Same-store sales at
) slipped 4.0% year over year in the five-week period ended June
30, 2012. This compares unfavorably with the 0.7% decrease in the
year-ago period. Total sales moved up 2% in June 2012 to $182.6
million from $179.4 million in June last year.
Lower than expected general merchandise sales affected the
comparable-store sales in June. Also, weather, calendar shift and
holidays affected sales negatively.
Shift from brand to generic drugs also kept sales at low levels in
the pharmacy department. However, performance of the new
initiatives in housewares, bath, and hardware departments were in
line with management's expectations.
Retail sales for the first five months of 2012 stood at $835.1
million, up 3.0% from the year-ago period. Same-store sales for the
period edged down 0.8% compared to the 0.6% increase in the
comparable previous year.
As a part of Fred's real estate plan for 2012, the company opened
two express pharmacy locations and closed 12 stores during June
As of June 30, 2012, Fred's operated 698 discount general
merchandise stores, including 21 franchised Fred's stores, in the
southeastern United States.
As of fiscal 2011, Fred's operated 679 discount general merchandise
stores, including 21 franchised Fred's stores, in the southeastern
For July, the company expects comparable same store sales to remain
flat or decline by 3%. The company anticipates second quarter
earnings to be at lower end of the previously-projected range of 15
cents to 17 cents.
Fred's maintained its fiscal 2012 earnings estimate in the range of
98 cents to $1.04 per share.
The Zacks Consensus Estimate for second quarter earnings is
currently pegged at 15 cents per share and the full-year 2012
estimate is $1.00 a share.
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.
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
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