Fred’s launches aggressive marketing campaign

Fred's plans to implement a long-term marketing strategy stressing everyday low pricing and the convenience of a smaller box to help bolster sales against what the company describes as "intense competitive pressures." The company's pharmacy operations continue to grow, however.

Fred's reported $150 million in sales for the four weeks ended May 3, representing a decline of 1.6% as compared to year-ago sales. For the first quarter ended May 3, sales totaled $498.5 million, down 0.6%.

Comparable store sales for the month of April decreased 2.3% compared with a 1.2% increase in the same period last year. On a comparable store basis, year-to-date sales decreased 1.9% versus a 1.3% decrease for the year-earlier period.

"April's sales reflect the limited success of our legacy marketing strategies in matching up with prevailing intense competitive pressures," stated Bruce Efird, Fred's CEO. "Beginning in late January, we started working with our outside marketing teams and consultants to uncover new opportunities available to us and adjust our marketing strategies to regain our sales momentum. Working through extensive research and building a marketing strategy that can be sustained over the long term has taken several months to design, develop and validate" he said. "One of the key findings of our research has pointed out that the aggressive use of our new strategy today is likely to be quickly embraced, based on the demographics of our customer base. The team has put together a solid marketing plan to capitalize on Fred's position as a low-price leader and brand our convenience departments' advantages over small-box competitors."

Fred's pharmacy department continued to demonstrate solid sales gains in April, with higher sales and comparable store script growth. "However, these improvements were not sufficient to offset the sales shortfall in the other general merchandise departments, which experienced negative comparable sales and traffic declines in April," Efird noted. "With this in mind, we now expect first quarter earnings per share to be in the range of $0.18 to $0.22. As we now begin to implement our new marketing strategy, we expect to see its impact beginning in June, when we anticipate a return to positive comparable store sales in the range of 1% to 3%."

During April, Fred's opened three Xpress stores, closed two stores without pharmacies, and converted one Xpress into a full-service store.



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