) reported total sales and comparable sales for November 2012.
Both total sales and comparable sales declined from the
Total sales for November 2012 dipped 1% from the prior-year
quarter to $150.4 million. Top line was significantly impacted by
the recent shift in the pharmacy sales from branded drugs toward
Comparable store sales for the month also dropped 3.6%, in
contrast to a growth of 1.5% in the prior-year quarter. The
decline in comparable store sales in November 2012 resulted from
strong competitions from the peer companies. Comparable store
sales were impacted by intensive brand building by its
competitors surrounding Thanksgiving and Black Friday.
The company expects stronger sales in the upcoming months owing
to increased marketing efforts. As per the guidance
provided at the third quarter conference call, Fred's expects
fourth quarter total sales, including one extra week, to increase
in the range of 9% to 11%. Comparable store sales, including one
extra week, are expected to increase 6% to 8% in the fourth
quarter of 2012.
We are encouraged with Fred's focus on high margin products, its
initiative of revamping its stores and upgrading stocks to
attract more traffic. All these bode well for long-term
growth, despite the short-term headwinds. However, a tough retail
environment and declining comparable store sales over the past
several months remain a concern.
We currently have a long-term Neutral recommendation on Fred's.
The stock carries a Zacks #3 Rank (a short-term Hold rating). Its
Dollar General Corporation
Wal-Mart Stores Inc.
), both carry a Zacks #3 Rank (short-term Hold rating).
DOLLAR GENERAL (DG): Free Stock Analysis
FREDS INC (FRED): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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