The Fresh Market, Inc. Reports Fourth Quarter and Full Year Fiscal 2012 Earnings

The Fresh Market, Inc. Reports Fourth Quarter and Full Year Fiscal 2012
Earnings

- Net Sales Increased 15.3% in the Fourth Quarter and 20.0% for Full Year 2012

 - Diluted EPS Increased 12.7% in the Fourth Quarter and 24.4% for Full Year
                                     2012

                   - Company Provides Fiscal 2013 Guidance

GREENSBORO, N.C., March 6, 2013 (GLOBE NEWSWIRE) -- The Fresh Market, Inc.
(Nasdaq:TFM), a high-growth specialty retailer, today announced unaudited
sales and earnings results for its fourth quarter and fiscal year ended
January 27, 2013.

Financial Overview

In the fourth quarter of fiscal 2012, net sales increased 15.3% to $369.9
million and comparable store sales increased 1.9%, compared to the
corresponding thirteen week period ended January 29, 2012. Net income in the
fourth quarter of fiscal 2012 was $20.6 million, compared to $18.3 million in
the corresponding thirteen week period in fiscal 2011. Diluted earnings per
share in the fourth quarter of fiscal 2012 were $0.43, an increase of 12.7%
over diluted earnings per share of $0.38 for the corresponding thirteen week
period in fiscal 2011.

Fiscal 2012 net sales were $1,329.1 million, a 20.0% increase as compared to
the corresponding fifty-two week period ended January 29, 2012, and comparable
store sales increased 5.7%. Net income increased to $64.1 million as compared
to $51.4 million for the prior year. Diluted earnings per share for fiscal
2012 increased to $1.33, compared to diluted earnings per share of $1.07 for
fiscal 2011, an increase of 24.4% over the corresponding period in fiscal
2011.

Craig Carlock, President and Chief Executive Officer, commented, "Fiscal 2012
was a terrific year for The Fresh Market. We achieved record annual sales and
earnings on comparable store sales growth of 5.7% and opened a record number
of new stores." Carlock added, "Though we executed well in the fourth quarter,
we experienced a sudden slowdown in customer traffic and resultant comparable
store sales that were consistent across our network. These effects were most
pronounced during the holidays and our business improved modestly as we moved
into the New Year."

Operating Performance

Fourth quarter total net sales increased 15.3% to $369.9 million and
comparable store sales increased 1.9% to $314.7 million, compared to the
corresponding thirteen week period in fiscal 2011. The fourth quarter
comparable store sales increase resulted from a 2.0% increase in average
transaction size, partially offset by a 0.1% decrease in the number of
transactions. Fiscal 2012 total net sales increased 20.0% to $1,329.1 million
and comparable store sales increased 5.7% to $1,135.9 million, compared to
fiscal 2011. Fiscal 2012 total net sales benefited from approximately 27
weeks, on average, of revenue per new store opening and the comparable store
sales increase resulted from a 3.4% increase in the number of transactions and
a 2.3% increase in average transaction size.

The Company's gross profit increased 16.5%, or $17.8 million, to $125.9
million in the fourth quarter of fiscal 2012, compared to the corresponding
thirteen week period of fiscal 2011. For the same period, the gross margin
rate increased 30 basis points to 34.0% compared to the corresponding prior
year period. This increase in the Company's gross margin rate was attributable
to an increase in the merchandise margin, leverage in occupancy costs, and a
reduction in LIFO expense. The increase in merchandise margin over the prior
year includes the cycling of the Company's initial recognition of $1.4 million
in gift card breakage income in the fourth quarter of 2011, which improved the
2011 fourth quarter merchandise margin by 30 basis points. For the fourth
quarter of fiscal 2012, the Fresh Market realized a LIFO expense of $0.1
million, a decrease of $0.5 million, or approximately 20 basis points as a
percentage of sales, over the corresponding thirteen week period of fiscal
2011. For fiscal 2012, the Company's gross profit increased 23.1%, or $84.8
million, to $451.7 million, and its gross margin rate increased 90 basis
points to 34.0%, compared to the prior year period. The increase in the
Company's gross margin rate for fiscal 2012 was primarily attributable to
increased merchandise margin, as well as leverage in occupancy cost. For
fiscal 2012, LIFO expense decreased by $1.0 million from $1.3 million in the
corresponding prior year period, which positively impacted the gross margin
rate by 10 basis points as a percentage of sales.

Selling, general, and administrative expenses for the fourth quarter of fiscal
2012 increased $13.4 million to $82.4 million, compared to the corresponding
thirteen week period in fiscal 2011. Selling, general, and administrative
expenses as a percentage of sales increased by 80 basis points to 22.3% for
the period, compared to 21.5% for the corresponding thirteen week period in
fiscal 2011. This increase in the selling, general and administrative expense
rate was primarily attributable to higher store compensation and benefits
expenses, partially offset by lower pre-opening expenses and insurance
reimbursements of storm-related losses incurred in the second quarter of
fiscal 2012. The Company opened two new stores in the fourth quarter of fiscal
2012 and opened six new stores in the corresponding prior year period. This
reduction in new store openings and associated pre-opening expenses positively
impacted selling, general, and administrative expenses as a percentage of
sales by approximately 20 basis points. For fiscal 2012, selling, general, and
administrative expenses increased $56.4 million to $303.5 million, or 22.8% as
a percentage of sales, from $247.0 million, or 22.3% as a percentage of sales,
for the corresponding fifty-two week period in fiscal 2011. The increase in
expenses was primarily attributable to higher store level compensation costs
and incremental expenses associated with the Company's share-based
compensation program.

Operating income increased $1.5 million to $30.8 million for the fourth
quarter of fiscal 2012, compared to $29.3 million for the corresponding
thirteen week period of fiscal 2011. Operating income as a percentage of sales
for the fourth quarter of fiscal 2012 decreased 80 basis points to 8.3%,
compared to 9.1% for the corresponding period of fiscal 2011. This decrease
was primarily attributable to higher compensation costs and an increase in
depreciation expense, partially offset by improvement in gross margin rate.
For fiscal 2012, operating income increased $18.6 million to $101.5 million,
compared to $82.9 million in fiscal 2011. As a percentage of sales, operating
margin increased by 10 basis points to 7.6% for fiscal 2012, compared to
operating margin of 7.5% for the prior year. The primary driver of the
increase in operating margin for fiscal 2012 was the increase in gross margin
rate, partially offset by higher employee-related expenses and depreciation
expense.

The effective tax rate for the fourth quarter of fiscal 2012 was 32.1% of
pre-tax income and compares to 36.7% for the corresponding thirteen week
period of fiscal 2011. The lower rate was due to higher permanent differences,
primarily increased enhanced charitable food contribution deductions, higher
state tax benefits and a slight benefit from the passage of the American
Taxpayer Relief Act of 2012, which continued the work opportunity tax credit.
For fiscal 2012, the income tax rate was 35.9% of pre-tax income compared to
36.6% in the corresponding fifty-two week period for fiscal 2011.

Balance Sheet/Cash Flow

During the fourth quarter of fiscal 2012, the Company generated $15.5 million
in cash flow from operations and invested $18.4 million in capital
expenditures, of which $13.7 million related to new, relocated and remodeled
stores.For fiscal 2012, the Company generated $91.9 million in cash flow from
operations and invested $81.1 million in capital expenditures, with $69.1
million spent on real estate activities.

The Company's cash balance as of January 27, 2013 was approximately $8.7
million.Total debt as of January 27, 2013 was $42.0 million, down $22.0
million from a balance of $64.0 million as of January 29, 2012.

Average inventory on a FIFO basis per store at the end of the fourth quarter
of fiscal 2012 increased 2.0%, compared to the corresponding period in fiscal
2011. The increase resulted from commodity cost increases in certain
departments, such as meat and produce, as well as increased inventory
investments in new product assortments and faster growing categories to
support the Company's overall sales growth.

On a trailing four quarter basis for the period ended January 27, 2013, the
Company's return on assets was 18.4%, return on invested capital, excluding
excess cash, was 25.9%, and return on equity was 32.4%.These financial return
measures are non-GAAP financial measures. The schedules attached to this press
release include a discussion of these non-GAAP measures, as well as the
details of our calculations of these financial return measures.

Growth and Development

During the fourth quarter of fiscal 2012, the Company opened two new stores in
Daphne, Alabama and Pensacola, Florida, as well as relocated one store in
Spartanburg, South Carolina. As of January 27, 2013, the Company operated 129
stores in 25 states.

Through March 6, 2013, the Company announced the signing of leases for nine
additional new stores in: Sacramento (Fair Oaks), California; Sacramento (Elk
Grove), California; Lynchburg, Virginia; Ashburn, Virginia; South Naples,
Florida; Brandon, Florida; Saratoga Springs, New York; Woodbury, New York; and
Kansas City, Kansas. These nine stores are currently scheduled to open during
or after fiscal 2013.

The following table provides additional information about the Company's real
estate and store opening activities through the fourth quarter of fiscal 2012
and leases signed as of March 6, 2013 for stores expected to open during or
after fiscal 2013.

                                        Stores Opened      Leases Signed for
                                       inFiscal 2012     Future
                                                            Store Locations ^1
Number of new leased store locations    14                  28
Number of ground leased and owned       2                   2
property store locations
Number of relocations                   1                   --
Average capital cost per store ^2       $3.7 million        
                                       Information for All 
                                        Open Stores
Average store size (gross square feet)  21,042              
Total rentable square footage (at end   2.7 million         
of period)

Note 1: Includes leases for stores expected to open after March 6, 2013 and
such leases typically include customary leasing conditions. In general, we do
not announce the location of a new store until all conditions to the lease are
satisfied or our involvement in the property or project will be made public in
connection with governmental permitting or approvals or in dealing with other
third-parties. We generally identify a store as "coming soon" when we take
possession of the property and commence our construction related activities.
The Company's website sets forth the most current list of announced lease
locations and stores that are "coming soon".

Note 2: Net of capital contributions, if any, received from landlords, and
including building costs but excluding cost of land for owned stores. Lease
inducement costs and similar prepayments in connection with acquiring or
entering into new leases are not included in the capital cost per store and
are included as a long-term asset and expensed over the primary term of the
lease.

Fiscal 2013 Outlook

In addressing guidance, Carlock commented, "We enter fiscal 2013 with a
balanced view. We are simultaneously taking a conservative view on consumer
trends while remaining enthusiastic about the portability of our concept, and
excited about our plans to accelerate square footage growth. We anticipate 19
to 22 new store openings in fiscal 2013, a record number for The Fresh Market.
These openings will be weighted toward the second half of the year, somewhat
dampening our EPS growth as we currently expect, on average, approximately
seven fewer weeks of revenue per new store for fiscal 2013 as compared to
fiscal 2012.With that in mind, we expect earnings per share to grow 14% to
19% in fiscal 2013. For comparative purposes, we estimate that fiscal 2013
earnings would grow an additional two percentage points if our 2013 class of
new stores opened at the same cadence of our 2012 vintage stores."

For fiscal 2013, management expects the Company to:

  oOpen 19 to 22 new stores, with two new stores opening in the first
    quarter; 4 to 6 new stores opening in the second quarter; and, 13 to 15
    new stores opening in the second half of the year
    
  oRemodel 3 to 5 stores and have no relocations
    
  oSpend approximately $130 million to $150 million in capital expenditures,
    primarily related to real estate investments
    
  oIncrease comparable store sales 2% to 4%
    
  oAchieve flat to modest growth in operating margin as a percentage of
    sales, as the Company continues to make operating expense investments
    related to its accelerated growth plans
    
  oGenerate diluted earnings per share of $1.51to $1.58, assuming an
    effective tax rate of 37.0%, where earnings per share in the second half
    of fiscal 2013 exceed earnings per share in the first half of the year

2012 Fourth Quarter Earnings Conference Call

The Company will host a conference call today at 9:00 a.m. Eastern Time.
During the conference call, the Company may answer questions concerning its
business. The Company's responses to these questions, as well as other matters
discussed during the conference call, may contain or constitute information
that has not been previously disclosed.

The call will be broadcast via a live audio webcast at www.thefreshmarket.com,
within the Investor Relations section of the Company website, and a recording
will be available for 30 days following the date of the event. Investors and
analysts interested in participating on the call may do so by dialing (877)
852-2928.

Items Impacting Comparability

During the second quarter of fiscal 2012, the Company completed a public
offering of common stock impacting the comparability of fiscal 2012 results to
the corresponding results in fiscal 2011. Transaction expenses related to the
offering, which in general are not tax deductible, are included in selling,
general and administrative expense and totaled approximately $0.5 million,
resulting in a reduction in earnings per share of approximately $0.01 per
share on a diluted basis. The costs associated with the offering include
legal, printing, accounting and filing fees and expenses as well as other
charges directly related to the offering.Additionally, the Company completed
a public offering of common stock during the first quarter of fiscal 2011 and
incurred approximately $1.1 million in transaction expenses, which resulted in
a reduction in earnings per share of approximately $0.02 per share on a
diluted basis and impacts full year comparisons with fiscal 2012.

About The Fresh Market, Inc.

Founded in 1982, The Fresh Market, Inc. is a specialty grocery retailer
focused on providing high-quality products in a unique and inviting atmosphere
with a high level of customer service. As of March 6, 2013, the Company
operates 130 stores in 25 states, located in the Southeast, Midwest,
Mid-Atlantic, Northeast, and West.For more information, please visit
www.thefreshmarket.com.

Forward Looking Statements: This document contains forward-looking statements
that reflect our plans, estimates, and beliefs regarding future business and
financial performance and financial condition, and include those in the
"Fiscal 2013 Outlook" section above.These statements involve a number of
risks and uncertainties.Any statements contained herein (including, but not
limited to, statements to the effect that The Fresh Market or its management
"anticipates," "plans," "estimates," "expects," "believes," and other similar
expressions) that are not statements of historical fact should be considered
forward-looking statements.The following are some of the factors that could
cause or contribute actual future results to differ materially from those
expressed in any forward-looking statements: accounting entries and
adjustments at the close of our fiscal quarter and fiscal year; unexpected
expenses and risks associated with our business; our ability to remain
competitive in the areas of merchandise quality, price, breadth of selection,
customer service and convenience; the effective management of our merchandise
buying and inventory levels; the quality and safety of food products and other
items that we may sell; our ability to anticipate and/or react to changes in
customer demand; changes in economic and financial conditions, including the
outcome of negotiations surrounding U.S. fiscal policy which, even if
resolved, may be adverse due to tax increases and spending cuts, and the
resulting impact on consumer confidence; other changes in consumer confidence
and spending; unexpected consumer responses to promotional programs; unusual,
unpredictable and/or severe weather conditions including their effect on our
supply chain and our store operations; the effectiveness of our logistics and
supply chain model, including the ability of our third-party logistics
providers to meet our product demands and restocking needs on a cost
competitive basis; the execution and management of our store growth, including
the availability and cost of acceptable real estate locations for new store
openings, the capital that we utilize in connection with new store development
and the anticipated time between lease execution and store opening; the mix of
our new store openings as between build to suit sites and second-generation,
as-is sites; the actions of thirdparties involved in our store growth
activities, including property owners, landlords, property managers,
contractors, subcontractors, government agencies, and current tenants who
occupy one or more of our proposed new store locations, all of whom may be
impacted by their financial condition, their lenders, their activities outside
of those focused on our new store growth and other tenants, customers and
business partners of theirs; global economies and credit and financial
markets; our ability to maintain the security of electronic and other
confidential information; serious disruptions and catastrophic events;
competition; personnel recruitment and retention; acquisitions and
divestitures including the ability to integrate successfully any such
acquisitions; information systems and technology; commodity, energy, fuel, and
other cost increases; compliance with laws, regulations and orders; changes in
laws and regulations; outcomes of litigation and proceedings and the
availability of insurance, indemnification, and other third-party coverage of
any losses suffered in connection therewith; tax matters; numerous other
matters of national, regional and global scale, including those of a
political, economic, business, and competitive nature;and other factors as
set forth from time to time in our filings with the Securities and Exchange
Commission. Any forward-looking statement, including any contained herein,
speaks only as of the time of this release and we do not undertake to update
or revise them as more information becomes available or to disclose any facts,
events or circumstances after the date of this release that may affect the
accuracy of any forward looking statement.

This press release, and access to our earnings call, is also available in the
Investor Relations portion of The Fresh Market, Inc. website
(http://ir.thefreshmarket.com/).



The Fresh Market, Inc.
                                                              
Consolidated Statements of Comprehensive Income
(In thousands, except share and per share amounts)
(unaudited)
                                                              
                                                              
                            For the Thirteen        For the Fifty-Two
                             Weeks Ended             Weeks Ended
                            January 27, January 29, January 27,  January 29,
                            2013        2012        2013         2012
                                                              
Sales                        $369,856  $320,772  $1,329,131 $1,108,035
Cost of goods sold          243,948    212,654    877,433     741,184
Gross profit                 125,908    108,118    451,698     366,851
                                                              
Operating expenses:                                            
Selling, general and         82,408     68,959     303,495     247,047
administrative expenses
Store closure and exit costs 120        99         976         437
Depreciation                 12,577     9,804      45,741      36,485
Income from operations       30,803     29,256     101,486     82,882
Other (income) expense:                                        
Interest expense             389        408        1,498       1,858
Other income, net            --        --        --         (2)
Income before provision for  30,414     28,848     99,988      81,026
income taxes
Tax provision              9,769      10,590     35,855      29,631
                                                              
Net income                  $20,645   $18,258   $64,133    $51,395
                                                              
Net income per share:                                          
Basic and diluted            $0.43     $0.38     $1.33      $1.07
                                                              
                                                              
Weighted average common                                        
shares outstanding:
Basic                       48,134,349 48,028,029 48,076,675  48,002,273
                                                              
Diluted                      48,338,471 48,174,636 48,294,299  48,137,519
                                                              
Comprehensive income                                           
Net income                   $20,645   $18,258   $64,133    $51,395
Interest rate swaps, net of
tax benefit of $249 and $129
for the thirteen and         --        308        --         674
fifty-two weeks ended
January 29, 2012,
respectively.
                                                              
Total comprehensive income   $20,645   $18,566   $64,133    $52,069



The Fresh Market, Inc.
                                                                 
Consolidated Balance Sheets
(In thousands, except share amounts)
(unaudited)
                                                                 
                                                      January 27, January 29,
                                                      2013        2012
                                                                 
Assets                                                            
Current assets:                                                   
Cash and cash equivalents                              $8,737    $10,681
Accounts receivable, net                               6,830      4,550
Inventories                                            43,985     37,796
Prepaid expenses and other current assets              7,675      5,595
Deferred income taxes                                  3,784      4,445
                                                                 
Total current assets                                   71,011     63,067
                                                                 
Property and equipment:                                           
Land                                                   2,846      5,451
Buildings                                              19,106     15,077
Store fixtures and equipment                           272,249    237,678
Leasehold improvements                                 170,483    141,391
Office furniture, fixtures, and equipment              12,224     10,175
Automobiles                                            1,335      1,211
Construction in progress                               18,661     14,347
                                                                 
Total property and equipment                           496,904    425,330
Accumulated depreciation                               (207,060)  (168,518)
                                                                 
Total property and equipment, net                      289,844    256,812
Restricted cash                                        14,205     –
Other assets                                           10,309     3,461
                                                                 
Total assets                                           $385,369  $323,340
                                                                 
Liabilities and stockholders' equity                              
Current liabilities:                                              
Accounts payable                                       $35,634   $34,788
Accrued liabilities                                    54,385     46,354
                                                                 
Total current liabilities                              90,019     81,142
                                                                 
Long-term debt                                         42,000     64,000
Deferred income taxes                                  24,053     31,053
Deferred rent                                          11,341     10,007
Other long-term liabilities                            20,097     10,222
                                                                 
Total noncurrent liabilities                           97,491     115,282
                                                                 
Stockholders' equity:                                             
Preferred stock – $0.01 par value; 40,000,000 shares   --        --
authorized, none issued
Common stock – $0.01 par value; 200,000,000 shares
authorized, 48,144,620 and 48,040,083 shares issued    482        481
and outstanding at January 27, 2013 and January 29,
2012, respectively
Additional paid-in capital                             105,431    98,622
Retained earnings                                     91,946     27,813
                                                                 
Total stockholders' equity                             197,859    126,916
                                                                 
Total liabilities and stockholders' equity             $385,369  $323,340



The Fresh Market, Inc.
                                                              
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
                                                              
                                                              
                                                For the Fifty-Two Weeks Ended
                                                January 27,    January 29,
                                                2013           2012
Operating activities                                           
                                                              
Net income                                      $64,133      $51,395
Adjustments to reconcile net income to net cash                
provided by operating activities:
Depreciation and amortization                    45,962        36,692
Loss on disposal of property and equipment       170           130
Share-based compensation                         4,259         2,269
Excess tax benefits from share-based             (1,140)       (289)
compensation
Deferred income taxes                            (6,339)       9,424
Change in assets and liabilities:                              
Accounts receivable                              (2,280)       (3,367)
Inventories                                      (6,189)       (6,655)
Prepaid expenses and other assets                (9,149)       (917)
Restricted cash                                  (14,205)      --
Accounts payable                                 846           9,390
Accrued liabilities and other long-term          15,846        10,439
liabilities
Net cash provided by operating activities        91,914        108,511
                                                              
Investing activities                                           
Purchases of property and equipment              (81,107)      (87,513)
Proceeds from sale of property and equipment     6,698         221
Net cash used in investing activities            (74,409)      (87,292)
                                                              
Financing activities                                           
Borrowings on revolving credit note              466,324       450,782
Payments made on revolving credit note           (488,324)     (468,632)
Debt issuance costs                              --           (1,056)
Proceeds from issuance of common stock pursuant                
to employee stock
purchase plan                                    185           62
Excess tax benefits from share-based             1,140         289
compensation
Payments on withholding tax for restricted stock (492)         (367)
unit vesting
Proceeds from exercise of share-based            1,718         517
compensation awards
Net cash used in financing activities            (19,449)      (18,405)
                                                              
Net (decrease) increase in cash and cash         (1,944)       2,814
equivalents
Cash and cash equivalents at beginning of period 10,681        7,867
                                                              
Cash and cash equivalents at end of period       $8,737       $10,681
                                                              
Supplemental disclosures of cash flow                          
information:
Cash paid during the period for interest         $1,000       $1,591
                                                              
Cash paid during the period for taxes            $41,128      $15,166

                                                    
                                                                           
                                                                           
The Fresh Market, Inc.                                                      
Calculation of Return Metrics (1)                                           
(Unaudited)                                                                
                                                    
                                January 27, 2013     January 29, 2012
                                Calculated Using     Calculated Using
                                GAAP                 GAAP
Return Metrics - Trailing Four   Net Income          Net Income
Quarters
Return on assets (2)             18.4%                17.6%
Return on invested capital (3)   25.9%                25.7%
Return on equity (4)             32.4%                40.5%
                                                    
(1)The return metrics do not represent financial measures prepared in
accordance with U.S. generally accepted accounting principles (GAAP). For
a discussion of financial measures not prepared in accordance with GAAP,
please see below. The Company's management believes that these
presentations provide useful information to management, analysts and
investors regarding certain additional financial and business trends
relatingto its results of operations and financial condition.In
addition, management uses these measures for reviewing financial results
of the Company.The financial return metrics are calculated on a trailing
four quarter basis.Our manner of calculating these return metrics is set
forth in the footnotes below and may not be comparable to the manner in
which other companies calculate these return metrics.
                                                    
(2) Net Income/Average Assets                       
                                                    
(3) (1-Tax Rate)*(EBIT)/(Average Assets - Average Cash - Average
Non-Interest Bearing Current Liabilities). EBIT, which is not presented as
a stand-alonefinancial measure, is a non-GAAP financial measure and
equals net income plus interest expense plus provision for income taxes.
                                                    
(4) Net Income/Ending Equity                        
                                                    
Non-GAAP Financial Measures                          
While the Company reports financial results in accordance with accounting
principles generally accepted in the United States (GAAP), we also provide
certain non-GAAP operating performance measures. This non-GAAP information
is provided as a supplement, not as a substitute for measures of financial
performance prepared in accordance with GAAP. We use this information
internally to make operating decisions and believe it is helpful to
investors because it allows period-to-period comparisons of our ongoing
operating results. The information can also be used to perform trend
analysis and to better identify operating trends that may otherwise be
masked or distorted by these types of items. Finally, the Company
believes such information provides a higher degree of transparency for
certain items. Investors should consider non-GAAP measures in addition
to, not as a substitute for measures of financial performance prepared in
accordance with GAAP.

CONTACT: Investor Relations
         (336) 615-8065
         investorrelations@thefreshmarket.com
 
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