Fred’s losing streak continues

Memphis — Fred’s Inc. remained unprofitable for its fifth consecutive quarter as pharmacy continued to weigh the chain down.

Fred’s reported a bigger-than-expected net loss of $4.9 million in the second quarter, down from $16.4 million for the same period last year.

Reductions in the percent of revenue represented by cost of goods sold and selling, general and administrative expenses helped shrink net loss.

Net sales grew 10%, from $491.18 million to $546.08 million, while same-store sales grew 0.9%.

A difficult pharmacy environment has been dragging down the retailer’s performance, according to CEO Jerry Shore.

"As we have noted over the past several months, developing headwinds in the pharmacy industry have adversely affected our retail pharmacy department and, by extension, our second quarter results,” Shore said. “The industry-wide issues include continued pressure on reimbursement rates, increasing regulation of controlled substances, which proportionately affects our southeast region more than other parts of the country, and a greater uninsured population due to lower-than-average participation in available health insurance alternatives.”

Total sales for the third quarter of 2015 are expected to increase in the range of 12% to 14%, while same-store sales are expected to range from flat to 2%.