Market Overview

Fred's Reports May Sales


Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week fiscal month of May, which ended on May 28, 2016.

Fred's total sales for the month decreased 1% to $164.8 million from $167.2 million in May 2015. Comparable store sales for the month declined 0.4% versus an increase of 0.3% for the year-earlier period.

Fred's total sales for the first four months of fiscal 2016 increased 6% to $714.4 million compared with $676.2 million for the same period last year. On a comparable store basis, year-to-date sales increased 0.7% versus an increase of 0.6% for the year-earlier period.

Commenting on the announcement, Jerry A. Shore, Chief Executive Officer, said, "May comparable store sales were within the range of expectation as outlined last week in our first quarter 2016 earnings press release and conference call. We further note that retail pharmacy experienced growth in both comparable sales and script counts in May, as our marketing efforts began to gain traction. Additionally, in general merchandise, our sales mix remained favorable as higher-margin categories were strong in May.

"As we enter June and the hot summer months ahead, we expect to see a lift in those general merchandise departments that are positively influenced by warm weather, where our broader assortment is a competitive advantage," Shore added. "We also expect that improvements in retail pharmacy script growth will continue as we expand our healthcare marketing and clinical services. Meanwhile, we remain focused on driving all of our initiatives forward and are confident that the investments we are making in our business will help us deliver our expected earnings growth in 2016."

During May, Fred's closed six locations, none of which had a pharmacy department.

Fred's, Inc. and subsidiaries operate 654 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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