Fairway files plans for IPO
PORTLAND, Ore. (AP) — Fairway Group Holdings Corp. filed paperwork Monday to take its natural and organic grocery chain public, hoping to capitalize on the popularity of specialty grocers to build its chain.
Fairway began as a small neighborhood market in New York in the 1930s. It has since grown into a chain of 11 stores in New York, New Jersey and Connecticut, which include its namesake grocery stores and Fairway Wine & Spirits stores,
Sterling Investment Partners acquired 80 percent of Fairway in 2007. With the investment firm's help, it began growing rapidly in 2009. The company said in a regulatory filing with the Securities and Exchange Commission that it plans to use the proceeds from the initial public offering to fund future growth and for general corporate purposes.
The preliminary filing did not disclose how many shares would be sold or at what price.
Sterling will still control the business following the proposed IPO
New York-based Fairway said its stores, which it says are "Like No Other Market," bridge the gap between specialty organic stores and conventional grocery stores.
It said it believes it can reach a broader base of customers with its array of gourmet and specialty foods at prices that are lower than other specialty grocery stores.
Whole Foods Market Inc. has had tremendous success with its natural and organic chain since its post-recession turnaround. And privately held Trader Joe's appears to be performing well with its growing base of stores where the aisles are jammed with both specialty products and shoppers. Fairway also follows the tremendously successful IPO of organic food maker Annie's Inc., whose shares were offered at $19 in March and closed Monday at $46.19.
Fairway said in the filing that its revenue has grown steadily over the past few years due to its expanding chain of stores. Its revenue grew from $401.2 million in its fiscal year that ended in March 2010 to $554.9 million in fiscal 2012.
But due to the cost of adding new stores, it has reported net losses in each of those years. It disclosed a net loss of $36.7 million in its most recent fiscal year. The company said it expects to continue to post losses through at least fiscal 2014.
Fairway said it intends to add three to four stores annually for the next several years in the greater New York City metropolitan area.
The stock is expected to trade on the NASDAQ exchange under the symbol FWM.