Fred’s posts 8% total sales lift in Q1, 1% comps increase

MEMPHIS, Tenn. — Fred’s on Thursday reported its earnings for the first quarter ended April 30, posting an 8% increase in total sales and a net income of $1.3 million. The company saw comparable store sales increase 1% for the first quarter, which is slightly better than the 0.8% increase in comps it posted in Q1 2015. 

 

The company’s adjusted earnings before interest, taxes, depreciation and amortization grew 35% to $15.7 million and its gross profit increased 3.1% to $141.3 million, compared to 137.1 million in the prior-year period. The company noted continued gross margin pressure in the pharmacy department, increased margins in general merchandise and leveraged SG&A expenses helped with earnings and operating margin, delivering profits on the top end of his guidance. 

 

“We are pleased to report a successful first quarter, highlighted by earnings growth and ongoing improvement throughout the company. “Our business model continues to undergo an exciting transformation as we further leverage our broad pharmacy capabilities together with a new retail store format and expanded product assortment. We believe the investments we have made to enhance human capital, strategic planning, process enhancements, and technology — to transform our business — will continue to drive earnings growth and shareholder value.”

 

The company opened one new store during the first quarter, and its second quarter guidance projects its sales increase to range from flat to 2%, and it expects a total sales increase of 2% to 6%