) reported flat total sales and comparable sales for the month of
August compared with that of the year-ago period.
Comparable store sales for the month were flat compared with a
2.8% fall in the year-ago month.
Total sales for the month were almost flat at $140.0 million
compared to $139.9 million a year ago. Strong sales in categories
like Pharmacy, Hometown Auto & Hardware, Pet, Lawn &
Garden, and other consumable products were offset by an
unfavorable calendar shift in the month.
However, sales were within the guidance of a range of flat to
up 2% provided by management during the second-quarter earnings
Year-to-date, total sales were up 1% year over year to $124
million and comps increased 0.5% compared to a decline of
0.8% in the year-ago period.
After closing one store and opening one Xpress pharmacy
location during the Aug 2013, Fred's operates 69 discount general
merchandise stores, including 21 franchised Fred's stores, in the
south-eastern United States as of Aug 2013.
Second Quarter of Fiscal 2013
In the recently concluded second-quarter sales increased only
2.0% year over year to $482.2 million, missing the Zacks
Consensus Estimate of $483.0 million. Sales were also at the
bottom end of Fred's top-line growth expectations of 2%-4%.
Categories like tobacco, consumables, paper, pet, beverage and
lawn and garden reported modest sales in the quarter.
Comparable store sales climbed 2.2% during the quarter better
than a 1% decline a year ago. Comparable sales improved on the
back of higher customer traffic and average ticket during the
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% in the third
quarter, 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 roll out its
expanded auto and hardware program. However, the company
continues to expect tough retail conditions to continue across
the markets in fiscal 2013.
Other Stocks to Consider
Currently, Fred's carries a Zacks Rank #3 (Hold). Other
diversified retailers worth considering include
Haverty Furniture Company Inc.
). While Haverty Furniture carries a Zacks Rank #1 (Strong Buy),
Restoration Hardware and Ross Stores hold a Zacks Rank #2
FREDS INC (FRED): Free Stock Analysis Report
HAVERTY FURNIT (HVT): Free Stock Analysis
RESTORATION HDW (RH): Free Stock Analysis
ROSS STORES (ROST): Free Stock Analysis
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