Fairway reports $13.9 million loss, stock drops 20 percent

Fairway Group Holdings Corp., parent company of Fairway Market, announced a $13.934 million net loss in its financial results for its fiscal 2016 first quarter on Tuesday, Aug. 4, and by Wednesday afternoon the company’s stock had lost more than 20 percent of its value.

The company said its same store sales performance in the quarter was affected by a New York City-based competitive opening and an increase in promotional activity. Excluding these items, its same store sales for the quarter were down approximately 2.3 percent. "We are, however, seeing some positive developments in several of our suburban locations from our efforts,” said Jack Murphy, Fairway Market's chief executive officer.

The company hopes a new store format will be a source of long-term improvement moving forward.

"The Fairway team is also engaged in development and design activities for new Fairway locations and we expect many of these elements will be reflected in our new store in the Mill Basin area of Brooklyn, which is scheduled to open in mid-2016,” he noted. "We believe the new format will result in great shopping benefits for our customers while also generating solid returns for Fairway. The new store format, improved gross margin and labor performance and the strategic actions to build our customer base are all important efforts in our long-term improvement plan for Fairway.”

Fairway’s net sales were $193.8 million for the first quarter of fiscal 2016 compared to $198.3 million for the first quarter of fiscal 2015. During the quarter, the company invested approximately $2.8 million for increased promotional activity, in large part related to the continued development of its digital customer engagement strategy, reducing sales by this amount. In addition, same store sales decreased 5.3 percent and customer transactions in comparable stores decreased by 7.4 percent compared to the first quarter of fiscal 2015.

Wonderful Citrus acquires Texas Citrus Exchange

Wonderful Citrus acquired the operations of Texas Citrus Exchange, one of the largest citrus juice processors in Texas. The operations of TCX have been renamed Rio Grande Juice Co., a division of Wonderful Citrus. John Glenn, who was previously chief operating officer of Sun Orchard Inc., has been named vice president of Rio Grande.wonderfulcei

“The operations of TCX are a perfect complement to our citrus business,” David Krause, president of Wonderful Citrus, said in a press release.  “The addition of the team from TCX expands our already robust operations in Texas.”

All of TCX’s more than 100 employees based in Mission, TX, are expected to join Wonderful Citrus after the close of the deal.  The current TCX management team will remain in place with the addition of Glenn.

Wonderful Citrus is famous for its signature brand Wonderful Halos and is one of the nation’s largest suppliers of fresh grapefruit, including Texas red grapefruit under the brand Wonderful Sweet Scarletts.  

 

 

Most of Michigan industry dodges a bullet

Despite a report of record-setting hail in Michigan, the produce trade itself is breathing a sigh of relief.

Mitch Brinks, a salesman for Riveridge Produce Marketing Inc. in Sparta, MI, said there was a brief hail storm Aug. 2 within a violent wind storm that struck Michigan’s fruit ridge. The small volume of hail was soft, Brinks said. If there were any damage to the apple crop, it would be so minor that the fruit would outgrow it.

Brinks hadn't heard of any areas in Michigan that were damaged by the storm except for areas farther north near Traverse City.

Aaron Fletcher, sales and logistics associate for Todd Greiner Farms Packing LLC in Hart, MI, which is an hour south of Traverse City, said the firm had experienced no damage from the storm.

“We were fortunate the worst part of the storm hit north of us,” said Fletcher. “We had some heavy rains, and some wind, but nothing that did excessive damage.”

At Applewood Orchards Inc., located in Deerfield in the southeastern portion of the state, Scott Swindeman said, “As far as the Sunday storm, there is some damage in the northern part of the state but overall, we dodged a huge bullet.”

Swindeman said the apple industry probably gained more from the needed rain storm that it lost in a few apples that were blown off the trees in high winds.

“In northern Michigan they were beat up pretty bad” by a hailstorm, he said. But as that violent storm stretched across the state, the hail disappeared and there was virtually no damage.

Historic rain dance continues for California growers

An estimated 800,000-plus acres of California farmland will sit idle this year. Despite crop declines, the state’s gross farm revenue and employment actually increased slightly last year, and food prices remain steady, according to Dale Kasler and Phillip Reese, who wrote “California farm economy surprisingly resilient amid drought” for  The Sacramento Bee.

While growers need to grow, that’s easier said than done for hundreds of farmers who are caught in the middle of the drought, now in its fourth year.BIN-FIELD-GARLICChristopher Ranch’s garlic bins being filled in its California fields.

The California Farm Water Coalition knows well the effects the drought is having on state farmers. The non-profit educational organization provides fact-based information on farm water issues to the public and works to help consumers, elected representatives, government officials and media make the connection between farm water and our food supply.

Brandon Souza, assistant executive director of research and technical services water use efficiency for CFWC told The Produce News about the blunt reality growers, including garlic producers, now face in California.

“Fresno, Kern, Santa Clara, Mono and San Bernardino counties, in order of production volume, produce the largest volumes of vegetables and other field crops,” said Souza. “Fresno, Kern and Santa Clara counties are affected not only by the drought, but also by long-term water supply instabilities regardless of year type due to volatility in surface water deliveries.”

These counties, he noted, receive water that passes through the bottleneck Delta region, where issues such as unchecked predation, urban pollution, habitat degradation and/or loss have affected the federally listed Delta Smelt and one of the Chinook salmon runs. San Bernardino County and Mono are both experiencing drought-related effects.

Souza said CFWC is not aware of any studies that specifically evaluate drought effects to the state’s garlic crop, but he pointed out that the leading three counties for garlic production are especially hard-hit by drought effects and are known to be idling vegetable and other field crops.

“Statewide, we expect approximately 564,000 acres to be fallowed,” he said. “Generally speaking, farmers will be idling some annual plantings to preserve water for use on higher return efforts.”

This, Souza noted, will directly impact any lower-value fresh produce crops, including vegetable and field crop plantings as grain and feed crop prices rise.

He referenced Josue Medellin-Azuara, Duncan MacEwan, Jay Lund, Richard Howitt and Daniel Sumner, who research and compile reports at the University of California-Davis Center for Watershed Sciences. They state that of an expected cut of 8.8 million acre feet of surface water from a typical year, California agriculture would use 32.9 million acre feet of the state’s 79.8 million acre feet of developed supply.

They further stated that some of this water loss will be made up through additional groundwater pumping. Year over year, estimates indicate that 2015 will see a reduction of 2.2 million acre feet of surface water. Fallowed acres in 2015 were expected to increase by 33 percent over 2014.

The California powers that be aren’t taking this news sitting down.

“Irrigation districts — public agencies providing water service to growing areas — have sought to initiate and maintain transfer programs between regions of the state, engage in banking activities and are promoting water use efficiency efforts to stretch what supply is available,” explained Souza. “Individual districts have contingency plans, but I am unaware of an overall long-term plan to remediate drought specifically.

“A holistic plan does exist that would lessen the impacts of future shortages and help enable farmers to better prepare for periods of scarcity,” he continued. “This plan is the California Water Action Plan. It incorporates a range of actions, including additional storage programs, efficiency improvements and conveyance systems.”

In the Sacramento Bee story, Kasler and Reese state that even as many farmers cut back their planting, California’s farm economy overall has been surprisingly resilient.

They reference the U.S. Department of Agriculture’s statistics that state farm employment increased by more than one percent last year. Gross farm revenue from crop production increased by 0.2 percent last year, to $33.09 billion.

The statistics don’t mean farmers and their employees are having an easy time of it. Rather, the data show how farmers are coping with the shortages of water. Forced to make choices, they’re diverting more of their dwindling water supplies to keep high-value crops going.

Souza addressed the worst-case-scenario if the drought continues into the future.

“It depends on perspective,” he said. “From my perspective, the worst case scenario is a failure to learn from this painful experience and do what can be done, both locally and at governmental levels to prepare for it in the future.”

Meijer's $750 million Wisconsin expansion progresses

Continuing an estimated $750 million investment in Wisconsin, Meijer opened two more stores in Wauwatosa and Oak Creek. The new supercenters create nearly 600 jobs and provide fresh produce delivered daily.meijer

“Since opening our first two stores in the state six weeks ago, local residents and new customers have welcomed us with open arms and responded positively to the new shopping option we offer in Wisconsin,” Co-Chairman Hank Meijer said in a press release. “We are thrilled to be opening our Wauwatosa and Oak Creek supercenters, giving us the opportunity to provide a quality one-stop shopping experience to more communities around Milwaukee.”

The Grand Rapids, MI-based company now operates 222 stores in six states and plans to open two to three new Wisconsin supercenters per year through 2019. The retailer also partners with local farmers and businesses, when available, to provide locally grown produce and other grocery products. For example, Meijer partners with five local produce growers in Wisconsin, including Alsum Farms of Friesland, WI.

The stores demonstrated their commitment to each community by making $25,000 donations to the Wauwatosa Public Library Foundation and the Oak Creek Public Library to fund an internet café at each location. The donations will allow the public libraries to purchase technology and necessary furnishings for the creation of a young adult space equipped with preloaded fun, interactive and educational iPad activities and more for teenagers.

As part of its ongoing community support, Meijer donates more than 6 percent of its net profit to charitable organizations annually, and each of its stores works with local food pantries and banks to help fight hunger at the local level.

Since 2008, the retailer’s Simply Give program has generated more than $16 million for its food pantry partners throughout the Midwest. The fall Simply Give campaign will kick off in Wauwatosa and Oak Creek upon the stores’ opening and will run through Sept. 12. To celebrate National Hunger Action Day, Meijer will double match customers’ donations from Sept. 3-5. The Oak Creek Meijer will partner with Family Life Food Pantry; the Wauwatosa Meijer will partner with Tosa Family Food Pantry.

In addition to the retailer’s traditional grocery and merchandise offerings, the new pharmacies feature drive-thru pick up and will offer the company’s free prescription program, as well as clinical services and immunizations. The program includes leading oral generic antibiotics with a special focus on prescriptions most often filled for children, prenatal vitamins and medications for those with diabetes and high cholesterol. Since its inception in 2006, more than 27 million free prescriptions have been filled, saving Meijer customers more than $390 million.

“Our teams have worked very hard to prepare and we’re excited to bring our stores to Wauwatosa and Oak Creek,” Meijer President J.K. Symancyk said in the press release. “We do our best to find locations that will best serve communities and are looking forward to building on the excitement of our first four stores in Wisconsin in the years to come.”