MEMPHIS — Net income for Fred's jumped 49% during the fourth quarter to $8.6 million, or 22 cents per diluted share, compared with the year-ago period.
Despite the challenging retail climate and concerns that rising gas prices will take a toll on retailers' financial well-being, Fred's noted it will continue to forge ahead with its plans.
"These results ... reflect the hard work and dedication of our team and [its] successful execution of our updated strategies — all within the context of a challenging retail climate," Fred's president and CEO Bruce Efird said. "Through [our team's] efforts, we made significant progress during 2010 in upgrading our stores, improving our merchandise selection and strengthening our customer service levels, which in turn helped drive increased sales and higher customer traffic."
"While we expect that tough retail conditions will continue across our markets in 2011 due to ongoing concerns about higher petroleum prices and their effects on the economy, the progress we made last year provides a solid foundation to expand market share and continue our push for higher operating margins," Efird added. "Our team is well-positioned to capitalize on these accomplishments. [Its] efforts, coupled with our new 2011 programs, will ensure a more exciting and pleasant shopping trip for our growing customer base, while continuing to drive strong financial returns."
Fred's total sales for the fourth quarter of fiscal 2010 increased 3% to $485.6 million from $473.1 million for the same prior-year period. Comparable-store sales for the quarter increased 2.3%, compared with a decline of 0.9% for the prior fourth quarter.
On a full-year basis, Fred's net income income increased 25% to $29.6 million, or 75 cents per diluted share, for the period ended Jan. 25, compared with the prior-year period. Fred's total sales for 2010 increased 3% to $1.84 billion from $1.78 billion for the same period in 2009. Comparable-store sales for 2010 increased 2.2% on top of an increase of 0.4% in 2009.
During 2010, Fred's opened 15 stores and 21 pharmacy locations, and closed seven stores and 15 pharmacy locations. The company said it also revamped 196 of its stores with its new Core 5 elements.
Looking ahead, Fred's projected total sales for first quarter 2011 will increase in a range of 2% to 4%, while comparable-store sales are expected to rise 1% to 3%. Earnings per diluted share are forecast to increase 14% to 24% to a range of 24 cents to 26 cents for the first quarter.