Discount general store Fred’s Inc. (FRED) delivered strong sales results for the five-week fiscal month of June, which ended July 3, 2010. Results, however, were still below management’s expectation.
Same-store sales for the month jumped 1.7%, compared with a growth of 0.2% in the prior-year period. Same-store sales spiked 3.5% in May 2010. The retailer has been registering positive comparable-store sales growth for every month of 2010 except January.
Year to date, comparable-store sales climbed 2.3%, compared with 1.7% in the same period last year.
Continuing the top-line escalation momentum, June sales surged 2% to $178.3 million, compared with $174.7 million posted in the year-ago period. Year to date, Fred’s total sales grew 3% year over year to $791.5 million.
In June 2010, Fred’s added one store, two express pharmacies and five additional pharmacies. The company also refreshed 85 stores with its new Core 5 elements.
An augmented sales mix aided by internal programs, an increase in sales at Core 5 departments, and a rise in prescription counts boosted traffic for the month. Fred’s also has a wide range of offerings for its clientele, which helped it to gain market share.
Fred’s guided its annual sales growth of 5%–7% in the second quarter of 2010. The same-store sales are expected to surge 2% – 4% in the second quarter versus a dip of 1.3% registered in the comparable period last year.
The operator of 672 discount general merchandise stores, Fred’s forecasts earnings of 12−15 cents a share and 72−79 cents a share for the second quarter and fiscal 2010, respectively. The current Zacks Consensus Estimate for the quarter and the year lie within the company’s stated range.
Based in Memphis, Tennessee, Fred’s offers pharmaceuticals, household goods, food and tobacco products, apparel and linen, health and beauty aids, household cleaning supplies, disposable diapers, pet foods, paper products, and various beverage products, The company supplies principally to low, middle, and fixed-income families.
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