The economic recovery may not be ripe yet, but affluent shoppers apparently aren't having a problem paying a premium for high-end groceries.
Shares of upscale supermarket operator The Fresh Market (TFM) hit fresh highs on Wednesday after the company posted blowout quarterly results. The Fresh Market saw its revenue climb 23% to $324.8 million in its fiscal first quarter, fueled by brisk expansion and a healthy 8.2% spike in same-store sales.
Adjusted earnings climbed 32% to 40 cents a share as the foodstuffs retailer expanded its profit margins, already milking more out of every dollar in sales than larger traditional grocers.
Analysts only figured that The Fresh Market would earn 36 cents a share on $310.9 million in revenue.
No Caveat to Selling Caviar
The Fresh Market has an Old World theme with fresh produce on display that would put larger supermarket chains to shame. The throwback butcher shop is there, only it serves up prime cuts of meat and exotic seafood. The chain's typical store is also much smaller than conventional supermarkets, allowing the company the flexibility to open in the heart of an affluent neighborhood where a larger chain would flop.
The end results are impressive. After closing out fiscal 2011 with net margins of 4.6%, the metric rose to 5.9% during the last three months to kick off fiscal 2012. Put another way, nearly 6 cents of every dollar in sales at The Fresh Market makes it all the way down the income statement as an after-tax profit.
Traditional grocery stores typically check in with net margins between 1% and 3%. Whole Foods Market (WFM) -- the slightly upscale organic grocer -- has delivered net margins of just 3.7% over the past year.
The Fresh Market is still early in its growth cycle. There are just 116 stores open as of the end of April, and the chain is eyeing 14 to 16 openings for the entire fiscal year.
Heartened by its strong quarter, The Fresh Market is increasing its outlook.
Stack up The Fresh Market's strong quarter on top of a better-than-expected report by Whole Foods, and it's clear that consumers aren't shying away from paying more for high-quality, "good for you" groceries.
Investors are apparently following suit. Whole Foods Market and organic distributor Hain Celestial (HAIN) have also hit new highs this month.
As Affluent Consumers Pay Up, High-End Grocers Pay Out
Responsible Shopper is designed to alert consumers and investors to problems within companies and to "encourage individuals to use their economic clout to demand greater corporate responsibility," according to the website.
Culling from a range of sources including news stories and reports from watchdog organizations, the site takes an investigative approach to track everything from abuses by well-known firms to their track record on labor practices, corporate governance and the environment. Consumers can search through hundreds of company profiles to vet a firm on a number of issues. A recent visit to Responsible Shopper turned up links to a list of companies that use child labor, as well as a link to "most viewed profiles," which this week were Walmart, Coca-Cola (KO) and the Gap (GPS).
Better World Shopper aims to deliver an exhaustive account of the social and environmental record of "every company on the planet."
The site monitors companies' records on social justice issues -- from their policies on fair wages to their health and safety records -- as well as other misdeeds, including discrimination, human-rights violations (like sweatshop factory conditions and third-world community exploitation), and environmental no-no's such as "greenwashing."
Shoppers can also find lists of the best and worst companies according to Better World Shopper's criteria, and check on the grade -- from A to F -- that a company earned for its record on a given issue.
Corporate Accountability International bills itself as a pioneer in the movement, having been "waging and winning campaigns to challenge corporate abuse for more than 30 years," according to its web site. CAI appeals to consumers with activist impulses by spotlighting offending companies and provides "action you can take -- petitions, letter-writing campaigns, etc.," Cone says.
One recent visit to the site, which has a newsy feel, turned up a link to "corporate hall of shame winners," as well as updates on a number of CAI campaigns, such as efforts to push fast-food giants to curb what the organization deems the industry's contribution to diet-related diseases.
This international think tank is devoted to the "creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability," its site says.
Denise Bowyer, vice president of American Income Life Insurance Company, cited Ethisphere as one of the sites she consults while shaping her company's advocacy agenda on behalf of working families. "Ethisphere conducted data analysis on hundreds of companies based on their research and a survey that measured against seven distinct categories," Bowyer says.
These include corporate citizenship and responsibility; corporate governance; innovation that contributes to the public well-being; industry leadership; executive leadership and tone from the top; legal, regulatory and reputation track record; and internal systems and ethics/compliance program.
This U.K. site is a source for information on offending companies and their misconduct, Cone says. A visit to Ethical Consumer turned up its signature "active boycott list," which tallies current boycotts of high-profile retail and consumer products companies for all manner of alleged offenses, from sweatshop factory conditions to environmental infractions and animal rights abuses.
Ethical Consumer also researches company behavior and measures that data against 23 ethical criteria.
Want to know a company's political leanings and campaign contributions? This nonpartisan organization, a part of the Center for Responsive Politics, tracks just that. Consumers can type in a company name on the site and pull up a record of its political contributions.
This site also follows the political spending trends and patterns of major industries.
Shoppers inclined to gauge the cause-worthiness of their purchases can consult the Good Guide, a definitive source of information on the health, environmental and social impacts of retail consumer products.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this story. The Motley Fool owns shares of The Hain Celestial Group. Motley Fool newsletter services have recommended buying shares of Whole Foods Market, The Hain Celestial Group, and The Fresh Market.