febrero 5th, 2016Fairway facing danger of possible bankruptcy

Fairway Market is starved for cash.

The quintessential New York grocery chain said Friday it needs to raise more capital by April to meet its debt obligations with its 15 stores in the metro area experiencing “significant losses.”

The company — whose stock is also in danger of being delisted from the Nasdaq — lost $35.7 million in the quarter ended Dec. 27 after losing more than $300 million over the past five years.

Revenue declined by 7 percent to $191.6 million from a year earlier, a regulatory filing revealed on Friday.

Fairway is counting on new stores to drive its growth, but conceded in the filing that “our current limited cash resources and significant leverage will adversely affect our ability to open new stores.”

The company went public in 2013 after decades of being owned and managed by the Glickberg family. Former CEO Howard Glickberg remains on the board.

The IPO was meant to jump-start an ambitious expansion plan led by Sterling Investment Partners, which wanted to expand into other regions of the country. Instead, the business, known for its fresh produce and high-quality prepared foods, is facing a possible bankruptcy.

The company did not respond to calls and emails for comment. But the chain has hired Weil, Gotshal & Manges, the law firm which is known for bankruptcy restructuring and which most recently handled the A&P bankruptcy, industry sources said.

“The question is whether there is a turnaround in the future of this company,” said David Tawil, president of Maglan Capital, adding “there is not a big pool of potential buyers as we saw with the A&P bankruptcy.”

A&P did not have takers for some 100 stores that it auctioned off late last year.

Fairway is hardly alone. The traditional supermarket business is under tremendous pressure from increased competition and changing consumer behavior as online grocers such as FreshDirect and even restaurants gain market share.

Another family owned business, D’Agostino, with 11 stores in the city, has closed a couple stores over the past year and just filed a notice with the Department of Labor about another store closure in Manhattan.

Among Fairway’s biggest competitors are Whole Foods, Trader Joe’s and Stop & Shop as well as online retailers, the company said in the filing.

They have “more experience operating multiple store locations or have greater financial or marketing resources than we do,” according to Fairway.

Article by: New York Post

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