On Feb 22, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) owing to soft comps for Jan
2014 and a bleak outlook for fourth-quarter fiscal 2013.
Why the Downgrade?
Fred's witnessed sharp downward estimate revisions after
reporting lower-than-expected fourth-quarter 2013 sales results
on Feb 06, 2014.
Bad weather in January resulted in shutdown of several shops
during the final week of the month. As a result, for the four
weeks of Jan 2014, Fred's' comps declined 1.8% worse than flat
comps in the year-ago period. Total sales for Jan 2014 also
declined 1.1% year over year to $134.8 million.
Weak results in Jan led to lower than expected sales
performance in the fourth quarter of 2013. For fourth quarter
fiscal 2013, Fred's comparable store sales inched up only 0.1%
compared with a gain of 1.4% in the prior-year period. Total
sales inched up 0.5% for the fourth quarter and increased 1.4%
for fiscal 2013.
Following lower-than-expected January sales, Fred's lowered
the fourth-quarter earnings guidance. The company anticipates
that the sales shortfall during January is expected to hurt
fourth quarter earnings by 3 cents per share. Fred's now expects
earnings in the range of 13 to 16 cents versus 18 to 23 cents
All the estimates were revised downward following the cautious
outlook of the company. The Zacks Consensus Estimate for
fourth-quarter 2013 and fiscal 2013 slipped 26.3% to 14 cents per
share and 6.3% to 75 cents per share, respectively, over the last
Other Stocks to Consider
Some better-ranked stocks in the consumer staples sector worth
Post Holdings Inc.
Diamond Foods Inc.
The Hain Celestial Group Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis
FREDS INC (FRED): Free Stock Analysis Report
HAIN CELESTIAL (HAIN): Free Stock Analysis
POST HOLDINGS (POST): Free Stock Analysis
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