) reported soft total sales and comparable sales for May 2013
compared to the year-ago period. Comparable store sales for the
month slipped 0.5% compared with an increase of 1.3% in the
year-ago month. The unusually cold and wet weather was
responsible for the weak sales during the month. Total sales for
May 2013 increased 0.2% to $152.4 million compared with $152.1
million a year ago.
Growth in script counts was more than offset by the negative
impact of the ongoing brand-to-generic conversion in the pharmacy
For the first four months of fiscal 2013, comparable store sales
slipped 1.1% compared to a 0.1% rise in the same period a year
ago. Fred's' total sales inched up 0.2% to $653.9 million
compared with $652.6 million for the same period last year.
Second quarter of fiscal 2013
For the second quarter of fiscal 2013, Fred's forecasts its
total sales to increase in the range of 2% to 4%, while it
expects comparable store sales to be flat in the second quarter.
The company expects earnings to remain within a range of 6-9
cents per share in the quarter.
Fiscal 2013 Outlook Retained
For the fiscal 2013, Fred's continues to expect earnings in
the range of 77-88 cents per share, which is lower than the
year-ago level. However, excluding the impact of favorable income
tax adjustment of 12 cents per share on the 2012 results,
earnings per share are expected to increase 12% to 28% in the
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. In addition, declining comparable
store sales over the past several months remain a concern.
Currently, Fred's carries a Zacks Rank #2 (Buy).
Other diversified retailers worth considering include
The TJX Company
). All these stocks carry a Zacks Rank #2 (Buy)
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