Market Overview

Fred's Reports April Sales


Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week fiscal month of April and the first quarter of fiscal 2016 that ended on April 30, 2016.

Fred's total sales for the month increased 1% to $163.4 million from $162.2 million in April 2015 as the Company lapped the April 2015 acquisition of EntrustRx specialty pharmacy. Comparable store sales for the month rose 0.3% versus an increase of 0.7% for the year-earlier period.

Fred's total sales for the first three months of fiscal 2016 increased 8% to $549.0 million compared with $509.0 million for the same period last year. On a comparable store basis, year-to-date sales increased 1.0% versus an increase of 0.8% for the year-earlier period.

Commenting on the announcement, Jerry A. Shore, Chief Executive Officer, said, "First quarter total sales and comparable store sales were at the low end of our guidance, primarily as a result of lower-than-anticipated average script price on pharmaceuticals and the impact of severe weather on the front of the store, especially in April. Despite heavy rains and flooding in many of our core markets, Fred's April sales reflected a good mix across most product departments, continuing a trend we have observed since mid-2015. We also witnessed ongoing improvements in health, beauty, personal care, and most hardline departments as comparable store sales for general merchandise remained positive in April. In the pharmacy department, we were pleased to see the best comparable script increase of the year as our traffic-driving initiatives continue to gain traction, especially with the marketing advantages of 90-day scripts.

"With the completion of the first quarter, we are pleased with the progress being made throughout the Company," Shore continued. "We remain on target with the implementation of several important initiatives, including those involving healthcare services, product assortment, store remodels, and technology upgrades, and we continue to see improvement in general merchandise gross margins and all-company operating expense control. Accordingly, we expect that earnings, which we will announce on May 26, 2016, will be within our guidance range for the first quarter."

During April, Fred's opened one full service location and closed one Xpress pharmacy location.

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

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.
Rick Hans, 901-362-3733, Ext. 2232
Executive Vice President and Chief Financial Officer

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