While most U.S. food retailers grapple with the weak economy and wage discount battles with competitors, at least one grocer is betting that more and more consumers are willing to trade up.
The Fresh Market Inc., a Greensboro, N.C.-based specialty food retailer, plans to raise as much as $345 million in an initial public share offering, the company said in a May 3 filing with the U.S. Securities and Exchange Commission.

Fresh Market strives to create a “neighborhood grocer” atmosphere offering “fresh, carefully-selected, high-quality food products focused on perishable categories,” the company said in the filing.

Store offerings include “hand-trimmed steaks… aged for tenderness” and hand-stacked, “colorfully displayed” fresh produce, the filing said. Many Fresh Market meat and produce items, including Red Delicious apples and fresh ground beef, are priced at premiums to conventional supermarkets “commensurate with the product’s higher quality.”

The planned IPO is a rarity for the grocery business, an industry long out of favor among the investment bankers who take companies public. Fresh Market’s IPO would be the first by a U.S.-based grocery company in at least 10 years, according to David Menlow, who runs IPOfinancial.com.

For the meat, dairy and fresh produce industries, Fresh Market is an example a small but growing niche in an otherwise drab retail food scene. Major supermarket chains struggled with recession and food deflation last year, and retail food sales nationwide are expected to grow little, if at all, this year.
Serving higher-income customers, and offering organic or other specialty foods, represents a model proven successful by Whole Foods Market, Inc., Menlow noted.

“On the surface it appears it’s going to stand a fair chance of being received well in the market,” Menlow said of Fresh Market’s planned IPO.

“The specialty markets like Whole Foods have done well,” Menlow said. “It’s the big-box names that don’t seem to generate any sparkle in the market to induce people to buy.”

Fresh Market, which nearly doubled its store count in the past four years, didn’t say when it expected to have its IPO or how many shares it would sell. Proceeds from the IPO will be distributed to shareholders, the filing said.

A Fresh Market spokeswoman didn’t immediately respond to a message May 5.

At the end of last month, Fresh Market had 95 stores in Florida and 18 other states in the Southeast, Midwest and Mid-Atlantic regions. Store locations include Naples, Fla., and Wilmette, a wealthy suburb north of Chicago. Another store is planned for South Miami Beach.

The company, which was founded in 1982, had 53 stores at the end of 2005.

In fruits and vegetables, Fresh Market offers a “farmers market” experience focused on variety and abundant displays, according to the filing.

The stores include about 20 mushroom varieties, including French horn, hen-of-the-woods and porcini, as well as Sweet Tango apples that may not be available in conventional supermarkets.
Meat offerings include steaks aged for 14 to 21 days “to provide restaurant-quality taste and tenderness,” as well as fresh turkey available year-round, Fresh Market said.

In dairy products, Fresh Market offers provide “hard-to-find and premium-quality” items, such as truffle oil and Devonshire cream.

High unemployment and the tenuous economic recovery remain concerns across the retail industry. Still, Fresh Market so far has fared better than larger grocery chains, based on the May 3 filing.

In 2009, Fresh Market posted net income of $49.2 million in 2009, up 56 percent from $31.6 million in 2008, according to filing. Sales last year rose 8 percent to $861.9 million.