Fred's Reports Solid Total Sales for October
Fred's, Inc. (NASDAQ: FRED) today reported sales for the four-week fiscal month, third quarter and nine-month year-to-date period ended October 27, 2012.
Fred's total sales for the month increased 3% to $140.0 million from $136.2 million in October 2011. Comparable store sales for the month declined 0.8% versus an increase of 2.0% in the same period last year.
Total sales for the third quarter of 2012 were $450.6 million, up 1% from $444.4 million in the same period last year. Comparable store sales for the quarter declined 2.5% compared with an increase of 1.5% in the third quarter of 2011.
Fred's total sales for the year-to-date period increased 3% to $1.422 billion compared with $1.381 billion for the same period last year. On a comparable store basis, year-to-date sales declined 0.8% versus an increase of 0.7% in the same period last year.
Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "We were pleased with the response to our increased marketing initiatives that began in October, resulting in positive customer traffic and higher general merchandising comparable store sales. One of our key end-of-year programs was the initiation of a $1 down holiday season layaway program, which dramatically increased layaway sales during the month. However, since layaway sales are not recognized for accounting purposes until final payments are made, the benefit of increased layaway sales, which would have added 150 basis points to total and comparable store sales in October, will be deferred until the fourth quarter. Also, we continued to see growth in script counts in our pharmacy department during October, but this was more than offset by the sales impact of the ongoing brand-name-to-generic conversion. The effect of this shift on total and comparable store sales was 250 basis points in October.
"As we reach the end of the third quarter, we now expect earnings per share to be in the range of $0.18 to $0.23 for the quarter," Efird added. "The reduction in expected earnings from prior estimates reflects the incremental shift in layaway sales, unfavorable LIFO expense charges in the quarter and a single-event increase in insurance reserves, with a combined impact of $0.03 to $0.05 in earnings per share for the quarter. However, with the implementation of several key new merchandising and marketing initiatives in the fourth quarter and the positive impact of the forward shifting of layaway sales and earnings, we continue to project a double-digit earnings per share improvement for 2012, with full-year earnings per share now expected to be in the range of $0.96 to $1.02."
During the month, Fred's opened three stores and one express pharmacy location and closed one store.
Fred's, Inc. operates 708 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States. For more information about the Company, visit Fred's website at www.fredsinc.com.
Comments in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, general economic trends, changes in consumer demand or purchase patterns, delays or interruptions in the flow of merchandise between the Company's distribution centers and its stores or between the Company's suppliers and same, a disruption in the Company's data processing services, costs and delays in acquiring or developing new store sites, and other contingencies discussed in the Company's Securities and Exchange Commission filings. Fred's undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.
Jerry A. Shore, 901-362-3733, Ext. 2217
Executive Vice President and
Chief Financial Officer