Fred’s reports slight gain in total sales numbers for September

MEMPHIS, Tenn Fred’s Inc. on Tuesday reported that total sales for the five weeks ending Oct. 4 were $161.3 million, up slightly from $161.1 million in Sept. 2007.

Excluding stores closed in 2008, total sales from ongoing stores increased 4 percent in September versus the same month last year. Comparable store sales for the month increased 1.1 percent.

“Increased customer transactions during September demonstrate that our sales initiatives

continue to improve the Fred’s shopping experience for our customers and, in turn, are helping us grow market share,” stated Fred’s chief executive officer Michael Hayes. “As the month came to an end, however, we saw a drop-off in our sales as our customers became more apprehensive about the credit crunch and grew more cash restrained. The sales trends in our pharmacy department also continue to affect our top-line sales—even though pharmacy margins are improving—as we experience comparable script growth that is less than the effect of the branded-to-generic script-mix shift.”

Citing that consumer angst over cash flow, Fred’s lowered its outlook for third quarter earnings to a range of $0.14 to $0.16 in earnings per diluted share, as more and more customers are expected to gravitate toward lower-margin departments, the company stated.

Fred’s did not open any stores or pharmacies in September. During the first eight months of the current fiscal year, Fred’s has opened 17 new stores and four new pharmacies.