Why Fairway Shares Got Tossed
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Fairway Group Holdings were looking rotten today, falling 22% after it badly missed earnings estimates in its quarterly report.
So what: The gourmet grocer turned in a loss of $0.30 a share on expectations of a $0.07 shortfall, while revenues improved 14.1%, to $183.2 million, short of the consensus at $187.3 million. Same-store sales grew just 1% in the quarter, as shares of the recent IPO fell to its lowest level since May. Executive Chairman Charles Santoro ignored the loss, saying the company "continued to perform well" in the quarter, making private label penetration, and opening its 14th store in Nanuet, New York.
Now what: While shares probably deserve to take a hit after missing on top and bottom lines, investors would be wise to look past the quarter. Fairway is an expansion play, as the company hopes to grow from just 14 supermarkets currently, to 300 nationwide. The current lack of profits may be scary, but the chain does have near cult-like status in its native New York. If it can similarly delight customers nationwide, profits and share prices are bound to head north.
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The article Why Fairway Shares Got Tossed originally appeared on Fool.com.
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