After posting soft comps in July 2014, discount retailer Fred's Inc. 's ( FRED ) comps have improved during the month of August backed by its strategic sales-driving initiatives.
Comparable store sales for Fred's during the four weeks ended Aug 30, 2014 climbed 2.3% which compared favorably with flat comps in the year-ago period. Same-store sales were within management's expectation of 1% to 3% growth announced during the second-quarter fiscal 2014 conference call.
Fred's' new marketing plan, including in-store marketing initiatives focusing on diverse product mix and an aggressive advertisement program, was operational for the first time in August.In August, Fred's started its new marketing plan, which included in-store marketing initiatives which will focus on diverse product mix and an aggressive advertisement program. Backed by these strategic top-line boosting initiatives, total sales for the month went up 6% year over year to $147.6 million. During August, Fred's opened three Xpress pharmacy locations
As of Aug 30, 2014, Fred's operated 707 discount general merchandise stores, including 21 franchised stores, in the southeastern United States.
During fiscal 2013, Fred's embarked on a plan to reposition its merchandise assortment to focus on convenience and consumables, while de-emphasizing more discretionary categories where the brand has little competitive advantage.
However, we remain concerned about the company's ability to execute these initiatives in the stipulated time frame.
Other Stocks to Consider
Fred's currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks to consider in the apparel industry include Crocs, Inc. ( CROX ), Columbia Sports Inc. ( COLM ) and Michael Kors Holding Ltd. ( KORS ). All these stocks have a Zacks Rank #2 (Buy).
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