Fred’s sees comps drop 1.6% in June
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MEMPHIS, Tenn. — Fred’s has reported its sales for fiscal June, which ended July 1, showing a 5.3% drop in year-over-year sales. It took in $197.5 million in June, compared with $208.5 million in 2016.
Fred’s attributed the sales dip to the recent closure of 39 underperforming stores in Q1 and pressures on its front-store business. The company also saw its comparable-store sales decrease 1.6%, compared with the over the prior-year period, which saw a 1.3% comps decrease. June comps also included a negative 0.9% impact resulting from the sale of low productive discontinued inventory.
Fred’s CEO Mike Bloom said that while the comps decrease was disappointing, there are bright spots in the company’s revenue streams, particularly with regard to its transformation into a healthcare company.
“Fred’s Pharmacy remains focused on executing the Company’s healthcare transformation,” Bloom said. “While overall comparable store sales in June were lower than we had anticipated, the results in our retail and specialty pharmacy businesses continue to be favorable, with combined pharmacy comparable sales increasing 3.5%. In retail pharmacy, we continue to see a positive shift to generic, while we consistently experience strong sales and script growth in the specialty pharmacy business.”
In addition to noting the results of diversifying Fred’s specialty pharmacy offerings, Bloom also noted that such efforts as introducing beer and wine in certain stores, as well as its efforts to upgrade talent and invest in technology and remodeled stores, were showing promise.
Bloom did note that the company no longer is expecting sequential improvement over Q1 in the second quarter, but did reiterate the company’s expectation to achieve operational profitability by year’s end.
“We remain committed to enhancing long-term shareholder value and will continue to execute on our strategy, including growing scripts and optimizing our supply chain and store fleet, to drive revenue growth, enhance gross margins, reduce operating expense and increase free cash flow,” Bloom said.