Fred's 2Q income drops

MEMPHIS, Tenn. Fred's Inc. today reported net income for the second quarter of 2007 totaled $3.1 million or 8 cents per diluted share versus net income in the prior-year period of $4.3 million or 11 cents per diluted share. For the six months ended Aug. 4, net income totaled $10.5 million or 26 cents per diluted share, compared with net income of $11.6 million or 29 cents per diluted share for the first half of 2006.

Total sales for the second quarter of 2007 increased 4% to $424.6 million from $406.9 million in the same period last year. For the first half of 2007, total sales increased 5% to $866.9 million compared with $823.8 million in the year-earlier period. On a comparable-store basis, sales increased 0.8% for the quarter versus a 3.1% increase in the year-earlier period. Comparable-store sales for the year to date in 2007 increased 1.3% versus 2.5% in the year-earlier period.

Operating income for the second quarter of 2007 totaled $5.7 million, down from $6.2 million in the year-earlier period. Operating income was 1.4% of sales in the second quarter of 2007 compared with 1.5% of sales last year. Operating income for the first six months of 2007 totaled $16.9 million, down from $17.3 million in the prior-year period. Operating income for the first half of 2007 was 2% of sales versus 2.1% of sales last year.