Answer: Because it does almost twice the rev per store than its closest competitor, Whole Foods. Because Gelsons was recently bought by tpg for almost double FWM's valuation. Because they have an anchored/growing presence in one of the worlds most stable markets. Because Duane Rd was bought by Wag for fx FWM's valuation and twice the debt. Because it is one of the highest rated brands by customers.
Because I visit the stores and see for myself the endless crowds.
Before they went public. They understand the New York Mkt is like no other mkt - just look at fwm's Rev numbers.
To get a sense of what the offer may have looked like just look to WAG's purchase of Duane Rd.
heard it live - watched intraday spike - aside from red hook I though the presentation was very positive - especially the reafffirmation that they will not need outside equity.
I'm not sure that it's a FACT that they won't turn a profit in 2 years... We'll have to wait and see. That said, I'm not worried about their profitability - I know the business and waited patiently to buy at these levels and lower.
The truth of the matter is - if you were familiar with nyc and the kind of valuations that certain consumers fetch such as Duane Rd, you'd be crazy to short this stock under 500m mkt cap.
This is a thriving business - with a sturdy regional moat unlike any other in the space.
You're connecting dots of your own design and strike me as apocalyptic in your thinking. They are solidifying and shoring up their model by investing in growth and increased efficinecy for the long term while disposing of extraneaous but neccesary management/personal expenses in the short term... Central Services is done... store expansion has been curtailed in order to generate more cash flow. They will have growth at the right time.
How do you suppose they lowered their borrowers interest rate if nobody was willing to lend?
Well, name another supermarket in the history of man kind that commands their price per sq ft. Top line will beat - 208.7 m. Look at recent comps(Gelsons/TPG) in terms of valuation.
Look out shortie - Your about the see some pain.
They beat on the top. 16 stores = 200 million per store = 50 million per year per store.
They can compete with Costco and Home Depot with those kind numbers per store.
No, that's definitely not what they meant to say.... Nor is it in any way plausible that a record setting grocery chain in terms of customer volume and revenue per store - a chain that doubles WFM in rev per store - a chain that makes over 100m alone, in 3 of their stores, would not have trouble securing equity if they needed too... But they don't.
They may not yet be profitable but they have leverage with respect to their borrowing capacity,
The new partnership between Google and Fairway has gone pretty much under the radar; which is understandable given its early stage prospects. Upon further examination, this partnership is a fully discounted variable that holds tremendous upside for a growth stock like Fairway.
Anyone familiar with FWM will note their eye popping, unprescedented revenue per square foot, that, unfortuantly for most share holders, has not yet translated into a profitable business model - In fact, though revenue has continued to grow, FWM has lost more each quarter, shrinking its mkt cap to probably half of what it would be forced to sell for, tomorrow, on the open market.
With expansion a necessity, cost reduction has been lacadaisacal despite having positive structural bones with respect to gross margins and industry leading inventory turnover.
Still, with expansion a neccessity, and perhaps in reaction to Fresh Direct who has a unique and very personal history with Fairway, partnering with Google and their understanding and investment in the future of macro logistics, FWM has possibly found a unique, cost effective way to expand into and further penetrate what is the highest pop/density, consumer market, in the nation; with a population about the size of Australia's. A market where they already remain perched atop as market leader(w respect to other organic grocers).
Though Google's delivery service does not yet deliver perishables, one day pretty soon you may be able to shop Fairway aisles, picking out oranges and steaks in real time, from your computer.
So why did google, a global leader in visual and virtual technology partner with a sixteen store chain supermarket(once Hudson and Tribecca open). In case their brand's popularity is lost on you, or you have never witnessed a day of shopping at a fairway location, just look at their revenue per square ft and use your imagination.
Will provide industry leading preparation, stocking, and delivery efficiency in the NY metro area... Companies like Google and Amazon cannot rely on the cloud for this area of their expanse.