Fred’s Pharmacy Reports April Sales

April Comparable Store Sales Increased 1.2%

Healthcare Transformation on Track

MEMPHIS, Tenn.--()--Fred’s, Inc. (“Fred’s Pharmacy” or the “Company”) (NASDAQ:FRED) today reported sales for the four-week fiscal month of April and the first quarter of fiscal 2017, which ended April 29, 2017.

Fred’s total sales for the month decreased 3.0% year-over-year to $159.1 million from $163.9 million in April 2016. Total comparable store sales for the month increased 1.2% compared with a 0.3% increase in comparable sales in the prior year period. Comparable store sales for April included a negative 1.0% impact as a result of the sale of low productive discontinued inventory versus April of last year. The April 2017 comparable store sales reflected double digit growth for Easter seasonal categories, which was the result of the shift of the Easter holiday from March 27 last year to April 16 this year.

Fred’s total sales for the first quarter of fiscal 2017 decreased 3.0% to $532.9 million compared with $549.5 million for the same period last year. The Company closed 39 underperforming stores in the quarter. On a comparable store basis, year-to-date sales decreased 1.2% versus an increase of 1.0% for the year-earlier period. Comparable store sales for the quarter included a negative 1.4% impact as a result of the sale of low productive discontinued inventory versus the same quarter last year.

Commenting on the announcement, Michael K. Bloom, Chief Executive Officer, said, “The Fred’s Pharmacy healthcare transformation is well under way as we continue to experience sequential sales improvement. The initiatives we began implementing in 2016 and early 2017 are taking hold and laying the foundation for continued success. We have created substantial momentum in our Pharmacy businesses as we make the strategic shift to focus on healthcare, with Specialty Pharmacy sales growing double digits and driving our consolidated pharmacy comparable sales. In Retail Pharmacy, we are seeing sequential growth in adjusted script comps, while our generic dispensing rate has increased as we continue our focus on more profitable scripts. We remain confident in the Fred’s Pharmacy plan to improve our performance, and are already realizing the benefits of our comprehensive strategy and talented management team.”

About Fred's Pharmacy

Tracing its history back to an original store in Coldwater, Mississippi, opened in 1947, today Fred’s Pharmacy is headquartered in Memphis, Tennessee, and operates 601 pharmacy and general merchandise stores and three specialty pharmacy-only locations, including 14 franchised Fred’s Pharmacy locations. With a unique store format and strategy that combines the best elements of a healthcare-focused drug store with a value-focused retailer, Fred’s Pharmacy stores offer more than 12,000 frequently purchased items that address the healthcare and everyday needs of its customers and patients. This includes nationally recognized brands, proprietary Fred’s Pharmacy label products, and a full range of value-priced selections. The company has two distribution centers, one in Memphis, Tennessee, and Dublin, Georgia.

On December 20, 2016, Fred's Pharmacy announced that it signed an agreement with Walgreens Boots Alliance, Inc. (NASDAQ: WBA) and Rite Aid Corporation (NYSE: RAD) to purchase 865 stores and certain assets related to store operations located across the eastern and western United States for $950 million in cash. Closing of the transaction is conditioned on the completion of Walgreens Boots Alliance's proposed acquisition of Rite Aid, approval by the Federal Trade Commission, as well as customary regulatory approvals and closing conditions.

For more information about the Company, visit Fred's website at www.fredsinc.com.

Forward-Looking Statements

Comments in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "outlook", "guidance", "may", "should", "could", “believe”, “anticipate”, “project”, “plan”, “expect”, “estimate”, “objective”, “forecast”, “goal”, “intend”, “will likely result”, or “will continue” and similar expressions generally identify forward-looking statements. All forward-looking statements are inherently uncertain, and concern matters that involve risks and other factors that may cause the actual performance of the Company to differ materially from the performance expressed or implied by these statements. Therefore, forward-looking statements should be evaluated in the context of these uncertainties and risks, including but not limited to the competitive nature of the industries in which we operate; the implementation of our strategic plan, and its impact on our sales, costs and operations; utilizing our existing and new stores and increasing our pharmacy department presence in new and existing stores; our reliance on a single supplier of pharmaceutical products; our pharmaceutical drug pricing; reimbursement rates and the terms of our agreements with pharmacy benefit management companies; our private brands; the seasonality of our business and the impact of adverse weather conditions; operational difficulties; merchandise supply and pricing; consumer demand and product mix; delayed openings and operating new stores and distribution facilities; our employees; risks relating to payment processing; our computer system, and the processes supported by our information technology infrastructure; our ability to protect the person information of our customers and employees; cyber-attacks; changes in governmental regulations; the outcome of legal proceedings, including claims of product liability; insurance costs; tax assessments and unclaimed property audits; current economic conditions; changes in third-party reimbursements; the terms of our existing and future indebtedness; our acquisitions and the ability to effectively integrate businesses that we acquire, including risks related to the possibility that transactions may not close, including because one or more closing conditions to such transactions, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of such transactions, or may require conditions, limitations or restrictions in connection with such approvals; the risk that the businesses and acquired stores, as applicable, will not be integrated successfully; the risk of litigation and/or regulatory actions related to such proposed transaction; our ability to pay dividends; and the factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and any subsequent filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date made. Consequently, all forward-looking statements are qualified by this cautionary statement. Readers should not place undue reliance on any forward-looking statements. Fred's undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

Contacts

Fred's Pharmacy
Rick Hans, 901-238-2232
Executive Vice President, Chief Financial Officer and Secretary
or
Joele Frank , Wilkinson Brimmer Katcher
Ed Trissel / Steve Frankel / Dan Moore, 212-355-4449

Release Summary

Fred’s Pharmacy Reports April Sales

Contacts

Fred's Pharmacy
Rick Hans, 901-238-2232
Executive Vice President, Chief Financial Officer and Secretary
or
Joele Frank , Wilkinson Brimmer Katcher
Ed Trissel / Steve Frankel / Dan Moore, 212-355-4449