Market Overview

Fred's Pharmacy Reports May Sales

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Fred's, Inc. ("Fred's Pharmacy" or the "Company") (NASDAQ:FRED) today
reported sales for the four-week fiscal month of May, which ended May
27, 2017.

Fred's total sales for the month decreased 3.1% year-over-year to $160.1
million from $165.2 million in May 2016. The decrease in sales is
related to the closure of 39 underperforming stores in the first
quarter. Total comparable store sales for the month increased 0.8%
compared with a 0.4% decrease in comparable sales in the prior year
period. Comparable store sales for May included a negative 1.0% impact
as a result of the sale of low productive discontinued inventory versus
May of last year.

Commenting on the announcement, Michael K. Bloom, Chief Executive
Officer, said, "This month we continued to deliver on our 2017 goals and
execute our healthcare transformation. We are pleased with our
performance in the month, with total comparable store sales for May
increasing 0.8% compared with the prior year. We are seeing substantial
momentum in our Retail and Specialty pharmacy businesses, creating
opportunities for growth throughout the Company. In Retail Pharmacy,
adjusted script comps are continuing to trend positively, while in the
Specialty Pharmacy business we are consistently experiencing significant
sales growth. We are confident in the ability of our leadership team and
the entire Fred's Pharmacy team to drive further operational improvement
as we continue to build on the foundation we've laid for future growth
and success."

About Fred's Pharmacy

Tracing its history back to an original store in Coldwater, Mississippi,
opened in 1947, today Fred's Pharmacy is headquartered in Memphis,
Tennessee, and operates 601 pharmacy and general merchandise stores,
including 14 franchised Fred's Pharmacy locations, and three specialty
pharmacy-only locations. With a unique store format and strategy that
combines the best elements of a healthcare-focused drug store with a
value-focused retailer, Fred's Pharmacy stores offer more than 12,000
frequently purchased items that address the healthcare and everyday
needs of its customers and patients. This includes nationally recognized
brands, proprietary Fred's Pharmacy label products, and a full range of
value-priced selections. The Company has two distribution centers, one
in Memphis, Tennessee, and Dublin, Georgia.

On December 20, 2016, the Company announced that it signed an agreement
with Walgreens Boots Alliance, Inc. and Rite Aid to purchase 865 stores
for $950 million in cash. Fred's Pharmacy is working collaboratively
with Walgreens Boots Alliance, Rite Aid and the Federal Trade Commission
("FTC") to help obtain the FTC's approval of Walgreens Boots Alliance's
pending acquisition of Rite Aid and the divestiture of certain Rite Aid
assets to Fred's Pharmacy. Fred's Pharmacy remains committed to
purchasing additional assets, including up to 1,200 Rite Aid stores, to
the extent necessary to obtain the FTC's approval of the transaction.
Completion of the transaction is subject to approval by the FTC, as well
as other customary regulatory approvals and closing conditions.

The proposed acquisition of the stores, which are based in highly
attractive markets, is a transformative event that will add substantial
scale to the Company and transform Fred's Pharmacy, the largest regional
pharmacy player, into an even stronger competitor and the third-largest
drugstore chain in the nation. The transaction will accelerate the
Company's healthcare growth strategy, generating considerable benefits
for our customers, patients, payors, supplier partners, team members and
shareholders.

For more information about the Company, visit Fred's website at www.fredsinc.com.

Forward-Looking Statements

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. The words "outlook", "guidance", "may",
"should", "could", "believe", "anticipate", "project", "plan", "expect",
"estimate", "objective", "forecast", "goal", "intend", "will likely
result", or "will continue" and similar expressions generally identify
forward-looking statements. All forward-looking statements are
inherently uncertain, and concern matters that involve risks and other
factors that may cause the actual performance of the Company to differ
materially from the performance expressed or implied by these
statements. Therefore, forward-looking statements should be evaluated in
the context of these uncertainties and risks, including but not limited
to the competitive nature of the industries in which we operate; the
implementation of our strategic plan, and its impact on our sales, costs
and operations; utilizing our existing and new stores and increasing our
pharmacy department presence in new and existing stores; our reliance on
a single supplier of pharmaceutical products; our pharmaceutical drug
pricing; reimbursement rates and the terms of our agreements with
pharmacy benefit management companies; our private brands; the
seasonality of our business and the impact of adverse weather
conditions; operational difficulties; merchandise supply and pricing;
consumer demand and product mix; delayed openings and operating new
stores and distribution facilities; our employees; risks relating to
payment processing; our computer system, and the processes supported by
our information technology infrastructure; our ability to protect the
person information of our customers and employees; cyber-attacks;
changes in governmental regulations; the outcome of legal proceedings,
including claims of product liability; insurance costs; tax assessments
and unclaimed property audits; current economic conditions; changes in
third-party reimbursements; the terms of our existing and future
indebtedness; our acquisitions and the ability to effectively integrate
businesses that we acquire, including risks related to the possibility
that transactions may not close, including because one or more closing
conditions to such transactions, including certain regulatory approvals,
may not be satisfied or waived, on a timely basis or otherwise,
including that a governmental entity may prohibit, delay or refuse to
grant approval for the consummation of such transactions, or may require
conditions, limitations or restrictions in connection with such
approvals; the risk that the businesses and acquired stores, as
applicable, will not be integrated successfully; the risk of litigation
and/or regulatory actions related to such proposed transaction; our
ability to pay dividends; and the factors listed under "Risk Factors" in
the Company's most recent Annual Report on Form 10-K and any subsequent
filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date made. Consequently,
all forward-looking statements are qualified by this cautionary
statement. Readers should not place undue reliance on any
forward-looking statements. 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.

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