Fred's Reports Solid Total Sales for October

  Fred's Reports Solid Total Sales for October

Business Wire

MEMPHIS, Tenn. -- November 01, 2012

Fred's, Inc. (NASDAQ:FRED) today reported sales for the four-week fiscal
month, third quarter and nine-month year-to-date period ended
October27,2012.

Fred's total sales for the month increased 3% to $140.0 million from
$136.2million in October 2011. Comparable store sales for the month declined
0.8% versus an increase of 2.0% in the same period last year.

Total sales for the third quarter of 2012 were $450.6 million, up 1% from
$444.4 million in the same period last year. Comparable store sales for the
quarter declined 2.5% compared with an increase of 1.5% in the third quarter
of 2011.

Fred's total sales for the year-to-date period increased 3% to $1.422 billion
compared with $1.381 billion for the same period last year. On a comparable
store basis, year-to-date sales declined 0.8% versus an increase of 0.7% in
the same period last year.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said,
"We were pleased with the response to our increased marketing initiatives that
began in October, resulting in positive customer traffic and higher general
merchandising comparable store sales. One of our key end-of-year programs was
the initiation of a $1 down holiday season layaway program, which dramatically
increased layaway sales during the month. However, since layaway sales are not
recognized for accounting purposes until final payments are made, the benefit
of increased layaway sales, which would have added 150 basis points to total
and comparable store sales in October, will be deferred until the fourth
quarter. Also, we continued to see growth in script counts in our pharmacy
department during October, but this was more than offset by the sales impact
of the ongoing brand-name-to-generic conversion. The effect of this shift on
total and comparable store sales was 250 basis points in October.

"As we reach the end of the third quarter, we now expect earnings per share to
be in the range of $0.18 to $0.23 for the quarter," Efird added. "The
reduction in expected earnings from prior estimates reflects the incremental
shift in layaway sales, unfavorable LIFO expense charges in the quarter and a
single-event increase in insurance reserves, with a combined impact of $0.03
to $0.05 in earnings per share for the quarter. However, with the
implementation of several key new merchandising and marketing initiatives in
the fourth quarter and the positive impact of the forward shifting of layaway
sales and earnings, we continue to project a double-digit earnings per share
improvement for 2012, with full-year earnings per share now expected to be in
the range of $0.96 to $1.02."

During the month, Fred's opened three stores and one express pharmacy location
and closed one store.

Fred's, Inc. operates 708 discount general merchandise stores, including 21
franchised Fred's stores, in the southeastern United States. For more
information about the Company, visit Fred's website at www.fredsinc.com.

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. These risks and uncertainties include, but are not
limited to, general economic trends, changes in consumer demand or purchase
patterns, delays or interruptions in the flow of merchandise between the
Company's distribution centers and its stores or between the Company's
suppliers and same, a disruption in the Company's data processing services,
costs and delays in acquiring or developing new store sites, and other
contingencies discussed in the Company's Securities and Exchange Commission
filings. 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.

Contact:

Fred's, Inc.
Jerry A. Shore, 901-362-3733, Ext. 2217
Executive Vice President and
Chief Financial Officer
 
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