With July sales, Fred’s shares best quarterly comps in past 4 quarters
MEMPSHIS, Tenn. — Fred’s on Thursday reported its July sales, as well as initial results from its fiscal second quarter, which included the best comparable-store sales the company has reported in the past four quarters. The company’s Q2 sales decreased 4.2% to $507.4 million, while comparable-store sales decreased 0.3%, compared with a 2% decrease in Q2 2016.
“While our financial results have been slower to materialize than we had anticipated, we are encouraged by our improving comparable store sales and strong performance in retail and specialty pharmacy,” Fred’s CEO Mike Bloom said. “Although slightly negative due to industry headwinds challenging the front store consumables category, our overall comparable sales for the second quarter represent the best quarterly performance in the trailing four quarters.”
The company attributed the decline in sales in Q2 to a shift from brand to generic scripts and its Q1 closure of 39 underperforming stores. It also noted that its comps saw a 0.8% negative impact from the sale of low productive discontinued inventory.
For July, Fred’s saw year-over-year sales decrease 3.5% to $150.5 million, which the company attributes mainly to the closure of underperforming stores. Comps for the month a 0.1% decrease, compared with a 4.6% decrease in July 2016. The month’s comps saw the 0.6% impact of the sale of low productive discontinued inventory that last July was not subject to.
Bloom said he remains optimistic about the company’s improvements coming as it continues its healthcare transformation. The company has touted this strategy as central to its goal of achieving operational profitability by year’s end.
“Our improving sales trends and the strength of the pharmacy businesses demonstrate that our healthcare transformation strategy is working,” Bloom said. “We are confident in our ability to improve our financial performance and drive long-term growth and profitability, and look forward to sharing more details about our second quarter results in the coming weeks.”