Fred's Reports December Sales

  Fred's Reports December Sales

Business Wire

MEMPHIS, Tenn. -- January 3, 2013

Fred's Inc. (NASDAQ: FRED) today reported sales for the five-week fiscal month
and 11-month year-to-date period ended December 29, 2012.

Fred's total sales for the month declined 1% to $209.9 million from $213.0
million in December 2011. Comparable store sales for the month decreased 4.2%
compared with a decline of 0.4% in the same period last year.

Fred's total sales for the year-to-date period increased 2% to $1.782 billion
compared with $1.747 billion in the same period last year. On a comparable
store basis, year-to-date sales declined 1.4% versus an increase of 0.7% in
the same period last year.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said,
"December sales did not meet our expectations as customers limited their
purchases of discretionary and weather-related merchandise again this month.
The economic headwinds around the holidays overshadowed some of the positive
aspects of the Company's performance in December, like the successful
completion of our layaway sales program and continued script improvement in
our pharmacy department." Efird said that, with the sales shortfall Fred's
experienced in November and December, the Company now expects fourth quarter
earnings per share to be in the range of $0.25 to $0.31.

"Looking ahead, we begin 2013 with many new programs and initiatives designed
to improve customer traffic," Efird continued. "We will accelerate pharmacy
growth through expanded programs in specialty drugs and clinical services, as
well as by increasing the pace of pharmacy acquisitions. In general
merchandise departments, we expect a positive impact from discount tobacco
programs and our new Hometown Auto and Hardware program, which will grow from
80 to 200 stores in 2013. We also are expanding the merchandise assortment in
our seasonal departments, designed to complement the new hardware program, and
we are upgrading the Home categories of our Core 5 Program.

"We expect that 2013 will be a springboard year for Fred's with the expansion
of specialty drugs and clinical services, accelerated pharmacy acquisitions,
new auto and hardware product initiatives, the rollout of a smaller drug and
dollar store concept, and the beginning of the relocation of approximately 125
stores," Efird added. "Our team is confident these programs will get Fred's
back to positive comparable sales and traffic in the upcoming year."

During the month, Fred's opened four new stores and one Xpress pharmacy and
closed two Xpress pharmacy locations.

Fred's, Inc. operates 712 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