Fred's Reports December Sales

  Fred's Reports December Sales

  *December comparable store sales rise 1.4% on the continued strength of
    Fred's pharmacy department
  *Jerry Shore, Chief Financial Officer, assumes additional duties as Chief
    Operating Officer
  *Company revamps its merchandising and marketing team and strategy; Chief
    Executive Officer Bruce Efird to lead the team
  *Fred's engages financial advisors to explore strategic opportunities to
    enhance shareholder value

Business Wire

MEMPHIS, Tenn. -- January 9, 2014

Fred's Inc. (NASDAQ:FRED) today reported sales for the five-week fiscal month
of December and the 11-month year-to-date period ended January 4, 2014.

Fred's total sales for the month were essentially flat at $209.5 million
versus sales of $209.9million in December 2012. Comparable store sales for
the month increased 1.4% versus a decline of 4.2% in the same period last
year.

Fred's total sales for the year-to-date period increased 1% to $1.805 billion
compared with $1.782 billion for the same period last year. On a comparable
store basis, year-to-date sales increased 0.9% versus a decline of 1.4% in the
same period last year.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said,
"While December sales were in the range of our expectations, they were driven
primarily by the strong performance of our Pharmacy department, as the
discretionary departments in general merchandising fell short of plan. The
positive impact from our reconfiguration plan continued in December, driven
mainly by our Hometown Auto & Hardware department. However, in spite of the
success of our reconfiguration program, Fred's 2013 fourth quarter promotional
strategy, which was centered on Black Friday, did not produce the incremental
gains we expected. As a result, we now expect fourth quarter earnings per
share to be flat to up modestly compared with the comparable 13-week period
last year.

"To address the challenges and opportunities coming out of the fourth
quarter," Efird added, "the merchandising and marketing team has been revamped
and now will report directly to me. We have developed new pricing, marketing,
inventory management and profit strategies that are designed to drive greater
profitability throughout the year, with a key goal of re-energizing fourth
quarter results in 2014. At the same time, we will continue to implement the
successful elements of our reconfiguration plan, adding 150 to 200 conversions
in 2014 and aggressively continuing our pharmacy expansion, which will reach
60% penetration of total stores by year end 2014."

In support of these strategic initiatives, the Company is promoting Jerry
Shore to the position of Chief Operating Officer. Shore also will continue his
responsibilities as Chief Financial Officer. As a result of this change, the
Company will benefit more comprehensively from Shore's demonstrated financial
and managerial expertise. Concurrently, CEO Bruce Efird will have the needed
time to manage the Company's ongoing efforts to improve its general
merchandise offering.

Additionally, the Board  has retained BofA Merrill Lynch and Peter J. Solomon
Company to review strategic opportunities to enhance shareholder value.

During December, Fred's opened two stores with pharmacies and two Xpress
pharmacy locations.

Fred's, Inc. has 701 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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