Fred's Reports February Sales

  Fred's Reports February Sales

Business Wire

MEMPHIS, Tenn. -- March 7, 2013

Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week month of
February, the first month of fiscal 2013, which ended March 2, 2013.

Fred's total sales for the month increased slightly to $159.2 million from
$159.0 million in February 2012. Comparable store sales for the month declined
1.5% compared with a decline of 0.7% in the same period last year.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said,
"Considering current economic headwinds, including delays encountered with
processing tax returns and refunds as well as increased payroll taxes, we were
pleased that February sales were within our projected range for the month.
General merchandise comparable store sales were positive for the second
consecutive month, reflecting good momentum in new initiatives such as an
expanded offering in auto/hardware and our discount tobacco shop. We also saw
a solid start to our new spring layaway program, and while sales under this
program are deferred until final payments are made and therefore not included
in February, they would have added 60 basis points to the month's total and
comparable store sales. In the pharmacy department, positive script growth
continued, but as in previous months, top-line sales were negatively affected
by the ongoing brand-to-generic shift. The effect of this shift on total and
comparable store sales was 280 basis points in February."

Because of the combination of fourth quarter promotional markdowns on basic
and consumable products, as well as year-end adjustments relating to
higher-than-anticipated insurance and other operating costs, the Company is
reducing its financial guidance for the fourth quarter of 2012. Fred's now
expects to report earnings in the range of $0.16 to $0.21 per share for the
fourth quarter. Although these adjustments are disappointing, the continued
positive results of the auto/hardware expansion will play a major role in the
changes we will be implementing in the new year. The Company will release
fourth quarter results on March 28, 2013, and during its conference call that
day, management will discuss the Company's 2013 reconfiguration program.

During February, Fred's opened one new store and pharmacy location.

Fred's, Inc. operates 713 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