January Weather Puts Damper On Fred’s Fiscal 2013 Results

For the 52-week fiscal 2013 year, Fred’s Inc. posted total sales of $1.94 billion versus $1.96 billion for 53-week fiscal 2012 period. On an adjusted basis, compensating for the extra week in 2012, comparable store sales for fiscal 2013 gained 0.6%.

For January, Fred’s total sales were $134.8 million on an unadjusted basis versus $173.5 million for the five-week year-earlier period. On an unadjusted basis, fourth quarter total sales were $495.1 million versus $533.4 million for the year-earlier period.

On an adjusted basis, total sales decreased 1.1% for January, advanced 0.5% for the fourth quarter and increased 1.4% for fiscal 2013, according to Fred’s. Also on an adjusted basis, January comps decreased 1.8% and fourth quarter comps increased 0.1%, the retailer related.

In comments on the financial results, Bruce Efird, Fred’s CEO, said, “The weather was a significant challenge for us in January. It not only disrupted consumer shopping patterns, but also resulted in more than 120 store closings during the final week of the month. Prior to the last week of January, sales were running in the mid-range of our forecast, with reconfiguration departments leading the way. In the final week of the month, comparable store sales dropped into the negative double digits, culminating in a weather effect on comparable store sales for all of January that is estimated at more than 300 basis points.”

Efird added that lower-than-anticipated sales in January’s last week would reduce earnings for the final quarter of 2013 by approximately three cents per share. Fred’s noted that it now expects to report fourth quarter earnings per diluted share in the range of 13 cents to 16 cents versus earnings of 15 cents per diluted share for the comparable 13-week period last year.

“With January closing out the fourth quarter, we had success in several areas, most notably in our reconfiguration departments that include pharmacy, pet, auto, and hardware, which will carry forward in 2014,” Efird maintained. “We are also in the process of revamping our fourth quarter marketing, promotion and pricing strategies to respond to changing consumer buying habits, along with the increasing popularity of Internet shopping. We are confident that our strategies to build a strong presence in specialty pharmacy and clinical services, together with accelerating pharmacy acquisitions and new pricing, promotion and marketing programs, will lead to continued success in 2014.”

In January, Fred’s opened one new store and two Xpress pharmacies, the company stated. In total, Fred’s, Inc. operates 704 discount general merchandise stores, including 21 franchised Fred’s stores, in the southeastern United States.