Market Overview

Fred's October Total Sales Increase 13% While Comparable Store Sales Increase 2.3%

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MEMPHIS, Tenn.--(BUSINESS WIRE)--

Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week fiscal month of October, third quarter and nine-month year-to-date period ended October 31, 2015.

Fred's total sales for the month increased 13% to $164.4 million from $145.4 million in October 2014. Excluding $4.5 million from last year's October sales related to 47 subsequently closed locations, total sales increased 17% for the month. Comparable store sales for the month rose 2.3% compared with a decline of 1.4% in the year-earlier period.

Total sales for the third quarter of 2015 were $541.2 million, up 14% from $476.2 million in the same period last year. Excluding sales of $16.2 million from stores closed mainly in late 2014, total sales increased 18% for the third quarter of 2015. Comparable store sales for the quarter increased 2.7% on top of an increase of 0.3% in the third quarter of 2013.

Fred's total sales for the first nine months of 2015 increased 9% to $1.596 billion from $1.466 billion for the same period last year. Excluding sales of $55.8 million from stores closed mainly in late 2014, total sales increased 13% for the first nine months of 2015. On a comparable store basis, year-to-date sales increased 1.5% versus a decline of 0.5% for the year-earlier period.

Commenting on the announcement, Jerry A. Shore, Chief Executive Officer, said, "We are pleased to report that comparable store sales growth for October tracked with our expectations. These results reflected continued strong top-line growth in our retail and specialty pharmacy departments and ongoing positive trends in general merchandise sales, with a balanced mix across all categories. Halloween sales were a key driver of general merchandise performance in October.

"Looking at the third quarter for a broader perspective, we saw clear momentum throughout all lines of business," Shore continued. "Specialty pharmacy sales of EntrustRx drove the strong total sales increase, while retail pharmacy department sales and scripts improved over the second quarter as we continue to implement the initiatives developed by our internal resources and A. T. Kearney. The positive general merchandise comparable sales for the quarter reflected the ongoing implementation of initiatives and improving alignment of pharmacy, merchandising, supply chain, and operations.

"We remain encouraged by this momentum and how Fred's is positioned for the upcoming holidays," Shore added. "These factors underscore the efforts we continue to make throughout the Company to optimize our operations. Based on this work, the progress we have seen, and the opportunities ahead, we have confidence that Fred's will continue to post solid sales growth and a stronger financial performance going forward."

Fred's, Inc. and subsidiaries operate 658 discount general merchandise stores and three specialty pharmacy-only locations in 15 states in the southeastern United States. Included in the store count are 19 franchised locations. Also, there are 374 full service pharmacy departments located within the Company's stores. 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. A reader can identify forward-looking statements because they are not limited to historical facts or they use such words as "outlook," "guidance," "may," "should," "could," "believe," "anticipate," "plan," "expect," "estimate," "forecast," "goal," "intend," "committed," "continue," or "will likely result" and similar expressions that concern the Company's strategy, plans, intentions or beliefs about future occurrences or results. These risks and uncertainties include, but are not limited to, those associated with the Company's announced strategic plan, the ultimate terms of the reworked pharmacy distribution agreement, lease buyouts and the underlying assumptions and projections upon which they are based, as well as risks that intended results may not be achieved or may not occur as quickly as expected; the success of announced acquisition activities and future growth trends in businesses acquired; 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 the factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and any subsequent quarterly filings on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made. 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.

Fred's Inc.
Jerry A. Shore, 901-362-3733, Ext. 2217
Chief Executive Officer

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