Fred's Sept. comps up 1.1%, outlook lowered

MEMPHIS, Tenn. Fred's reported September sales, for the five weeks ended Oct. 4, of $161.3 million, up slightly from $161.1 million in September 2007. The change reflects the company's program to close 75 underperforming stores and 22 underperforming pharmacies this year. Excluding stores closed in 2008, total sales from ongoing stores increased 4% in September versus the same month last year. Comparable-store sales were up 1.1%, versus an increase of 1% last year.

"Increased customer transactions during September demonstrate that our sales initiatives continue to improve the Fred's shopping experience for our customers and, in turn, are helping us grow market share," said ceo Michael J. Hayes. "As the month came to an end, however, we saw a drop-off in our sales as our customers became more apprehensive about the credit crunch and grew more cash restrained ... Considering the current pressures on our customers, we expect to see increased transaction growth near-term in lower-margin departments and, as a result, we are lowering our outlook for third-quarter earnings to a range of 14 cents to 16 cents per diluted share, representing an increase of 17% to 33% over the year-earlier quarter."