MEMPHIS, Tenn. Fred’s last week reported sales of $866.9 million, up 5 percent, for the six months ended August 4. Comparable store sales for the year to date in 2007 increased 1.3% versus 2.5% in the year-earlier period.
"Despite the headwinds we encountered this past quarter, we were pleased to witness improved operating performance in our pharmacy department, where the shift to generic drugs, while hurting sales, actually helped our margins," stated Michael Hayes, Fred’s chief executive officer. "During August, we have gained momentum with our merchandise refresher program, as sales of new product categories are now exceeding those of the product categories we are exiting. We believe these factors will continue to pay dividends for Fred’s in the last half of the year."
Fred’s gross profit for the second quarter increased 6 percent to $121.5 million. Gross margin for the quarter rose to 28.6 percent, up 30 basis points from last year. The margin improvement was attributable primarily to the continuing shift from branded to generic drugs in Fred’s pharmacy department sales.