Following the sale of its specialty pharmacy business, Fred’s saw its comps decline in the first quarter.
For the first quarter of 2018, Fred’s posted a net loss from continuing operations of $19.9 million, or 54 cents per share, compared to a net loss from continuing operations of $37.8 million, or $1.02 per share, in the 2017 period. A consensus analyst estimate published by Marketbeat called for a net loss from continuing operations of 12 cents per share.
Comparable sales for the quarter decreased 3.9% year over year with front store, including general merchandise, down 4.3% and retail pharmacy down 3.4%. Net sales decreased 5.8% to $437.1 million versus the year-earlier period. Operating loss was $20.2 million as compared to $33.9 million in the year-prior quarter.
Joe Anto, Fred’s CFO and interim CEO, said, “We are rapidly making progress on our two main goals of eliminating our debt balance and returning to significant profitability by the fourth quarter of this year, but there is still much work to be done. We recently closed the sale of our specialty pharmacy business for approximately $40 million, and as of June 12th, our borrowings against our ABL were $135 million, down from $162 million at the end of the first quarter, with over $60 million in available liquidity. We expect our ABL balance to continue to decrease over the coming weeks, as we collect all remaining receivables associated with the specialty pharmacy business. We continue to explore other strategic transactions and expect to generate additional cash proceeds, which should meaningfully reduce our debt balance. We have engaged PJ Solomon & Co. to analyze the value of our retail pharmacy script portfolio and also engage with potential strategic buyers on this part of our business. Additionally, we continue to aggressively reduce expenses in every part of the business while executing on various initiatives to increase sales and gross margin.”