Fred's Inc. Revises Guidance - Quick Facts

(RTTNews) - Fred's, Inc. (FRED) announced it expects changes in both total sales and comparable store sales to range from negative 1% to a positive 1% for the second half of the year. The company expects a loss per share for the second half of the year in the range of $0.18 to $0.23, with the third quarter loss deeper than the fourth quarter loss.

For the second quarter ended July 30, 2016, Fred's net loss totaled $6.9 million or $0.18 per share compared to a net loss of $4.9 million or $0.13 per share for the second quarter of last year. Total sales for the second quarter declined 3.0%. Comparable store sales for the second quarter declined 2.0%.

Michael Bloom, CEO, said, "Looking at the quarter, we are disappointed with the company's performance, as comparable store sales were down in front store, retail pharmacy and specialty pharmacy. The deleveraging impact of lower-than-plan sales, combined with a decline in gross margin rate for the pharmacy division - driven by generic deflation, reimbursement pressures and unexpected direct and indirect remuneration (DIR) fees - accounted for the quarter's net loss and the revision in guidance for 2016. While we did see progress on initiatives in the front store delivering improved gross margins and operating profit, the headwinds in pharmacy and competitive pressures in the front store were deeper than anticipated."

The company also reported sales for the four-week fiscal month ended August 27, 2016. Fred's total sales for the month declined 3.5% to $159.6 million from $165.3 million in August 2015. Comparable store sales for August declined 3%.