Fred's Super Dollar reports 1.3% lift in October sales overall, 1.4% decline in same-store sales
MEMPHIS, Tenn. — Fred's Super Dollar on Thursday reported sales of $145.3 million for the four weeks ended Nov. 1, up 1.3% as compared with the same year-ago period. Comparable store sales for the month declined 1.4% versus an increase of 0.8% in the same period last year.
"Sales for October were below expectations," said Jerry Shore, Fred's CEO. "While general merchandise sales and traffic were adversely affected by the warmer weather, the primary driver for the sales miss was related to changes made in our layaway program this year and the lack of incremental sales from layaway customer visits during this October as traffic declined late in the month," he said. "Last year, our program was promoted at only $1 down and no layaway fee, which generated a significant increase in layaway sales, but a majority of the merchandise ultimately was never picked up by the customer, causing sales and inventory issues during the fourth quarter."
Fred's anticipates a rebound in layaway activity during November and December that should benefit fourth quarter sales this year, Shore said. "Offsetting these adverse developments to some extent was the ongoing strong performance of our pharmacy department, which continued to post higher comparable scripts and sales."
Shore noted that sales, inventory clean up and clearance margin pressures experienced in earlier months have been the primary causes of the company's recent losses. These pressures have clearly continued during the third quarter. Consequently, Fred's now expects a net loss for the quarter of $0.12 to $0.16, excluding any special charges related to store closings. The company's new prime pharmacy vendor contract, now fully in effect, is expected to have a significant positive impact on gross margin in the fourth quarter and beyond.
"We enter the fourth quarter with new programs and initiatives to capitalize on the convenience and pharmacy advantages we offer our customers," Shore continued. "We know that the upcoming holiday season will be very competitive and internet shopping will continue to make gains, but the fourth quarter programs we have in place will meet the convenience dimension of our customers'shopping needs and drive more trips to our stores," he said. "Looking ahead to 2015, we are confident that the continued growth in pharmacy and the 'need it now' front store layout will provide a strategic foundation for future growth and profitability."
Total sales for the third quarter of 2014 were $476.1 million, up 3.4%. Comparable store sales for the quarter increased 0.3% on top of an increase of 1.4% in the third quarter of 2013.
Fred's total sales for the nine months of 2014 increased 1.5% to $1.5 billion. On a comparable store basis, year-to-date sales decreased 0.5% compared with an increase of 1.1% for the year-earlier period.
During the month, Fred's opened three Xpress locations and moved one Xpress into an existing full-service store, for a net increase of two locations.