Same-store sales at
) climbed 1.3% year over year in the four-week period ended May 26,
2012. This compares favorably with the marginal 0.2% increase in
same-store sales in the year-ago period. Total sales moved up 6% in
May 2012 to $152.1 million from $143.6 million in the year-ago
May's comparable-store sales came in at the high end of
management's guidance on the back of many new product innovations
at the end of the first quarter. Shift from brand to generic drugs
also boosted sales in the pharmacy department.
General merchandise and pharmacies continued to surpass
management expectations during May. Management is also confident
about the newer initiatives taken to remodel its stores and the new
products launched during the period.
Retail sales for the first four months of 2012 stood at $652.6
million, up 4.0% from the year-ago period. Same-store sales for the
period edged up 0.1% compared with an increase of 0.8% in the
As of May 26, 2012, Fred's operated 708 discount general
merchandise stores, including 21 franchised Fred's stores, in the
southeastern United States. This includes one store opened by the
company in May 2012.
Fred's Inc. runs Discount General Merchandise stores in a number
of states in the southeastern United States. Fred's stores
generally serve low, middle and fixed income families located in
small to medium-sized towns. Majority of the company's stores have
full service pharmacies. The company also markets goods and
services to franchised Fred's stores.
At the time of announcing first quarter results, Fred's said
that its expects total sales to increase 4% to 6% in the second
quarter, while it expects its comparable store sales to remain flat
versus a 4% decline in the second quarter of last year.
The company expects second quarter earnings to increase between
15% and 30% and remain within a range of 15 cents - 17 cents per
share. Fred's expects its 2012 earnings in the range of 98 cents to
$1.04 per share.
The Zacks Consensus Estimate for the second quarter 2012 is
currently pegged at 16 cents and the full-year 2012 estimate is
$1.01 a share.
Fred's faces stiff competition from
Dollar General Corporation
Wal-Mart Stores Inc.
). Currently, we have a long-term Neutral recommendation on Fred's,
which carries a Zacks #2 Rank (short-term Buy rating).
DOLLAR GENERAL (DG): Free Stock Analysis Report
FREDS INC (FRED): Free Stock Analysis Report
WALGREEN CO (WAG): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
To read this article on Zacks.com click here.