Fred's 1Q Profit Falls on Higher Taxes

Memphis, Tenn. Fred's Inc. said Thursday its first-quarter profit fell 3% as higher sales were offset by growing costs and rising taxes.

For the quarter ended May 3, Fred's earned just under $7.3 million compared with profit of about $7.4 million during the same period a year prior. Sales rose 5% to $464.3 million from $442.3 million.

Same-store sales rose 2.1% during the quarter and would have risen 2.5%, excluding stores that have been closed or will be closed, the company said.

In February, Fred's said it will close 75 underperforming stores in an effort to improve its profit.

"Although we will see pressure on the gross margin over the balance of the year due to a shift in sales mix and the impact of inflation, we are pushing forward aggressively on our performance initiatives to continue driving customer traffic into our stores," said CEO Michael J. Hayes in a statement.