Specialty pharmacy bumps Fred's sales
Fred's Inc. says the expansion of its specialty pharmacy business helped drive an increase in sales in June.
Fred's total sales for the period ended July 4 increased 12% to $212.9 million from $190.8 million in June 2014. Excluding $7.4 million from last year's June sales for 56 subsequently closed locations, total sales increased 16% for the month. Same store sales for the month increased 1.6% compared with a decrease of 0.6% in the same period last year.
"The strong sales growth we experienced during June continued to reflect the recent expansion of our specialty pharmacy business, which accounted for approximately 11% of total sales," said Jerry A. Shore, CEO. "June also benefited from a favorable calendar shift at the beginning of the month, improved performance from our advertising changes and new products in our stores. On a comparable store basis, June sales were on the lower end of our expectations, reflecting softer retail pharmacy department script volume and increasing reimbursement rate pressures associated with preferred Medicare Part D networks, which affects both sales and margins."
Fred's total sales for the first five months of fiscal 2015 increased 6% to $889.1 million from $840.5 million for the same period last year. Excluding sales of $35.2 million from closed stores in 2014, total sales increased 10% for the first five months of 2015. On a comparable store basis, year-to-date sales increased 0.8% versus a decline of 1.3% for the year-earlier period.
"Our team remains focused on initiatives to drive stronger sales and operating performance," Shore added. "Gross margin pressure in our retail pharmacy department has accelerated this year and is changing the landscape of the industry. We have engaged A. T. Kearney, a leading management and drug sector consulting firm, to help our team map out a more aggressive strategy and take steps to address these industry-wide issues. Alternatively, our EntrustRx specialty pharmacy business continues to achieve its financial goals. In our general merchandise retail business, we are pleased with the headway made so far with product assortment and marketing programs, as well as our work to improve supply chain and store operations. Our outlook for continued progress remains positive as momentum builds around our initiatives, which in turn will lead to strong financial performance in the future."
During June, Fred's closed one Xpress pharmacy location.Fred's operates 662 discount general merchandise stores and three specialty pharmacy-only locations in the southeastern United States.
