Fred's posts increases in October despite some headwinds
Gary Evans -- Furniture Today, November 7, 2013
Memphis, Tenn. - Meeting guidance but on the lower end, Fred's reported mild sales increases in October.
The 701-unit regional discount chain posted a 2% increase in total sales for the month to $143.4 million. Comparable store sales showed a turnaround from last year, increasing 0.8% versus a decline of 0.8% in the same period last year.
Total sales for the third quarter were $460.5 million, up 2%, and comps increased 1.4% compared with a decline of 2.5% a year ago.
Year to date, Fred's total sales rose 2% to $1.4 billion, and comps were up 1.1% versus a decline of 0.8% in the same period last year.
Bruce Efird, ceo, said general merchandise sales were sluggish and the business was consumable-driven in October.
"Poor weather around Halloween hurt sales and consumers tightened spending during the recent budget crisis, with the combination affecting sales and gross margins in the back half of the month," he added.
Fred's however showed strength elsewhere, namely pharmacy and its newly reconfigured departments, especially hometown auto & hardware."
Efird noted that reported sales also were reduced by higher comparable layaway sales, which are not recognized for accounting purposes.
"As a result of the October sales performance, we now expect third quarter earnings to be up 5% to 10% over last year," Efird said. "Forecasts for the upcoming holiday season project a very tough retail environment. In anticipation of these challenges, Fred's merchandising team has maintained inventories at or below last year's levels and has initiated an aggressive and targeted marketing program for the fourth quarter."
During the month, Fred's opened two stores with relocated pharmacies and closed one Xpress pharmacy locations.
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