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Fred’s reports sales decline for December, but year-to-date gains

BY Adam Kraemer

MEMPHIS, Tenn. Fred’s total sales for the five-week fiscal month of December declined to $210 million from $221.5 million in December 2006. The company said sales were adversely affected by fewer pre-Christmas shopping days in the fiscal December month for 2007. Comparable store sales for December declined 1.8 percent compared with a 2 percent increase in the same month last year.

Total sales for the year-to-date period ended Jan. 5, 2008 increased 3 percent to a record $1.65 billion from $1.60 billion in the first 11 months of 2007. On a comparable store basis, year-to-date sales for 2007 increased 0.4 percent versus a 2.4 percent gain in the same period last year.

Commenting on the announcement, Michael Hayes, chief executive officer, said, “As has been the case for months, the retail environment continues to be pressured by mounting economic concerns, keeping customers conservative in their spending. Because of these weaker conditions, our sales for December came in at the low end of our revised plan for the month, which foresaw comparable store sales declining as much as 2 percent. In addition, December sales reflected a more promotion-driven customer, leading to higher-than-planned markdowns across most of our product categories. The impact of December’s lower sales and accelerated markdowns is expected to reduce our fourth-quarter earnings by five cents.”

Hayes noted that Fred’s opened two stores and one pharmacy in December.

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Walgreens, DHL team up to offer shipping at store kiosks

BY Drew Buono

DEERFIELD, Ill. Walgreens has entered into an agreement with DHL to offer shipping services in almost all of its stores. The program will begin in April in Illinois and Florida and is expected to expand to more than 6,500 locations by the end of the calendar year 2008.

DHL shipping spot kiosks will be available at Walgreens photo counters and will be staffed by Walgreens employees, who will weigh, label and ship customer packages to U.S. or international destinations. Each location will offer packaging materials, in addition to complimentary DHL Express shipping envelopes and boxes. Walgreens customers will have access to all of DHL’s core services, including overnight, ground and international delivery.

“We’ve seen strong customer response to DHL in-store shipping in test markets,” said Walgreens executive vice president of marketing George Riedl. “The service addresses an important need for our time-crunched customer base. This new offering will be another powerful addition to our overall strategy of making life easier for customers.”

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Supervalu reports earnings increase despite sales drop

BY Michael Johnsen

MINNEAPOLIS Supervalu on Wednesday reported a third-quarter drop of 4.7 percent in net sales of $10.2 billion, but record net earnings of $141 million show an increase of 25 percent compared to the year-ago period.

“Our third-quarter results continue to benefit from the transformational acquisition in 2006 as we deliver the sixth straight quarter of double-digit earnings per share growth,” stated Jeff Noddle, Supervalu chairman and chief executive officer. We are pleased with our overall results, despite some headwind from softer than expected retail sales in the quarter.”

Supervalu’s third quarter of fiscal 2008 ended Dec. 1, 2007, and included 12 weeks of combined results compared to the third quarter of fiscal 2007 which included 13 weeks of acquired operations. The estimated sales impact of one less week of acquired operations in the third quarter of fiscal 2008 is approximately $500 million.

In addition, third-quarter fiscal 2008 and third-quarter fiscal 2007 results included after-tax charges for one-time acquisition-related costs of $7 million and $10 million, respectively. When adjusting for the one-time acquisition costs in both years and the one extra week in the prior year quarter, diluted earnings per share increased 23 percent, the company stated.

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