Fairway (FWMHQ) 10-Q 4 Aug 15 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Jun. 28, 2015	Jul. 24, 2015
Entity Registrant Name	Fairway Group Holdings Corp
Entity Central Index Key	1,555,492
Document Type	10-Q
Document Period End Date	Jun. 28, 2015
Amendment Flag	false
Current Fiscal Year End Date	--04-03
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Class A Common Stock
Entity Common Stock, Shares Outstanding		29,805,986
Class B Common Stock
Entity Common Stock, Shares Outstanding		14,225,455

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 28, 2015	Mar. 29, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 32,197	$ 36,362
Accounts receivable, net	2,365	3,404
Merchandise inventories	30,065	29,150
Income tax receivable	572	890
Prepaid rent	1,192	829
Deferred financing fees	1,743	1,745
Prepaid expenses and other current assets	2,823	3,036
Total current assets	70,957	75,416
PROPERTY AND EQUIPMENT, NET	144,047	148,293
GOODWILL	95,412	95,412
INTANGIBLE ASSETS, NET	27,115	27,161
OTHER ASSETS	12,136	12,854
Total assets	349,667	359,136
CURRENT LIABILITIES
Current portion of long-term debt	2,750	2,750
Accounts payable	29,264	31,872
Accrued expenses and other	24,619	23,227
Total current liabilities	56,633	57,849
NONCURRENT LIABILITIES
Long-term debt, net of current maturities	254,497	254,336
Deferred income taxes	29,964	28,091
Other long-term liabilities	42,507	41,463
Total liabilities	$ 383,601	$ 381,739
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Additional paid-in capital	$ 384,874	$ 382,271
Accumulated deficit	(418,822)	(404,888)
Total stockholders' deficit	(33,934)	(22,603)
Total liabilities and stockholders' deficit	$ 349,667	$ 359,136
Class A Common Stock
STOCKHOLDERS' DEFICIT
Common stock
Class B Common Stock
STOCKHOLDERS' DEFICIT
Common stock	$ 14	$ 14

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Jun. 28, 2015	Mar. 29, 2015
Treasury stock, shares	3	3
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	150,000	150,000
Common stock, shares issued	29,781	29,366
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	31,000	31,000
Common stock, shares issued	14,225	14,225
Common stock, shares outstanding	14,225	14,225

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 28, 2015	Jun. 29, 2014
Consolidated Statements of Operations
Net sales	$ 193,774	$ 198,268
Cost of sales and occupancy costs (exclusive of depreciation and amortization)	132,830	136,872
Gross profit	60,944	61,396
Direct store expenses	47,506	46,957
General and administrative expenses	18,000	15,295
Store opening costs	1,272	1,686
Production center start-up costs	1,087	1,429
Loss from operations	(6,921)	(3,971)
Interest expense, net	(4,855)	(4,778)
Loss before income taxes	(11,776)	(8,749)
Income tax provision	(2,158)	(945)
Net loss	$ (13,934)	$ (9,694)
Basic and diluted loss per common share (in dollars per share)	$ (0.32)	$ (0.22)
Weighted average common shares outstanding (in shares)	43,787	43,357

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 28, 2015	Jun. 29, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (13,934)	$ (9,694)
Adjustments to reconcile net loss to net cash (used in) provide by operating activities
Deferred income taxes	1,873	939
Deferred rent	1,260	1,524
Depreciation and amortization of property and equipment	6,964	6,903
Amortization of intangibles	46	74
Amortization of discount on term loans	849	838
Amortization of deferred financing fees	437	438
Amortization of prepaid rent	79	79
Stock compensation expense	2,417	2,857
Changes in operating assets and liabilities
Accounts receivable	1,039	(204)
Merchandise inventories	(915)	(1,309)
Prepaid expense and other	168	1,198
Other assets	204	480
Accounts payable	(2,608)	531
Accrued expenses and other	1,362	707
Other long-term liabilities		144
Net cash (used in) provided by operating activities	(759)	5,505
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,718)	(14,332)
Net cash used in investing activities	(2,718)	(14,332)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt	(688)	(688)
Net cash used in financing activities	(688)	(688)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(4,165)	(9,515)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	36,362	58,800
CASH AND CASH EQUIVALENTS, END OF PERIOD	32,197	49,285
Cash paid during the period for:
Interest, net of capitalized amounts	3,530	3,500
Income taxes	$ 2	$ 2

Consolidated Statement of Chang

Consolidated Statement of Changes in Stockholders' Deficit - 3 months ended Jun. 28, 2015 - USD ($) shares in Thousands, $ in Thousands	Class A Common StockCommon Stock	Class B Common StockCommon Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Deficit	Total
Balance at Mar. 29, 2015		$ 14	$ 382,271		$ (404,888)	$ (22,603)
Balance (in shares) at Mar. 29, 2015	29,366	14,225		3
Increase (Decrease) in Stockholders' Equity
Stock compensation expense			2,603			2,603
Issuance of stock for vested RSUs	415
Net loss					(13,934)	(13,934)
Balance at Jun. 28, 2015		$ 14	$ 384,874		$ (418,822)	$ (33,934)
Balance (in shares) at Jun. 28, 2015	29,781	14,225		3

DESCRIPTION OF BUSINESS AND ORG

DESCRIPTION OF BUSINESS AND ORGANIZATION	3 Months Ended
	Jun. 28, 2015
DESCRIPTION OF BUSINESS AND ORGANIZATION
DESCRIPTION OF BUSINESS AND ORGANIZATION	1. D ESCRIPTION OF BUSINESS AND ORGANIZATION Fairway Group Holdings Corp. was incorporated in the State of Delaware on September 29, 2006 and is controlled by investment funds managed by Sterling Investment Partners and affiliates (collectively, “Sterling”). Fairway Group Holdings Corp. and subsidiaries (the “Company” or “Fairway”) operates in the retail food industry, selling fresh, natural and organic products, prepared foods and hard-to-find specialty and gourmet offerings along with a full assortment of conventional groceries. The Company operates fifteen stores in the Greater New York metropolitan area, four of which include Fairway Wine & Spirits locations. Fourteen of the stores (including three Wine & Spirits locations) were in operation prior to the beginning of the fiscal year ended March 29, 201 5 (“fiscal 2015”) and one store and the Company’s fourth Wine & Spirits location were opened during fiscal 2015, subsequent to June 29, 2014. The Company has determined that it has one reportable segment. Substantially all of the Company’s revenue comes from the sale of items at its retail food stores.

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Jun. 28, 2015
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements in accordance with US GAAP, pursuant to such rules and regulations. Therefore, these unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2015 . The accompanying unaudited consolidated financial statements as of June 28, 2015 , and for the thirteen weeks ended June 28, 2015 and June 29, 2014 reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and operating results of the Company. All material intercompany accounts and transactions have been eliminated in the unaudited consolidated financial statements. The results of operations for any interim period may not necessarily be indicative of the results that may be expected for the entire fiscal year or any interim period therein. Certain amounts in the financial statements for prior periods have been reclassified to conform to the current year presentation and had no effect on previously reported consolidated net loss or stockholders’ deficit. There have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2015 that have had a material impact on the Company’s unaudited interim consolidated financial statements and related notes.

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE	3 Months Ended
	Jun. 28, 2015
NET LOSS PER COMMON SHARE
NET LOSS PER COMMON SHARE	3. NET LOSS PER COMMON SHARE Basic net loss per common share is calculated by dividing net loss by the weighted average common shares outstanding for the fiscal period. Diluted net loss per common share is calculated by dividing net loss by the weighted average common shares outstanding for the fiscal period plus the effect of any potential common shares that have been issued if these additional shares are dilutive. For all periods presented, basic and diluted net loss per common share are the same, as any additional common stock equivalents would be anti-dilutive. The following table is a summary of the share amounts (in thousands) used in computing basic and diluted earnings per share and anti-dilutive shares excluded from the computation: Thirteen Weeks Ended June 28, June 29, 2015 2014 Weighted average shares outstanding - basic and diluted Anti-dilutive securities excluded from diluted loss per share computation: Options — Unvested restricted stock Restricted stock units Total anti-dilutive securities As of Jun e 28, 2015 and June 29, 2014 certain of the options to purchase shares of Class A common stock have exercise prices in excess of the Company’s publicly quoted stock price and therefore are not considered potentially dilutive.

LONG-TERM DEBT

LONG-TERM DEBT	3 Months Ended
	Jun. 28, 2015
LONG-TERM DEBT
LONG-TERM DEBT	4. LONG-TERM DEBT A summary of long-term debt is as follows (in thousands): June 28, March 29, 2015 2015 Credit facility, gross $ $ Less unamortized discount Credit facility, net Less current maturities Long-term debt, net of current maturities $ $ A summary of interest expense is as follows (in thousands): Thirteen Weeks Ended June 28, June 29, 2015 2014 Interest on senior credit facility $ $ Amortization of original issue discount Amortization of deferred financing fees Other interest (income) expense, net Total $ $ Effective interest rate on senior credit facility Other interest (income) expense, net includes approximately $228,000 and $221,000 of capitalized interest for the thirteen weeks ended June 28, 2015 and June 29, 2014 , respectively. 2013 Senior Credit Facility In February 2013, Fairway Group Holdings Corp. and its wholly-owned subsidiary, Fairway Group Acquisition Company, as the borrower, entered into a senior secured credit facility consisting of a $275 million term loan (the “2013 Term Facility”) and a $40 million revolving credit facility, which includes a $40 million letter of credit sub-facility (the “2013 Revolving Facility” and together with the 2013 Term Facility, the “2013 Senior Credit Facility”) with the 2013 Term Facility maturing in August 2018 and the 2013 Revolving Facility maturing in August 2017. The Company used the proceeds from the 2013 Term Facility to repay the $264.5 million of outstanding borrowings (including accrued interest) under its 2012 senior credit facility and pay fees and expenses. On May 3, 2013, the 2013 Senior Credit Facility was amended to, among other things, lower the interest rate margins and eliminate the interest coverage ratio financial covenant. Borrowings under the 2013 Senior Credit Facility, as amended, bear interest, at the option of the Company, at (i) adjusted LIBOR (subject to a 1.0% floor) plus 4.0% or (ii) an alternate base rate plus 3.0% . In addition, there is a fee payable quarterly in an amount equal to 1.0% per annum of the undrawn portion of the 2013 Revolving Facility, calculated based on a 360 -day year. Interest is payable quarterly in the case of base rate loans and on the maturity dates or every three months, whichever is shorter, in the case of adjusted LIBOR loans. The 4.0% and 3.0% margins will each be reduced by 50 basis points at any time when the Company’s corporate family rating from Moody’s Investor Services Inc. is B2 or higher and the Company’s corporate rating from Standard & Poors Rating Service is B or higher, in each case with a stable outlook, and as long as certain events of default have not occurred. All of the borrower’s obligations under the 2013 Senior Credit Facility, as amended, are unconditionally guaranteed (the “Guarantees”) by Fairway Group Holdings Corp. and subsidiaries (other than the borrower and any future unrestricted subsidiaries as the Company may designate, at its discretion, from time to time) (the “Guarantors”). Additionally, the 2013 Senior Credit Facility and the Guarantees are secured by a first-priority perfected security interest in substantially all present and future assets of the borrower and each Guarantor, including accounts receivable, property and equipment, merchandise inventories, general intangibles, leases, intellectual property, investment property and intercompany notes among Guarantors. Mandatory prepayments under the 2013 Senior Credit Facility, as amended, are required with: (i) 50% of adjusted excess cash flow (which percentage shall be reduced to 25% upon achievement and maintenance of a leverage ratio of less than 5.0:1 .0, and to 0% upon achievement and maintenance of a leverage ratio of less than 4.0 :1.0); (ii) 100% of the net cash proceeds of asset sales or other dispositions of property by the Company and certain of its subsidiaries (subject to certain exceptions and reinvestment provisions); and (iii) 100% of the net cash proceeds of issuances, offerings or placements of debt obligations (subject to certain exceptions). The 2013 Senior Credit Facility, as amended, contains negative covenants, including restrictions on: (i) the incurrence of additional debt; (ii) liens and sale-leaseback transactions; (iii) loans and investments; (iv) guarantees and hedging agreements; (v) the sale, transfer or disposition of assets and businesses; (vi) dividends on, and redemptions of, equity interests and other restricted payments, including dividends and distributions to the Company by its subsidiaries; (vii) transactions with affiliates; (viii) changes in the business conducted by the Company; (ix) payment or amendment of subordinated debt and organizational documents; and (x) maximum capital expenditures. The Company is also required to comply with a maximum total leverage ratio financial covenant. The Company was in compliance with all applicable affirmative, negative and financial covenants set forth under the 2013 Senior Credit Facility at June 28, 2015 . Because the Company’s recent operating performance has been below the Company’s expectations at the time that the financial covenants in its senior credit facility were established, if the Company’s financial performance does not improve, it is possible that the Company will not meet the maximum total leverage ratio financial covenant at some point within the next twelve months. In the event of a covenant violation that remains uncured, the lenders have the right to declare all outstanding debt under the 2013 Senior Credit Facility immediately due and payable. The Company has the ability to exercise equity cure rights, which allows for the issuance of additional equity and for the proceeds to be treated as EBITDA for purposes of the covenant, subject to certain restrictions, including that the amount of equity that can be used as EBITDA cannot exceed the EBITDA shortfall, the proceeds must be used to repay debt, and the equity cure can only be used twice within a four quarter period and only four times during the term of the loan. At June 28, 2015 , the Company had $29.6 million of outstanding letters of credit, and $10.4 million of availability under the 2013 Revolving Facility, all of which was available for letters of credit . Subsequent to June 28, 2015, the Company increased its outstanding letters of credit by $3.0 million in the aggregate, decreasing its availability under the 2013 Revolving Facility to $7.4 million.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Jun. 28, 2015
SHARE-BASED COMPENSATION DISCLOSURE
SHARE-BASED COMPENSATION	5. STOCK-BASED COMPENSATION The Company accounts for stock-based compensation awards in accordance with the provisions of FASB Accounting Standards Codification (“ASC”) Topic 718 — Compensation — Stock Compensation which requires companies to estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the awards ultimately expected to vest is recognized as expense over the requisite service period. The Company recognized total stock-based compensation of $2.4 million and $2.9 million for the thirteen weeks ended June 28, 2015 and June 29, 2014 , respectively, as general and administrative expenses in the Company’s Consolidated Statements of Operations. Included in the amounts recorded for the thirteen weeks ended June 29, 2014 are: ( i) approximately $96,000 representing the value of restricted stock units issued to certain directors during such period in payment of the directors’ fees for the calendar quarter ended June 30, 2014; (ii ) approximately $41,000 representing the value of restricted stock units issued during such period to the Company’s chairman in payment of his fees for serving as executive chairman for the calendar quarter ended June 30, 2014; and (iii ) approximately $187,500 representing the value of restricted stock units issued to a former executive officer in partial payment of his salary for the calendar quarter ended June 30, 2014. All of these restricted stock units were vested upon issuance but will be settled in shares of Class A common stock in the future. No such items were included in stock-based compensation expense during the thirteen weeks ended June 28, 2015. The Company’s 2007 Equity Compensation Plan (the “2007 Plan”), which provided for the grant of stock options and restricted shares, and the 2013 Long-Term Incentive Plan (the “2013 Plan”), which provides for the grant of stock options, restricted stock units, restricted stock, other stock-based awards and other cash-based awards, are more fully described in the Company’s Annual Proxy Statement for its 2015 annual meeting of stockholders filed with the Securities and Exchange Commission on June 23, 2015 under the caption “Executive Compensation—Equity Compensation Plans.” Changes in equity awards outstanding under the 2007 Plan and 2013 Plan during the thirteen weeks ended June 28, 2015 are summarized as follows: 2007 Equity Compensation Plan As of June 28, 2015 , there was $47,000 of unrecognized compensation expense related to the restricted stock awards granted under the 2007 Plan. The status of the Company’s unvested restricted stock grants for the thirteen weeks ended June 28, 2015 is summarized as follows: Weighted Restricted Average Grant Stock Date Fair Value Outstanding unvested awards at March 29, 2015 $ Granted — — Vested Forfeited — — Outstanding unvested awards at June 28, 2015 $ 2013 Long-Term Incentive Plan Restricted Stock Units As of June 28, 2015 , there was $10.7 million of unrecognized compensation expense related to the restricted stock unit awards (“RSU”s) granted under the 2013 Plan. The status of the Company’s unvested restricted stock units for the thirteen weeks ended June 28, 2015 is summarized as follows: Weighted Restricted Average Grant Stock Units Date Fair Value Outstanding unvested awards at March 29, 2015 $ Granted Forfeited Vested Outstanding unvested awards at June 28, 2015 $ Approximately 13,847 RSUs with a grant-date fair value of approximately $94,000 granted during the thirteen weeks ended June 28, 2015 related to executive separation agreements, which were charged to expense during fiscal 2015. As of June 28, 2015, approximately $305,000 is included in accrued expenses related to separation payments to be made in RSUs in future periods. Stock Options As of June 28, 2015 , there was $1.4 million of unrecognized compensation expense related to the stock option compensation awards granted under the 2013 Plan. A summary of stock option activity for the thirteen weeks ended June 28, 2015 is as follows: Weighted Weighted Average Average Remaining Stock Exercise Contractual Options Price Life (years) Balance at March 29, 2015 $ Granted — — Forfeited Exercised — — Outstanding awards at June 28, 2015 Exercisable at June 28, 2015 $ Stock options outstanding as of June 28, 2015 had $264,000 of aggregate intrinsic value. Aggregate intrinsic value represents the value of the Company’s stock based on the closing stock price on the last trading day of the fiscal period in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Jun. 28, 2015
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	6. RELATED PARTY TRANSACTIONS Operating Leases and Utility Services A director who is a former executive officer of the Company: · owns one-third of certain entities from which the Company leases certain stores, a production bakery, and warehouses; · owns one-sixth of an entity from which the Company leases its Red Hook, Brooklyn, NY (“Red Hook”) store; and · owns one-sixth of an entity from which the Company obtains utility services for its Red Hook store. Total amounts related to the foregoing included $1.5 million and $1.5 million in cost of sales and $0.4 million and $0.4 million in general and administrative expenses for the thirteen weeks ended June 28, 2015 and June 29, 2014 , respectively. At June 28, 2015 and March 29, 2015, amounts payable to related parties included in accrued expenses were $0 and $0.1 million, respectively, and receivables from related parties of $0.3 million and $0.2 million, respectively, were included in accounts receivable. Executive Separations In connection with the separation of the Company’s then Chief Executive Officer in February 2014, its then Interim Chief Executive Officer in September 2014, and the retirement of an individual who served as a n executive officer in November 2014 (although this individual remains a director) , the Company entered into separation agreements with the departed individuals. Under certain of these agreements, the Company entered into consulting arrangements with the departed individuals and was obligated to provide salary and benefit continuation, which required the payment of cash and the grant of restricted stock units. Under these agreements, the Company paid cash of $1.0 million and $47,000 for the thirteen weeks ended June 28, 2015 and June 29, 2014, respectively. During the thirteen weeks ended June 28, 2015, the Company granted approximately 13,847 restricted stock units with a grant date fair value of approximately $94,000 related to these agreements. No restricted stock units related to these agreements were granted during the thirteen weeks ended June 29, 2014. As June 28, 2015 and March 29, 2015, amounts related to executive separation included in accrued expenses were $1.4 million and $2.4 million, respectively.

INCOME TAXES

INCOME TAXES	3 Months Ended
	Jun. 28, 2015
INCOME TAXES
INCOME TAXES	7. INCOME TAXES The reconciliation of the U.S. statutory rate with the Company’s effective tax rate for the thirteen weeks ended June 28, 2015 is summarized as follows: Thirteen Weeks Ended June 28, June 29, 2015 2014 Federal statutory rate % % Effect of: State income taxes (net of federal tax benefit) Permanent differences Stock compensation — Valuation allowance Effective rate % % As a result of historical net operating losses (“NOLs”), the Company currently provides a full valuation allowance against its net deferred tax assets. For t he thirteen weeks ended J une 28, 2015 and June 29, 2014 , income tax expense was computed at the estimated annual effective rate based on the total estimated annual tax provision which included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets. Based on management’s assessment, the Company has placed a valuation reserve against its deferred tax assets, as it is more likely than not that the Company may not generate sufficient taxable income during the carryforward period to utilize the NOLs. The Company regularly reviews the net deferred tax valuation allowance to determine if available evidence continues to support the position that it is more likely than not that a portion of or the entire deferred tax asset will not be realized in the future. As of June 28, 2015 , management could not conclude that it is more likely than not that the deferred tax assets will be realized. As a result, the Company continues to maintain a full valuation allowance against its deferred tax assets. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future. For more information regarding the Company’s valuation allowance against its deferred tax assets, please see Note 13 to the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended March 29, 2015 . The valuation allowance was $ 116.6 million and $110.8 million as of June 28, 2015 and March 29, 2015 , respectively.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Jun. 28, 2015
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	8. COMMITMENTS AND CONTINGENCIES Operating Leases The Company occupies premises pursuant to non-cancelable lease agreements, including the lease agreements with related parties as described in Note 6, which expire at various times through 2039. Required rent payments under lease agreements with related parties increase annually by either 50% of the percentage increase in the consumer price index or by the percentage increase in the consumer price index of up to 5% , except for certain lease years when the rent is determined by arbitration . Lease agreements with non-related parties include various escalation clauses. The Company has signed certain leases for which the Company’s obligation is not yet established because the Company does not yet have possession of the site. The aggregate minimum rental commitments under all operating leases, for which the Company has possession, as of June 28, 2015 are as follows for the fiscal years ending (in thousands): April 3, 2016 $ April 2, 2017 April 1, 2018 March 31, 2019 March 29, 2020 Thereafter $ Rent expense for the thirteen weeks ended June 28, 2015 and June 29, 2014 was approximately $11.2 million and $10.2 million , respectively. During the thirteen weeks ended June 28, 2015, the Company entered into an agreement terminating its lease of a site in the new Hudson Yards development in west midtown Manhattan where the Company had expected to open a store in late calendar 2015 or early calendar 2016. In connection with the lease termination, the Company recorded a charge of $3.7 million during the thirteen weeks ended June 28, 2015, which has been included in general and administrative expenses. The amount recorded includes $3.5 million paid in cash to the landlord , of which $0.5 million was paid during the thirteen weeks ended June 28, 2015 and the remainder was paid in July 2015, and the impairment of $0.2 million of previously capitalized investments in the store site. The $3.0 million that was paid in July 2015 has been included in accrued expenses as of June 28, 2015. Other Contingencies The Company obtains its utility services for the Red Hook store from an entity which is one sixth owned by an individual who is a Company director and former executive officer. The Company believes that the entity has overcharged for utilities since its initial occupancy of the premises. Since November 2008, with the exception of the post-Hurricane Sandy period through fiscal 2014, when the Company received utilities from the local utility provider because the co-generation plant was not operational, the Company has taken deductions from the utility invoices based on the methodology that the Company believes represents the parties’ original intentions with respect to the utility calculations. The Company believes that it will be successful in negotiating an amicable resolution of this matter between the parties. The Company also believes that the resolution of this matter will not have a material adverse effect on its financial condition and results of operations. In February and March 2014, three purported securities class action lawsuits alleging the violation of the federal securities laws were filed in the United States District Court for the Southern District of New York against the Company and certain of the Company’s current and former officers and directors and the underwriters for the Company’s initial public offering. The actions were consolidated on June 3, 2014 under the caption In re Fairway Group Holdings Corp. Securities Litigation , No. 14-cv-0950. On July 18, 2014, an amended class action complaint was filed, adding affiliates of Sterling as defendants. The complaint seeks unspecified damages and alleges misleading statements in the registration statement and prospectus for the Company’s initial public offering and in subsequent communications regarding the Company’s business and financial results. On September 5, 2014, the Company and the other defendants moved to dismiss the amended class action complaint. On January 20, 2015, the Magistrate appointed by the district judge to whom the case was assigned to review the motions and make a recommendation to the judge recommended that the Company’s and the other defendants’ motion to dismiss be granted in part and denied in part. The Company filed an objection to the Magistrate’s recommendation. In March 2015, the district judge to whom the case was assigned notified the plaintiffs and defendants to refile the complaint and motion to dismiss in light of a recent decision of the Supreme Court. All revised filings have been filed with the court. Although the Company believes the claims are without merit and intends to defend this lawsuit vigorously, the Company cannot predict the outcome of this lawsuit. In April 2014, a purported stockholder derivative action was filed against certain of the Company’s directors in New York state court, asserting claims for breach of fiduciary duties and gross mismanagement based on substantially similar allegations as in the securities class action. In June 2014, the Company and the other defendants moved to dismiss the derivative complaint. On July 30, 2014, plaintiffs filed an amended complaint, adding affiliates of Sterling as defendants and asserting claims against them for breach of fiduciary duty and unjust enrichment. On September 29, 2014, the Company and the other defendants moved to dismiss the amended derivative complaint. On November 10, 2014, the court granted the Company’s and the other defendants’ motion to dismiss on the grounds that under the Company’s certificate of incorporation the derivative action must be brought in the State of Delaware. On June 18, 2015, the court denied the plaintiffs’ motion for reconsideration. The plaintiffs’ appeal brief is due by September 14, 2015. A similar case was filed in the Delaware Chancery Court in February 2015, and the Company and the other defendants have moved to dismiss this case as well. Although the Company believes the claims are without merit and intends to defe nd these lawsuits vigorously, the Company cannot predict the outcome of these lawsuits. The Company, from time to time, is and may be subject to legal proceedings and claims which arise in the ordinary course of its business. The Company has not accrued any amounts in connection with these uncertainties, including those discussed above as the Company has determined that losses from these uncertainties are not probable. For all matters, including unasserted claims, where a loss is reasonably possible, the aggregate range of estimated losses is not material to the financial position, results of operations, liquidity or cash flows of the Company. Regardless of the outcome, these matters or future litigation may require significant attention from management and could result in significant legal expenses, settlement costs or damage awards that could have a material impact on the Company’s financial position, results of operations and cash flows.

RECENTLY ISSUED ACCOUNTING STAN

RECENTLY ISSUED ACCOUNTING STANDARDS	3 Months Ended
	Jun. 28, 2015
RECENT ISSUED ACCOUNTING STANDARDS
RECENT ISSUED ACCOUNTING STANDARDS	9. RECENTLY ISSUED ACCOUNTING STANDARDS The Company does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 amends existing revenue recognition requirements and provides a new comprehensive revenue recognition model requiring entities to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company does not expect this adoption to have a material impact on its financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. ASU 2014-15 is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect this adoption to have a material impact on its financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 amends existing requirements for debt issuance costs, requiring entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015, and requires retrospective application. Early adoption is permitted for financial statements that have not been previously issued. The Company does not expect this adoption to have a material impact on its financial statements. In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement . ASU 2015-05 provides clarification about a customer’s accounting for fees paid in a cloud computing arrangement, and provides guidance to customers about whether a cloud computing arrangement includes a software license, and the portion of the arrangement that should be accounted for as a service contract. ASU 2015-05 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015 and may be applied either prospectively or retrospectively, and early adoption is permitted. The Company does not expect this adoption to have a material impact on its financial statements.

NET LOSS PER COMMON SHARE (Tabl

NET LOSS PER COMMON SHARE (Tables)	3 Months Ended
	Jun. 28, 2015
NET LOSS PER COMMON SHARE
Summary of share amounts (in thousands) used in computing earnings per share	The following table is a summary of the share amounts (in thousands) used in computing basic and diluted earnings per share and anti-dilutive shares excluded from the computation: Thirteen Weeks Ended June 28, June 29, 2015 2014 Weighted average shares outstanding - basic and diluted Anti-dilutive securities excluded from diluted loss per share computation: Options — Unvested restricted stock Restricted stock units Total anti-dilutive securities

LONG-TERM DEBT (Tables)

LONG-TERM DEBT (Tables)	3 Months Ended
	Jun. 28, 2015
LONG-TERM DEBT
Summary of long-term debt	A summary of long-term debt is as follows (in thousands): June 28, March 29, 2015 2015 Credit facility, gross $ $ Less unamortized discount Credit facility, net Less current maturities Long-term debt, net of current maturities $ $
Summary of interest expense	A summary of interest expense is as follows (in thousands): Thirteen Weeks Ended June 28, June 29, 2015 2014 Interest on senior credit facility $ $ Amortization of original issue discount Amortization of deferred financing fees Other interest (income) expense, net Total $ $ Effective interest rate on senior credit facility

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Jun. 28, 2015
2007 Equity Compensation Plan | Unvested restricted stock
EQUITY COMPENSATION PLAN AND COMMON STOCK
Summary of status of the Company's unvested restricted stock grants	Weighted Restricted Average Grant Stock Date Fair Value Outstanding unvested awards at March 29, 2015 $ Granted — — Vested Forfeited — — Outstanding unvested awards at June 28, 2015 $
2013 Long-Term Incentive Plan | Restricted stock units
EQUITY COMPENSATION PLAN AND COMMON STOCK
Summary of status of the Company's unvested restricted stock grants	Weighted Restricted Average Grant Stock Units Date Fair Value Outstanding unvested awards at March 29, 2015 $ Granted Forfeited Vested Outstanding unvested awards at June 28, 2015 $
2013 Long-Term Incentive Plan | Stock options
EQUITY COMPENSATION PLAN AND COMMON STOCK
Summary of stock option activity	Weighted Weighted Average Average Remaining Stock Exercise Contractual Options Price Life (years) Balance at March 29, 2015 $ Granted — — Forfeited Exercised — — Outstanding awards at June 28, 2015 Exercisable at June 28, 2015 $

INCOME TAXES (Tables)

INCOME TAXES (Tables)	3 Months Ended
	Jun. 28, 2015
INCOME TAXES
Schedule of reconciliation of the U.S. statutory rate with the Company's effective tax rate	Thirteen Weeks Ended June 28, June 29, 2015 2014 Federal statutory rate % % Effect of: State income taxes (net of federal tax benefit) Permanent differences Stock compensation — Valuation allowance Effective rate % %

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	3 Months Ended
	Jun. 28, 2015
COMMITMENTS AND CONTINGENCIES
Schedule of aggregate minimum rental commitments under all operating leases	The aggregate minimum rental commitments under all operating leases, for which the Company has possession, as of June 28, 2015 are as follows for the fiscal years ending (in thousands): April 3, 2016 $ April 2, 2017 April 1, 2018 March 31, 2019 March 29, 2020 Thereafter $

DESCRIPTION OF BUSINESS AND O21

DESCRIPTION OF BUSINESS AND ORGANIZATION (Details)	3 Months Ended	9 Months Ended
	Jun. 28, 2015segmentstore	Mar. 29, 2015store	Mar. 30, 2014locationstore
DESCRIPTION OF BUSINESS AND ORGANIZATION
Number of stores operated	15
Number of stores which include integrated Fairway Wine & Spirits stores	4
Number of stores opened prior to April 1, 2013			14
Number of wine & spirits locations | location			3
Number of stores opened during the period		1
Fourth wine and spirits location		4
Number of reportable segments | segment	1

NET LOSS PER COMMON SHARE (Deta

NET LOSS PER COMMON SHARE (Details) - shares shares in Thousands	3 Months Ended
	Jun. 28, 2015	Jun. 29, 2014
Net Loss Per Common Share
Weighted average shares outstanding - basic and diluted (in shares)	43,787	43,357
Total anti-dilutive securities	1,269	97
Common Stock
Net Loss Per Common Share
Weighted average shares outstanding - basic and diluted (in shares)	43,787	43,357
Options | Class A Common Stock
Net Loss Per Common Share
Total anti-dilutive securities	70
Unvested restricted stock | Class A Common Stock
Net Loss Per Common Share
Total anti-dilutive securities	7	41
Restricted stock units | Class A Common Stock
Net Loss Per Common Share
Total anti-dilutive securities	1,191	56

LONG-TERM DEBT - Debt Summary (

LONG-TERM DEBT - Debt Summary (Details) - USD ($)	3 Months Ended
	Jun. 28, 2015	Jun. 29, 2014	Mar. 29, 2015
Long-term debt
Less current maturities	$ (2,750,000)		$ (2,750,000)
Long-term debt, net of current maturities	254,497,000		254,336,000
Interest expense
Interest on senior credit facility	3,753,000	$ 3,727,000
Amortization of original issue discount	849,000	838,000
Amortization of deferred financing fees	437,000	438,000
Other interest (income) expense, net	(184,000)	(225,000)
Total	$ 4,855,000	$ 4,778,000
Effective interest rate on senior credit facility	7.80%	7.80%
Interest Costs Capitalized	$ 228,000	$ 221,000
2013 Senior Credit Facility
Long-term debt
Credit facility, gross	268,125,000		268,813,000
Less unamortized discount	(10,878,000)		(11,727,000)
Credit facility, net	257,247,000		257,086,000
Less current maturities	(2,750,000)		(2,750,000)
Long-term debt, net of current maturities	$ 254,497,000		$ 254,336,000

LONG-TERM DEBT - Covenants (Det

LONG-TERM DEBT - Covenants (Details)	1 Months Ended	3 Months Ended
	Feb. 28, 2013USD ($)	Jun. 28, 2015USD ($)	Jun. 29, 2014USD ($)
Long-Term Debt
Accrued interest paid		$ 3,530,000	$ 3,500,000
Amount of letters of credit outstanding		$ 29,600,000
2013 Senior Credit Facility
Long-Term Debt
Percentage of net cash proceeds of asset sales or other dispositions of property by the entity and certain of its subsidiaries (subject to certain exceptions and reinvestment provisions) to be used for mandatory prepayments under facility		100.00%
Percentage of net cash proceeds from issuances, offerings or placements of debt obligations to be used for mandatory prepayments under facility		100.00%
Availability under the facility		$ 7,400,000
Amount of letters of credit outstanding		$ 3,000,000
2013 Senior Credit Facility | Adjusted LIBOR
Long-Term Debt
Reference rate		adjusted LIBOR
Floor interest rate for reference rate (as a percent)		1.00%
Interest rate margin (as a percent)		4.00%
Interest payment period		3 months
Percentage reduction in interest rate margins		0.50%
2013 Senior Credit Facility | Alternate base rate
Long-Term Debt
Reference rate		alternate base rate
Interest rate margin (as a percent)		3.00%
Percentage reduction in interest rate margins		0.50%
2013 Senior Credit Facility | Leverage ratio greater than or equal to 5.0:1.0
Long-Term Debt
Percentage of adjusted excess cash flow to be used for mandatory prepayments under facility		50.00%
2013 Senior Credit Facility | Leverage ratio greater than or equal to 5.0:1.0 | Minimum
Long-Term Debt
Leverage ratio used to determine mandatory prepayments under credit facility		5
2013 Senior Credit Facility | Leverage ratio less than 5.0:1.0 and greater than or equal to 4.0:1.0
Long-Term Debt
Percentage of adjusted excess cash flow to be used for mandatory prepayments under facility		25.00%
2013 Senior Credit Facility | Leverage ratio less than 4.0:1.0
Long-Term Debt
Percentage of adjusted excess cash flow to be used for mandatory prepayments under facility		0.00%
2013 Senior Credit Facility | Leverage ratio less than 4.0:1.0 | Maximum
Long-Term Debt
Leverage ratio used to determine mandatory prepayments under credit facility		4
2013 Term Facility
Long-Term Debt
Face amount	$ 275,000,000
2013 Revolving Facility
Long-Term Debt
Maximum borrowing capacity	40,000,000
Quarterly fee payable on the undrawn portion of facility (as a percent)		1.00%
Period for calculating quarterly fee payable on undrawn portion of facility		360 days
Availability under the facility		$ 10,400,000
Letter of credit sub-facility
Long-Term Debt
Maximum borrowing capacity	40,000,000
2012 senior credit facility
Long-Term Debt
Repayment of outstanding borrowings	$ 264,500,000

STOCK-BASED COMPENSATION - Allo

STOCK-BASED COMPENSATION - Allocated Compensation Expense (Details) - General and administrative expenses - USD ($) $ in Thousands	3 Months Ended
	Jun. 28, 2015	Jun. 30, 2014	Jun. 29, 2014
EQUITY COMPENSATION PLAN AND COMMON STOCK
Non-cash stock based compensation expense	$ 2,400		$ 2,900
Restricted stock units | Certain Directors
EQUITY COMPENSATION PLAN AND COMMON STOCK
Non-cash stock based compensation expense		$ 96,000
Restricted stock units | Executive Chairman
EQUITY COMPENSATION PLAN AND COMMON STOCK
Non-cash stock based compensation expense		41,000
Restricted stock units | Executive officer
EQUITY COMPENSATION PLAN AND COMMON STOCK
Non-cash stock based compensation expense		$ 187,500

STOCK-BASED COMPENSATION - Rest

STOCK-BASED COMPENSATION - Restricted Stock and Units (Details) - Jun. 28, 2015 - Title Of Individual With Relationship To Entity [Domain] - USD ($)	Total
2007 Equity Compensation Plan | Unvested restricted stock
EQUITY COMPENSATION PLAN AND COMMON STOCK
Unrecognized compensation expense	$ 47,000
Shares
Outstanding unvested awards at the beginning of the period (in shares)	15,573
Vested (in shares)	(7,786)
Outstanding unvested awards at the end of the period (in shares)	7,787
Weighted Average Grant Date Fair Value
Outstanding unvested awards at the beginning of the period (in dollars per share)	$ 7.81
Vested (in dollars per share)	7.81
Outstanding unvested awards at the end of the period (in dollars per share)	$ 7.81
2013 Long-Term Incentive Plan | Restricted stock units
EQUITY COMPENSATION PLAN AND COMMON STOCK
Unrecognized compensation expense	$ 10,700,000
Shares
Outstanding unvested awards at the beginning of the period (in shares)	3,195,624
Granted (in shares)	248,347
Vested (in shares)	(258,593)
Forfeited (in shares)	(28,668)
Outstanding unvested awards at the end of the period (in shares)	3,156,710
Weighted Average Grant Date Fair Value
Outstanding unvested awards at the beginning of the period (in dollars per share)	$ 8.26
Granted (in dollars per share)	4.84
Vested (in dollars per share)	10.87
Forfeited (in dollars per share)	13.44
Outstanding unvested awards at the end of the period (in dollars per share)	$ 7.73

STOCK-BASED COMPENSATION - 2013

STOCK-BASED COMPENSATION - 2013 Plan Options Activity (Details) - USD ($)	3 Months Ended		12 Months Ended
	Jun. 28, 2015	Jun. 29, 2014	Mar. 29, 2015
Separation Agreement
Other disclosures
Amounts related to executive separation included in accrued expenses	$ 1,400,000		$ 2,400,000
Restricted stock units | Separation Agreement
Other disclosures
Amounts related to executive separation included in accrued expenses	305,000
2013 Long-Term Incentive Plan | Stock options
Options
Unrecognized compensation expense	$ 1,400,000
Outstanding unvested awards at the beginning of the period (in shares)	878,722
Forfeited (in shares)	(36,955)
Outstanding unvested awards at the end of the period (in shares)	841,767		878,722
Weighted Average exercise price
Outstanding unvested awards at the beginning of the period (in dollars per share)	$ 9.65
Forfeited (in dollars per share)	15.01
Outstanding unvested awards at the end of the period (in dollars per share)	9.42		$ 9.65
Exercisable at end of period (in dollars per share)	$ 13.18
Weighted average remaining contractual life (years)
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2	8 years 7 months 6 days
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2	8 years 7 months 6 days
Exercisable at end of period	8 years
Other disclosures
Intrinsic value, outstanding unvested awards at the end of the period (in dollars)	$ 0
Exercisable at end of period (in shares)	237,128
2013 Long-Term Incentive Plan | Restricted stock units
Other disclosures
Restricted units granted during the period in relation to agreement (in units)	248,347
Director and executive officer | Restricted stock units | Separation Agreement
Other disclosures
Restricted units granted during the period in relation to agreement (in units)	13,847
Restricted units granted during the period related to agreement	$ 94,000	$ 0

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		12 Months Ended
	Jun. 28, 2015	Jun. 29, 2014	Mar. 29, 2015
Related party transactions
Cost of sales	$ 1,500,000	$ 1,500,000
General and Administrative Expenses	400,000	400,000
Amount due to related party included in accrued expenses	0		$ 100,000
Related party receivables	$ 300,000		200,000
Operating Leases | Entity owned by an individual who is a Company director and executive officer | Director and executive officer | Red Hook store facility
Related party transactions
Ownership interest in an affiliated entity held by related party (as a percent)	16.67%
Operating Leases | Entity owned by an individual who is a Company director and executive officer | Director and executive officer | Property that houses the production bakery and the cheese and dried fruits and nuts warehouses
Related party transactions
Ownership interest in an affiliated entity held by related party (as a percent)	33.33%
Utility Services | Director and executive officer | Red Hook store facility
Related party transactions
Ownership interest in an affiliated entity held by related party (as a percent)	16.67%
Utility Services | Entity owned by an individual who is a Company director and executive officer | Director and executive officer | Red Hook store facility
Related party transactions
Ownership interest in an affiliated entity held by related party (as a percent)	16.67%
Separation Agreement
Related party transactions
Amounts related to executive separation included in accrued expenses	$ 1,400,000		$ 2,400,000
Separation Agreement | Director and executive officer
Related party transactions
Salary and benefit continuation paid	1,000,000	47,000
Restricted stock units | Separation Agreement
Related party transactions
Amounts related to executive separation included in accrued expenses	$ 305,000
Restricted stock units | Separation Agreement | Director and executive officer
Related party transactions
Restricted units granted during the period in relation to agreement (in units)	13,847
Restricted units granted during the period related to agreement	$ 94,000	$ 0

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 28, 2015	Jun. 29, 2014	Mar. 29, 2015
INCOME TAXES
Federal statutory rate (as a percent)	34.00%	34.00%
Effect of:
State income taxes (net of federal tax benefit) (as a percent)	6.80%	8.70%
Permanent differences (as a percent)	(2.00%)	(0.40%)
Stock compensation (as a percent)	(8.00%)
Valuation Allowance (as a percent)	(49.10%)	(53.10%)
Effective rate (as a percent)	(18.30%)	(10.80%)
Valuation allowance	$ 116.6		$ 110.8

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Jul. 31, 2015	Jun. 28, 2015	Jun. 29, 2014
Annual increase in rent under lease agreements with related parties as a percentage of increase in the consumer price index		50.00%
Maximum annual increase in rent under lease agreements with related party as a percentage increase in the consumer price index		5.00%
Aggregate minimum rental commitments under all operating leases
April 3, 2016		$ 29,449
April 2, 2017		38,989
April 1, 2018		37,306
March 31, 2019		37,474
March 29, 2020		37,970
Thereafter		590,068
Total		771,256
Rent expense
Rent expense		11,200	$ 10,200
Hudson Yards, Midtown Manhattan
Rent expense
Loss on contract termination		3,700
Aggregate amount of lease termination charges to be paid in cash		3,500
Impairment of previously capitalized investments		$ 200
Amount of lease termination charges paid in cash	$ 3,000
Utility Services | Red Hook store facility | Director and executive officer
Other Contingencies
Ownership interest in an affiliated entity held by related party (as a percent)		16.67%

COMMITMENTS AND CONTINGENCIES31

COMMITMENTS AND CONTINGENCIES - Other Contingencies (Details)	2 Months Ended
	Mar. 30, 2014lawsuit
Securities Class Actions, United States District Court Southern District of New York
Other Contingencies
Number of lawsuits filed	3