NEW YORK Shares of Fairway climbed on their first day of trading after the New York grocery store chain priced its initial public offering above expectations.
The company's shares were up $4.66, or 36 percent, at $17.66, in midmorning trading. Fairway had priced the stock at $13 per share, above its forecast of $10 to $12.
Fairway is well-known among New York shoppers for offering relatively low prices and cramming its shelves with a wide assortment of groceries. The company began as a fruit and vegetable stand in 1933 and has since expanded to a dozen locations in the region, including in Connecticut and New Jersey.
It says there's room for more than 300 additional U.S. locations. That would put it on par with organic grocer Whole Foods, which has 346 stores in North America and the United Kingdom.
For now, Fairway plans to open two new stores in 2014 and three to four stores a year after that.
But Fairway is looking to expand at a time when the supermarket industry is facing greater competition from big-box retailers, drugstores and even dollar stores. And the company notes in a filing with the Securities and Exchange Commission that its competitors have greater marketing resources, along with more experience operating big chains.
Nevertheless, the chain has been growing since Sterling Investment Partners bought an 80 percent stake in it in 2007. The investment firm will continue to control Fairway Group Holdings Corp. after the IPO. Howard Glickberg, who is the grandson of the company's founder, remains on the board.
In the fiscal year ended April 1, 2012, Fairway had revenue of $554.9 million, up 14 percent from a year earlier. But it booked a loss of $36.7 million last year, and a loss of $39 million a year earlier, due to the cost of opening new stores.
Revenue at stores open at least a year also fell 8 percent, as new stores cannibalized sales from established locations.
Last fall, Superstorm Sandy also flooded and damaged its location in Brooklyn's Red Hook neighborhood. The store was closed from late October to late February.
Fairway is trading under the ticker "FWM" on the Nasdaq. The company expects net proceeds of about $158.8 million from the IPO.