Fred's Increases Quarterly Cash Dividend 20%, Expands Existing Share Repurchase Program by 3.6 Million Shares

Fred's, Inc.

today announced two important measures that further the Company's efforts to enhance shareholder value. Fred's Board of Directors has increased the Company's quarterly cash dividend 20% to $0.06 per share from the previous rate of $0.05 per share. The dividend is payable on March 15, 2012, to shareholders of record as of March 1, 2012. Fred's Board also authorized the expansion of the Company's existing stock repurchase program by increasing the authorization to repurchase an additional 3.6 million shares or approximately 10% of the currently outstanding shares.