Fred’s dip in pharmacy sales brings down bottom line in June

MEMPHIS, Tenn. — Fred’s on Thursday reported its June sales figures, posting a 2.3% decrease in total sales for the five weeks ended July 2, totaling $208.5 million, compared to last June’s $213.3 million. Comparable store sales also saw a drop of 1.3%, where last June there was a 1.6% rise. 

 

The company’s total sales for the first five months of FY2016, however, are showing a 3.8% increase over the same period last year, posting $923.2 million in total sales. Year-to-date comps grew by 0.1%, compared to a 0.8% increase for the period last year. 

 

Commenting on the numbers, Fred’s CEO Jerry Shore noted that the front-store performance in June was strong, due largely to growth in health and beauty, seasonal merchandise, apparel, toys, lawn and garden and electronics. Shore said the company continues to face challenges when it comes to paper, chemicals and food. But the biggest thing Shore identified as curbing front-store sales is pharmacy. 

 

“Lower pharmacy sales reflected the industry-wide slowdown in specialty pharmacy sales attributable to the demand for Hepatitis C drugs as well as a decline in retail sales and scripts, which underscored calendar shifts that benefited May to the detriment of June,” Shore said, noting that the company hopes to expand high-margin offerings and turn around weak categories by the end of Q3, while looking forward in pharmacy. 

 

“We expect the retail pharmacy department will remain resilient as our labor management program continues to have a positive impact on our cost to fill,” Shore said. “Additionally, the pressured Hepatitis C segment should benefit from new Hepatitis C drugs being introduced in July as well as longer-term company strategies to expand additional therapies.”