Fred's paring its merchandising mix to favor pharmacy

MEMPHIS, Tenn. — Fred's Super Dollar will be exiting a number of front-end categories — including footwear, televisions/home theater and select home furnishings — in an effort to expand seasonal, health, beauty, pharmacy and OTC, in line with reconfiguration plan strategies, Fred's CFO Jerry Shore told analysts Thursday. 

For Fred's, it's all about building out its pharmacy business. "By exiting these product lines, the company will better tailor its health and beauty care products to be more reflective of a pharmacy’s product offering," explained Bruce Efird, Fred's CEO. "In stores without pharmacy exiting these product lines will make much needed space available for ongoing automotive and hardware expansion plans."

In 2013, Fred's reconfigured 322 locations and boosted its pharmacy footprint from 346 to 355 locations. By the end of its fiscal 2014 first quarter, 53% of stores will feature a pharmacy offering and by the end of the year, 56% of stores will host a pharmacy, noted Efird. 

"As we continue to accelerate our pharmacy presence, we are further leveraging our pharmacy department by tailoring our general merchandise mix towards our pharmacy customers in stores with pharmacies," Efird said. "We will be retrofitting 80 stores in the first half of 2014 with the reconfiguration program as well. The results of reconfiguration continues to be positive, with comparative sales of retrofitted stores realizing a 1.6% comp gain over the chain store average."