Dive Brief:
- The Fresh Market will open 22 new store locations over the next 24 months, South American retailer Cencosud announced in its most recent earnings report last week.
- The addition locations will increase the specialty grocery chain’s store fleet by about 14%.
- The store expansion is coming on the 1-year anniversary of the grocer’s majority ownership under Cencosud.
Dive Insight:
The store expansion plans are just th latest changes for The Fresh Market as the grocery chain looks to refine its specialty retailing approach under the ownership of Cencosud.
Last summer Cencosud acquired a majority stake in The Fresh Market for $676 million with potential to reach 100% in the future. The South American retailer operates a portfolio of retail segments, including 998 supermarkets such as the Jumbo supermarket chain in Chile.
The acquisition aimed to improve The Fresh Market’s balance sheet with $265 million in cash of the purchase price going toward reducing the grocer’s net leverage to 2.7 times earnings before income taxes, depreciation and amortization (EBITDA). Cencosud said it would refinance The Fresh Market’s debt to improve its capital structure from an extended maturity and interest rate perspective.
Right after the acquisition, The Fresh Market reversed its plans to go public, withdrawing its IPO plans with the Securities and Exchange Commission.
Earlier this summer, The Fresh Market named a new CFO and a new chief merchandising officer and saw its first post-acquisition store opening with the debut of its Carmel, Indiana, location in May.
The Fresh Market, which recently celebrated its 41st year in business, has 159 stores across 22 states.
The new 22-store expansion marks yet another change for the chain, which saw its store count shrink under the ownership of Apollo Global Management, which took the grocer private in 2016. Prior to Apollo’s acquisition, The Fresh Market had undergone rapid expansion during a six-year period as a publicly-traded company that started in 2010.
On Friday, Cencosud reported during its second-quarter earnings results that the successful consolidation of The Fresh Market and of GIGA Atacado in Brazil drove its revenue increase of 12.9% — marking the company’s ninth consecutive quarter of double-digit sales growth.
Now with one year of Cencosud’s ownership under its belt, The Fresh Market is seeing “important financial and commercial synergies,” according to Cencosud.
“In these 12 months, The Fresh Market has contributed with an Adjusted EBITDA of US$ 210 million and an Adjusted EBITDA margin of 10.4% to the Company's consolidated result, exceeding estimates,” Cencosud CEO Matías Videla said in a statement.
