Fred's April sales fell 1.6% year-over-year to US$150M as comparable-store sales fell 2.3%; results reflect 'limited success' of legacy marketing strategies in current intensely competitive environment, says CEO
May 8, 2014
– Fred's Inc. (FRED) today reported sales for the four-week month of April ended May 3, 2014, and the first quarter of fiscal 2014.
Fred's total sales for the month decreased 1.6% to $150.0 million from $152.4 million in April 2013. Comparable store sales for the month decreased 2.3% compared with a 1.2% increase in the same period last year.
Fred's total sales for the first three months of fiscal 2014 decreased 0.6% to $498.5 million compared with $501.5 million for the same period last year. On a comparable store basis, year-to-date sales decreased 1.9% versus a 1.3% decrease for the year-earlier period.
Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "April's sales reflect the limited success of our legacy marketing strategies in matching up with prevailing intense competitive pressures. Beginning in late January, we started working with our outside marketing teams and consultants to uncover new opportunities available to us and adjust our marketing strategies to regain our sales momentum. Working through extensive research and building a marketing strategy that can be sustained over the long term has taken several months to design, develop and validate. One of the key findings of our research has pointed out that the aggressive use of our new strategy today is likely to be quickly embraced, based on the demographics of our customer base. The team has put together a solid marketing plan to capitalize on Fred's position as a low-price leader and brand our convenience departments' advantages over small-box competitors.
"Our pharmacy department again demonstrated solid sales gains in April, with higher sales and comparable store script growth, and our reconfiguration departments – notably Hometown Auto & Hardware – continued to perform well," Efird continued. "However, these improvements were not sufficient to offset the sales shortfall in the other general merchandise departments, which experienced negative comparable sales and traffic declines in April. With this in mind, we now expect first quarter earnings per share to be in the range of $0.18 to $0.22. As we now begin to implement our new marketing strategy, we expect to see its impact beginning in June, when we anticipate a return to positive comparable store sales in the range of 1% to 3%."
During April, Fred's opened three Xpress stores, closed two stores without pharmacies, and converted one Xpress into a full-service store.
Fred's, Inc. operates 704 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States. For more information about the Company, visit Fred's website at www.fredsinc.com.
Comments in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, general economic trends, changes in consumer demand or purchase patterns, delays or interruptions in the flow of merchandise between the Company's distribution centers and its stores or between the Company's suppliers and same, a disruption in the Company's data processing services, costs and delays in acquiring or developing new store sites, and other contingencies discussed in the Company's Securities and Exchange Commission filings. Fred's undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.
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