) reported higher total sales and comparable sales for Sep 2013
compared with that of the year-ago period.
Comparable store sales for the month increased 2.8% compared
with a 3.8% fall in the year-ago month. The comps were at the
higher end of management's expectation backed by strong gains in
the general merchandise and pharmacy departments.
Total sales for the month also went up 4% to $177.3 million
compared to $170.9 million a year ago. Strong sales in categories
like Pharmacy, Hometown Auto & Hardware, backed by Fred's'
reconfiguration plans boosted sales during the month.
Year-to-date, total sales were up 1% year over year to $1.3
billion and comps increased 0.8% compared with a 1.2% drop in the
Keeping in view the substantial contribution of the pharmacy
department to the overall profit, Fred's is geared to put greater
focus on the sector and is increasing pharmacy departments in all
Including two stores and one Xpress pharmacy location opened
during September, Fred's operates 702 discount general
merchandise stores, including 21 franchised Fred's stores, in the
south-eastern United States as of Sep 2013.
Third Quarter of Fiscal 2013
For the third quarter of fiscal 2013, Fred's forecasts its
total sales to increase in the range of 1% to 3%, while
comparable store sales to be flat to up to 2%, better than a
decline of 2.5% a year ago.
Fiscal 2013 Outlook Retained
Management expects competitive climate to be intense and the
operating environment to be challenging in the second half of the
year. Discretionary spending is expected to remain low,
especially among the lower-income consumers which comprise
Fred's' principal customers.
Management is well on track to improve its pharmacy department
growth, expand its specialty drug program and launch the expanded
auto and hardware program. However, the company continues to
expect tough retail conditions to continue across the markets in
Other Stocks to Consider
Currently, Fred's carries a Zacks Rank #3 (Hold). Other
diversified retailers worth considering include
The TJX Companies Inc.
Dollar General Inc.
) all carrying a Zacks Rank #2 (Buy).
DOLLAR GENERAL (DG): Free Stock Analysis
FREDS INC (FRED): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis
TJX COS INC NEW (TJX): Free Stock Analysis
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