Is Scopia Capital Giving Up On The Fresh Market Inc (TFM) Despite Considerable Future Prospects?

Scopia’s latest move isn’t a surprise considering the nearly 43% drop in The Fresh Market Inc (NASDAQ:TFM)’s stock price so far this year. Meanwhile the grocery stores industry is up by almost 4% during the same period. The hedge fund initiated a position in the $1.15 billion specialty grocery retailer during the second quarter of last year. The stock has depreciated by nearly 20% since then. However, the timing of Scopia’s move might not have been perfect considering that The Fresh Market Inc (NASDAQ:TFM) has received an array of upgrades from analysts recently, as Northcoast pushed up its rating to ‘Buy’ from ‘Neutral’, Sterne Agee CRT raised it a notch higher to ‘Neutral’ from ‘Underperform’, and Goldman also jumped on this boat and upgraded the stock to ‘Buy’ from ‘Neutral’.

A major impetus for The Fresh Market Inc (NASDAQ:TFM) is the appointment of a new CEO this month, in the form of Richard Anicetti, who served an eight-year tenure as CEO of Delhaize Group’s subsidiary Food Lion LLC. The company was headed by an interim CEO for eight months during which its performance considerably faltered, especially when compared to the time of former CEO Craig Carlock, when it saw considerable growth. For the second quarter, the EPS of $0.36 was flat on a year-over-year basis and missed the consensus estimates by $0.04, while revenues of $442.1 million were $16.24 million lower than what was expected. The factors to blame here included changes in pricing and promotional investment failing to meet the management’s expectations. As far as growth is concerned, The Fresh Market Inc (NASDAQ:TFM) did manage to open six new stores, remodeled another four, and refreshed three of them. The company is on track to open 18 stores this year.

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