share. Excluding severance, compensation and other items, adjusted net loss narrowed 77% to about $252,000.

Sales rose 12% to $200.3 million. In February, the company said it expected a 10% increase in revenue from the year-ago period.

Analysts polled by Thomson Reuters recently expected a per-share loss of nine cents on revenue of $199.2 million.

Same-store sales, a key metric that focuses on stores that are open at least a year, fell 1.9%. That figure doesn't include the company's Red Hook store, which had been excluded from last year's calculations as it had been temporarily closed due to damage from Hurricane Sandy.

Gross margin narrowed to 32.4% from 33.5%, which Fairway attributed to higher occupancy costs.

Expenses jumped 14%, while store-opening costs dropped 52%.

Through Thursday's closing, Fairway's shares, up 4% in recent-after hours trading to $6.90, were down 69% over the past 12 months. The stock debuted on the market at $13 a share in April 2013.