Fred's Reports December Sales Results (0.4%); Sees Q4 EPS at Low-Midpoint of Prior View

Fred's Inc.

today reported sales for the five-week fiscal month and 11-month year-to-date period ended December 31, 2011. Fred's total sales for the month increased 1% to $213.0 million from $210.5 million in December 2010. Comparable store sales for the month declined 0.4% compared with an increase of 0.2% in the same period last year. Fred's total sales for the year-to-date period increased 2% to $1.747 billion compared with $1.713 billion in the same period last year. On a comparable store basis, year-to-date sales increased 0.7% on top of an increase of 2.2% in the same period last year. Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "December sales were affected significantly by unseasonably warm weather throughout the month. Sales in areas such as heaters, softlines, automotive, and healthcare products reduced overall comparable store sales by more than 200 basis points as our customers typically purchase these products as needed. We expect a recovery in these product sales as colder weather returns over the next few months. December sales remained strong in several areas, most notably in Pet, Household Supplies and Pharmacy – three of our Core 5 departments. Even though overall sales did not hit expectations for the month, we continued to control markdowns and operating expenses and now expect earnings for the fourth quarter to be at the low to midpoint of our projected range $0.23 to $.027 per diluted share."