Market Overview

Fred's Pharmacy Reports June Sales

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Fred's, Inc. ("Fred's Pharmacy" or the "Company") (NASDAQ:FRED) today
reported sales for the five-week fiscal month of June, which ended on
July 1, 2017.

Fred's total sales for the month decreased 5.3% year-over-year to $197.5
million from $208.5 million in June 2016. The decrease in sales is
related to the closure of 39 underperforming stores in the first quarter
and continued pressure in the Front Store business. Total comparable
store sales for the month decreased 1.6% compared with a 1.3% decrease
in comparable sales in the prior year period. Comparable store sales for
June included a negative 0.9% impact as a result of the sale of low
productive discontinued inventory.

Commenting on the announcement, Michael K. Bloom, Chief Executive
Officer, said, "Fred's Pharmacy remains focused on executing the
Company's healthcare transformation. While overall comparable store
sales in June were lower than we had anticipated, the results in our
Retail and Specialty Pharmacy businesses continue to be favorable, with
combined pharmacy comparable sales increasing 3.5%. In Retail Pharmacy,
we continue to see a positive shift to generic, while we consistently
experience strong sales and script growth in the Specialty Pharmacy
business. Front Store sales continue to face headwinds in consumables
categories, and cooler than average temperatures impacted summer
seasonal sales. However, we are encouraged by our early results in the
recent introduction of beer and wine in select stores. We also continue
to see the benefits of the initiatives we began to roll out last year,
including upgrading talent, investing in technology and remodeled stores
and diversifying our specialty pharmacy portfolio, to name a few."

Mr. Bloom continued, "Our lower than anticipated June sales and the
headwinds we are facing will impact our second quarter results, and we
no longer expect sequential improvement from the first quarter. However,
we still expect to achieve operational profitability in the fourth
quarter of 2017. We remain committed to enhancing long-term shareholder
value and will continue to execute on our strategy, including growing
scripts and optimizing our supply chain and store fleet, to drive
revenue growth, enhance gross margins, reduce operating expense and
increase free cash flow."

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.

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; 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.

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