) reported higher total sales and comparable sales for four weeks
of Oct 2013 compared with that of the year-ago period.
Comparable store sales for the month increased 0.8% compared
with a 0.8% fall in the year-ago month. However, the comps were
at the lower end of management's expectation due to soft sales in
the general merchandise. Moreover, Halloween season could not
boost comps as consumers tightened their spending due to lower
Total sales for the month also went up 2% to $143.4 million
compared to $139.9 million a year ago. Strong sales in categories
like Pharmacy, Hometown Auto & Hardware, backed by Fred's'
reconfiguration plans boosted sales during the month.
Total sales for the third quarter of fiscal 2013 were up 2%
year over year to $460.5 million. Comps for the quarter increased
1.4% compared with a decline of 2.5% a year ago.
Year-to-date, total sales were up 2% year over year to $1.4
billion and comps increased 1.1% compared with a 0.8% 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
With two store openings and closure of one Xpress pharmacy
location during the month, Fred's operates 701 discount general
merchandise stores, including 21 franchised Fred's stores, in the
southeastern United States as of Oct 2013.
Third Quarter of Fiscal 2013
After reviewing the October results, Fred's forecasts its
earnings to be up 5% to 10% over last year for the third quarter
of fiscal 2013. Fred's has maintained inventories at lower levels
compared with last year to counter the ongoing tough retail
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 expects the
unfavorable conditions to continue in fiscal 2013. Fred's carries
a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other diversified retailers worth considering include
The TJX Companies Inc.
Dollar Tree Inc.
Big Lots Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
BIG LOTS INC (BIG): Free Stock Analysis
DOLLAR TREE INC (DLTR): Free Stock Analysis
FREDS INC (FRED): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis
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