Market Overview

Fred's Pharmacy Reports February Sales


Fred's Inc. ("Fred's Pharmacy" or "the Company") (NASDAQ:FRED) today
reported sales for the four-week fiscal month of February, the first
month of fiscal 2017, which ended February 25, 2017.

Fred's total sales for the month decreased 3.5% year-over-year to $165.4
million from $171.4 million in February 2016. Total comparable store
sales for the month declined 4.0% compared with a 0.8% increase in
comparable sales in the prior year period.

Commenting on the announcement, Michael K. Bloom, Chief Executive
Officer, said, "Despite the tax refund delay impacting a significant
percentage of our customer base and our front of store sales, we are
pleased with the progress we are making against our strategic plan,
demonstrated by our continued improvement in Retail and Specialty
Pharmacy. This is an affirmation that our healthcare strategy is
working. Notably, comparable store sales in our overall Pharmacy
business were strong in the month, driven by positive adjusted
prescription comparisons."

Mr. Bloom continued, "Progress against our strategic plan in the front
of store was offset in February by the significant delay of individual
tax refunds, which are down approximately 13% year-over-year.1
However, comparable sales in our front of store improved in the last
week of February as individual refunds were received by customers.
Looking ahead to March and the remainder of the first quarter, we expect
customer spending will continue to increase as tax refunds are received.

"We continue to execute on our strategic initiatives aimed at providing
healthcare services and value merchandise in the markets we serve. We
remain confident in our long-term transformational strategy to
capitalize on the opportunity to grow sales and enhance value for our

Fred's Pharmacy and its subsidiaries operate 643 discount general
merchandise stores and three specialty pharmacy-only locations in 15
states in the southeastern United States. Included in the store count
are 14 franchised locations. Also, there are 354 full service pharmacy
departments located within Fred's stores, including one franchised
location. For more information about the Company, visit Fred's website

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.

1 Based on data released by the U.S. Department of Treasury
as of Friday, February 24, 2017.

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