Market Overview

Fred's Pharmacy Reports December Sales


Fred's Inc. ("Fred's Pharmacy" or "the Company") (NASDAQ: FRED) today reported sales for the five-week fiscal month of December and the 11-month year-to-date period ended December 31, 2016.

Fred's Pharmacy's total sales for the month decreased 3.9% to $222.9 million from $232.0 million in December 2015. Comparable store sales for the month declined 3.4% compared with an increase of 2.4% in the year-earlier period.

Fred's Pharmacy's total sales for the year-to-date period decreased 0.8% to $1.978 billion versus $1.994 billion for the same period last year. On a comparable store basis, year-to-date sales declined 2.0% versus an increase of 1.5% for the year-earlier period.

Commenting on the announcement, Michael K. Bloom, Chief Executive Officer, said, "Our Pharmacy department saw a 2% increase in comparable prescription growth in the current month, when adjusted for 90 days' scripts. The Company also reported positive comparable sales in Health and Beauty along with key holiday categories, which posted strong year-over-year growth. However, this wasn't enough to completely overcome headwinds related to the impact of reduced SNAP benefits, competitive promotional activity and unusually warm weather, which had a negative influence on seasonal categories. Looking more broadly at our business, we believe the key marketing and merchandising initiatives we have implemented will drive future sales, traffic and profits, and represent a solid strategic response to the near-term challenges we are currently experiencing. Between the launch of Category Management University, our robust analytics tools that allow us to better track consumer behavior, and numerous other strategies aimed at increasing sales, we remain confident in Fred's long-term prospects."

Fred's Pharmacy and subsidiaries currently operate 647 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 370 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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