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Fred's Pharmacy Comments on Termination of Walgreens-Rite Aid Merger and Related Agreement with Fred's

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Fred's, Inc. ("Fred's Pharmacy" or the "Company") (NASDAQ:FRED) today
commented on the termination of the merger between Walgreens Boots
Alliance, Inc. ("Walgreens") (NASDAQ:WBA) and Rite Aid Corporation
("Rite Aid") (NYSE:RAD) and the related asset purchase agreement of
Fred's with Walgreens and Rite Aid.

Michael K. Bloom, Chief Executive Officer, said, "While the acquisition
of additional stores was an opportunity for growth, we always viewed it
as a potential outcome that would accelerate our transformation, not
define it. This is a disappointing outcome; however, the termination of
the transaction has no impact on the Company's transformation strategy
or our ability to execute. We are as confident as ever that we have a
strong team and the right strategy in place to drive long-term growth
and profitability, and to enhance value for our shareholders. We are
excited about what we have accomplished and are optimistic about the
future."

Mr. Bloom continued, "Our leadership team continues to deliver on its
promise to optimize our business model and execute our healthcare
strategy. We are capitalizing on opportunities to increase prescription
comps in Retail Pharmacy, growing sales in Specialty Pharmacy and
driving traffic into our front store. We also continue to optimize our
store fleet, upgrade our talent, technology, supply chain and business
processes. Our transformation is on track."

On December 20, 2016, Fred's Pharmacy announced that it signed an asset
purchase agreement with Walgreens and Rite Aid to purchase 865 stores
and certain other assets. Completion of the transaction was subject to
approval by the Federal Trade Commission, as well as other customary
regulatory approvals and closing conditions. Following the termination
of the merger between Walgreens and Rite Aid, the Fred's Pharmacy asset
purchase agreement with Walgreens and Rite Aid has also been terminated.
Fred's Pharmacy will receive $25 million as reimbursement for expenses
associated with the terminated transaction.

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. 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 success of announced
acquisition activities and future growth trends in businesses acquired;
general economic trends; risks related to the possibility that the
transactions may not close, including because one or more closing
conditions to the 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 the 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 the proposed transaction; 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. The Company 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.

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.

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

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