MEMPHIS, Tenn. Fred's on Thursday cited the underperformance of 22 pharmacies and 75 stores as significant contributors to a net loss of $4.4 million, or $0.11 per diluted share.
Fred’s total sales for its fiscal year ending Feb. 2 were up 1 percent to $1.8 billion. Comparable store sales increased 0.3 percent.
"Although the fourth quarter, before considering restructuring charges, met our revised plan, it was nevertheless disappointing,” commented Michael Hayes, Fred’s chief executive officer. “The rapid changes in discretionary income for our customer base made us face some very tough decisions.”
Short-term, Fred’s to enhance Fred's operating and financial performance through store and merchandise refresher programs, tightened inventory disciplines, and improvements to in-stock levels on the chain’s most popular items, Hayes said, a strategy that has already netted tangible results. “For long-term benefits, we are implementing a multi-year strategic plan that involves a stronger focus on operational execution at our best-performing stores and pharmacies,” Hayes said.
In the fourth quarter, Fred's opened nine stores, closed one store, and opened two pharmacies, bringing the totals for the year to 35 store openings, 20 closed stores, 11 pharmacy openings and four pharmacy closings.
Fred's expects to open 18 stores and 15 pharmacies in 2008 and close the 75 underperforming stores and 22 pharmacies during the coming year.