The Fresh Market Redux (TFM)
The Fresh Market filed for an IPO this past Friday. It filed a confidential S-1 in March. It was taken private for $1.36B five years ago by Apollo. The Fresh Market now operates 159 stores in 22 states, 27 fewer than the last time it was public. The company could be seeking to raise $250M. The use of proceeds includes paying down the $900M+ in debt (5x levered). The Fresh Market had sales of $1.9B in 2020. SSS grew 7.3% in Q1 (Q ended May 2) as it lapped a 12.9% increase. The grocer focuses on premium fresh food, curated meal offerings, and competitive prices on high volume basics. The Florida market is a key market for The Fresh Market, with nearly 30% of stores in the state. The competition has grown in the state since The Fresh Market went private, with Sprouts Farmers Market and Aldi opening stores at a fast clip. Publix has over 800 stores in Florida. The Southeastern Grocers (owner of the Publix banner) IPO was pulled in January when investors’ concerns were highest about how the supermarkets would anniversary the pandemic boost to sales. Investors were lukewarm to the Southeastern Grocers IPO, but The Fresh Market may need the public offering more.
Online sales for U.K. grocery (NOMD)
According to Kantar, online grocery sales in the U.K. declined 2.6% YOY for the four weeks ended July 11. The first decline in online grocery sales in the country was driven by the re-opening and people returning to stores. The number of people choosing to purchase groceries online fell by 81,000 in the four-week period. The value of the digital shopping baskets decreased 8% to £80 ($109.40) per store. Online groceries were 13.3% of the U.K. grocery market, down 10bps from the previous four-week period. Overall grocery sales decreased 5.1% YOY in the 12-week period. Compared to the same weeks in 2019, grocery sales increased 10.9%. Alcohol sales grew 24% compared to the same four-week period in 2019 due to the Euro 2020 soccer tournament. Over the 12-week period, grocery prices fell 1.5%. The four largest grocers all reported sales declines compared to the prior year. The UK is Nomad Food's largest country by sales, representing 31% of overall sales (before the Fortenova frozen food acquisition).
Alcohol to-go sales (VWE)
Thirty-nine states and the District of Columbia had special provisions that allowed restaurants and bars to deliver alcohol to their customers during the pandemic. The National Restaurant Association estimated that the to-go alcohol sales boosted sales by 5-10% during the pandemic. Eleven states have returned their laws back to their pre-pandemic state, while the remaining have kept the alcohol to-go rules in place, as seen in the chart below. New York’s rules abruptly changed on June 24 when the Governor’s emergency order ended, giving the industry one day notice. According to the New York State Restaurant Association, 78% of residents supported a permanent extension of to-go sales. (In New York, beer and hard seltzer can still be purchased to-go.) The rules often require the beverages to be sold in sealed containers, and the order must include food. The food requirement reflects the input of alcohol retailers. Many restaurants have access to rare and highly allocated wines not available to retailers. Restaurants with strong wine programs often hosted virtual wine tasting events. The restaurant industry still has 1.5 million fewer people employed than before the pandemic, a 12% loss of jobs. Alcohol sales tend to have a higher markup than food sales providing a boost to the restaurants.
