News

Fred’s Q2: Customer challenged; pharmacy significant POD

BY Michael Johnsen

MEMPHIS, Tenn. — Southeastern discount banner Fred’s on Thursday morning reported that the consumer continues to be challenged by economic pressures. "In key markets we continue to see swings in sales [tied to] the payroll cycle," Bruce Efird, Fred’s president and CEO, told analysts during a conference call this morning. Efird also reported an increase in government assistance utilization.

As many as 23% to 25% of consumers in those markets where Fred’s operates are receiving some form of government assistance, Efird said. "I’ts really hard to separate the effect of gas prices, the inflation that we’ve seen on core products, in addition to the debt crisis."

Other tell-tale signs that today’s customer is spend cautious — Efird reported significant declines across several segments considered as a discretionary cost by many consumers, including apparel, home furnishings and entertainment/electronics.

But not all necessarily is doom and gloom, Efird noted. A decent back-to-school period, currently in season, could serve as a good prognosticator that holiday sales, while not stellar, may be good as well. "I wouldn’t say we’re very bullish on the back half, [but] we’ve seen some easing on our customers," which should mean increased discretionary spending, Efird said.

"Back to school has done better than we anticipated, that is somewhat discretionary, [there has been] a lot of the growth in the basic and consumable products," reported Jerry Shore, Fred’s EVP, chief administrative officer and CFO.

As a deep discounter, Fred’s certainly has been successful communicating its value proposition to its core consumers. Fred’s reported net income of $5.1 million, up 3%, representing 14 cents per diluted share, for the second quarter ended July 30. That performance beat out the Capital IQ Consensus by one penny.

Pharmacy also continues to be a key traffic driver for the Southeastern chain — prescriptions filled were up 2% over the quarter. "Pharmacy is a strong differential factor in drawing customers to our stores," Efird said. And while the strong number of new generics has been negatively impacting top-line sales and same-store sales comps, the profitability of pharmacy going forward will be a positive considering the upcoming generic introductions to the blockbuster Lipitor (atorvastatin).

Fred’s total sales for second quarter of fiscal 2011 increased 1% to $452.7 million. Comparable-store sales for the quarter decreased 0.4% versus a 2.5% increase for the second quarter last year. Fred’s total sales for the first half of fiscal 2011 increased 2% to $937.1 million from $921.1 million for the same period last year. Comparable-store sales for the first half of 2011 increased 0.4% on top of a 2.4% increase for the same period last year.

In third quarter 2011, Fred’s expects total sales to increase 2% to 4%. Comparable-store sales are expected to increase 1% to 3% versus an increase of 1.5% in the third quarter last year.

"Looking ahead, with the federal debt crisis behind us for this year, our strategic initiatives well under way and the cost-reduction programs that are now in place, we are confident that we will regain the momentum experienced in the first quarter and expect income growth of 10% to 20% for the final two quarters of 2011," Efird stated.

During the second quarter, Fred’s opened two new stores and one pharmacy as part of its 2011 operating plan. One franchise store closed during the quarter. The company also remodeled and refreshed 68 stores with its new Core 5 elements in the quarter, bringing the total stores upgraded to 332 during 2010 and 2011.

Currently, Fred’s operates 674 discount general merchandise stores, including 22 franchised Fred’s stores, in the southeastern United States.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
News

OPI to launch Muppet-inspired nail lacquer collection at salons this holiday season

BY Antoinette Alexander

NEW YORK — This holiday season, OPI is paying homage to America’s Muppet friends as they hit the big screen in Disney’s “The Muppets” with a limited-edition collection of Muppet-inspired nail lacquers available beginning in November at nail salons, Ulta and JCPenney.

With an all-star cast, including Jason Segel, Amy Adams, Chris Cooper, Kermit, Miss Piggy and the entire Muppet crew, the comedy opens in theaters nationwide on Nov. 23. 

“OPI is so excited to work with Disney to celebrate this long-awaited movie release,” stated Suzi Weiss-Fischmann, OPI EVP and artistic director.  “Not only do The Muppets characters inspire fun, bright and joyful colors, the fashionable Miss Piggy lends her name to three high-shine pink-based hues, ranging from bold red flecked with silver to a multi-dimensional strawberry shade.”

This line features six shimmery reds and neutrals, as well as six glitter-packed shades, including:

  • Animal-istic: This wild bright red cannot be tamed!



  • Meep-Meep-Meep: Missing out on this fuchsia would make you weep, weep, weep!



  • Wocka Wocka!: The popular deep berry makes everything fun and merry!



  • Pepe’s Purple Passion: This deep, decadent shade is the best purple ever, okay!

  • 
Designer, de Better!: And this light metallic bronze is ready for the runway.

  • 
Warm & Fozzie: A feel-good shade of metallic copper.



  • Rainbow Connection: The rainbow glitter of your dreams.



  • Excuse Moi!: Ahem! This pink glitter has something to say!



  • Gone Gonzo!: The aqua-blue glitter is taking over the world!

  • 

Fresh Frog of Bel Air: A glitter that prefers the greener things in life.



  • Divine Swine: The finest, most fabulous magenta glitter ever.

  • 

Gettin’ Miss Piggy With It!: Red glittery fun for everyone!


keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
News

AstraZeneca introduces Rx savings program for Nexium patients

BY Allison Cerra

WILMINGTON, Del. — AstraZeneca is offering a discount savings program for its prescription acid reflux disease treatment.

The company said its new Nexium savings card is designed to offer eligible patients instant discounts on their prescriptions for the drug. AstraZeneca noted that the offer is good for up to $50 off on 12 prescriptions of at least a 30-day supply of Nexium, must be used within 14 months of the first prescription fill and cannot be combined with any other offer. Additionally, the offer is not valid for patients that have a co-pay of $18 or less.

Click here for more information.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?