First quarter sales at Fred’s were up 8% as the company reported margin increases in general merchandise departments that allowed the company to deliver profits at the top end of its guidance.
Sales for the quarter ended April 30 were $549.5 million, up from sales of $509 million in the comparable quarter the previous year. Net income totaled $1.3 million or $0.03 per share compared with essentially flat net income and earnings per diluted share for the first quarter of last year. Comparable store sales were up 1% for the quarter.
“We are pleased to report a successful first quarter, highlighted by earnings growth and ongoing improvement throughout the company,” said Jerry Shore, Fred’s CEO. “Our business model continues to undergo an exciting transformation as we further leverage our broad pharmacy capabilities together with a new retail store format and expanded product assortment. We believe the investments we have made to enhance human capital, strategic planning, process enhancements, and technology— to transform our business— will continue to drive earnings growth and shareholder value.”
Based on current sales trends for the month, company officials expect May comparable store sales to range from slightly negative to flat. The May sales reporting period ends on May 28, and Fred’s expects sales to be negatively impacted by the shift in Memorial Day year-over-year. The company will report actual May sales on June 2.
For the second quarter, total sales are projected to range from flat to an increase of 2% versus the same quarter last year. Quarterly comparable store sales are projected to range from flat to an increase of 2%.
Fred’s operates 660 discount general merchandise stores and three specialty pharmacy-only locations in 15 states in the southeastern United States.