Market Overview

Fred's December Total Sales Increase 10% While Comparable Store Sales Increase 2.4%

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

Fred's Inc. (NASDAQ: FRED) today reported sales for the five-week fiscal month of December and the 11-month year-to-date period ended January 2, 2016.

Fred's total sales for the month increased 10% to $231.9 million from $210.7 million in December 2014. Excluding $8.0 million from last year's December sales related to 47 subsequently closed locations, total sales increased 14% for the month. Comparable store sales for the month rose 2.4% compared with a decline of 1.4% in the year-earlier period.

Fred's total sales for the first 11 months of 2015 increased 9% to $1.994 billion from $1.830 billion for the same period last year. Excluding sales of $71.7 million from stores closed mainly in late 2014, total sales increased 13% for the first 11 months of 2015. On a comparable store basis, year-to-date sales increased 1.5% versus a decline of 1.0% for the year-earlier period.

Commenting on the announcement, Jerry A. Shore, Chief Executive Officer, said, "We are pleased to report solid sales results for December, which reflected the success of our merchandising programs designed for the holiday season and, in the case of total sales, recent growth in our specialty pharmacy department. December comparable store sales were driven by strong general merchandise department sales, with increases in holiday gift-giving categories as well as continued balance in our sales mix across all categories. On the other hand, comparable sales for our retail pharmacy department were negatively affected in December by a very low incidence of cold and flu activity, which reduced December overall comparable store sales by approximately 125 basis points.

"As we enter the last month of fiscal 2015 and move into 2016, we do so with confidence built on the successful programs and process improvements we made during this past year," Shore continued. "Our team is well aligned to extend this success with additional initiatives in the coming year to drive stronger financial returns for fiscal 2016."

Fred's, Inc. and subsidiaries operate 659 discount general merchandise stores and three specialty pharmacy-only locations in 15 states in the southeastern United States. Included in the store count are 18 franchised locations. Also, there are 376 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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