Market Overview

Fred's March Total Sales Increase 11%

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

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

Fred's total sales for the month increased 11% to $214.4 million from $193.6 million in March 2015. Comparable store sales for the month rose 1.8% versus an increase of 1.9% for the year-earlier period.

Fred's total sales for the first two months of fiscal 2016 increased 11% to $385.8 million compared with $346.8 million for the same period last year. On a comparable store basis, year-to-date sales increased 1.3% versus an increase of 0.9% for the year-earlier period.

Commenting on the announcement, Jerry A. Shore, Chief Executive Officer, said, "We are pleased to report that total March sales increased at the high end of our guidance, while comparable stores sales came in near the midrange. Much of the total increase can be attributed to the April 2015 acquisition of EntrustRx specialty pharmacy. Next month, we begin cycling the acquisition and in May, total sales comparisons will be normalized. Regarding March comparable store sales, we continued to see progress throughout most areas of our business. Comparable sales were led by the strong performance in general merchandise departments across most categories, especially in health, beauty, personal care, apparel, spring seasonal and Easter holiday merchandise. Our traffic-driving initiatives for the pharmacy department continue to take hold, and for the second consecutive month, comparable scripts and sales were positive.

"We are off to a good start on the many initiatives we laid out in our earnings call last month," Shore continued. "We now have completed 10 store remodels and are pleased with the early results. We continue to roll out several upgrades in technology that will improve sales and margin while reducing expenses. Overall, the positive momentum continues to further enhance the well-being of our customers and generate stronger returns for our shareholders."

Fred's, Inc. and subsidiaries operate 660 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 373 full service pharmacy departments located within Fred's stores, including four franchised locations. 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; cyber-security threats; 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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