Fred’s turns red in Q3, will close 47 stores

Memphis, Tenn. – Fred’s Inc. swung to a net loss of $10.4 million in the third quarter of fiscal 2014, compared to net income of $7.3 million in the same quarter a year earlier. Costs associated with closing five underperforming stores in the third quarter, and an anticipated 47 stores in the fourth quarter, contributed to the loss, which exceeded Wall Street projections.

However Fred’s beat the Street with third quarter sales of$476.2 million, up 3% from $460.5 million. Same-store sales rose 0.3%.

"As we forecasted, the third quarter was difficult as we aggressively cleared inventory, cut receipts of overstocked high-margin product, brought prices in line with competitors, and revamped the ad programs to drive traffic,” said Jerry A. Shore, CEO. “Overall, inventory was down 9% at the end of the quarter, with general merchandise inventory down 11% on a per-store basis. These reductions highlight the success of the programs implemented during the year.”

Fred’s also promoted Craig Barnes to general merchandising officer. Barnes previously held executive roles with Auto Zone, Carquest and Delphi Products. The company expects to have a new president and COO in place before the start of fiscal 2015