Down $35 million, Fairway may face bankruptcy
Down $35 million, Fairway may face bankruptcy
Fairway Market, which operates 15 locations in New York, New Jersey and Connecticut, said it intends to grow its store base in the New York City metropolitan area for the next several years; however, the company continues to experience significant losses, which could result in its need to file for bankruptcy protection.
"Unless we are able to raise additional capital, our current limited cash resources and significant leverage will adversely affect our ability to open new stores," the company said in its latest filing with the U.S. Securities & Exchange Commission.
In the quarter that ended Dec. 27, Fairway's net loss was $35.7 million, and according to the New York Post this comes after losing more than $300 million over the past five years.
While the company was in compliance with financial covenants as of Dec. 27, 2015, if its financial performance does not improve or additional third-party equity financing is not obtained, Fairway anticipates that it will not be in compliance at the end of its fiscal quarter ending April 3.
Fairway can seek an amendment or waiver of the violation from its lenders; however, they have the right to declare all outstanding debt immediately due and payable, and Fairway does not have sufficient working capital to fulfill this obligation.
Fairway cited competition as a major challenge. "The food retail industry as a whole, particularly in the Greater New York City metropolitan area, is highly competitive," the company said. "Due to the increasingly competitive environment in which we operate, our operating results have been, and in the future may be, negatively impacted through a loss of sales, reduction in margin from competitive price changes, and/or greater operating costs such as marketing."
