Fred’s focuses on consumables, posts profit
By Cecile B. Corral -- Home Textiles Today, 3/26/2009 10:14:00 AM
Memphis, Tenn. – Showing modest but consistent growth rates over other more discretionary merchandise areas, the consumables category and pharmacy remain focal points going forward at Fred’s Inc. with expanded product assortments and allocated space in the works in 2009.
The 663-unit regional discount department store chain, which operates in 15 Southeastern states, said that the company is avidly exploring new store layouts that better position consumables and the in-store pharmacy this year, executives said during its fourth-quarter and yearend earnings call today with analysts.
Bruce Efird, president and who also became the chain’s ceo in February, said Fred’s has a pilot program for updating the store layout. Changes include switching to a single automatic door entrance, an uncluttered customer space, wider aisles, relocating pharmacy to the front, giving added exposure to seasonal merchandise, and anchoring the store corners with “strong traffic-generating departments to improve traffic flow.” He said of the latter, “this includes expanded consumables with an emphasis on food expansion.”
For the fourth quarter ended Jan. 31, Fred’s posted a profit of $2.3 million, or 6 cents per share, versus of loss of $4.4 million, or 11 cents per share, in the prior 4Q. Sales fell 5% to $494.1 million, primarily due to the closings of a net 55 stores and 12 pharmacies.
Profit for the fiscal year jumped 55% to $16.6 million, or 42 cents per share. Sales rose 1.1% to $1.8 billion.
For the year, food and tobacco comprised 15.5% of sales mix, a step up from the prior year when the category made up 14.2%. For the quarter, food and tobacco rang in 15% of the sales mix, compared to 13.8% in the prior fourth quarter.
But just as food and consumables grew, soft lines – which includes apparel -- shrank as a portion of sales. For the year soft lines decreased to 8.6% from 9.9% the previous year, and in the fourth quarter also sank to 8.8% from 10% the same period in 2007.
Efird is one example of recent leadership shifts for 2009. Fred’s recently implemented new leadership in several areas, including merchandising, marketing, real estate, store operations and store development. Leadership shifts include internal realignments, expanded existing roles and new outside talents.
“This realignment of responsibilities and new talent is bringing new energy into our organization,” Efird said.
Like many of its competitors, Fred’s is approaching its 2009 real estate plans more conservatively than in the past. New store openings include 12 to 16 new units and 10 to 14 new pharmacies, as well as an accelerated remodel program – which includes expanded consumables departments -- that calls for updating 30 stores.
Closings this year will range from three to 10 stores and 5 to 15 pharmacies.
I shop at the Zebulon store in Georgia and that store is so little. the isles are little and there is hardly no room to move around. I love shopping at Freds! I just wish yall would build a bigger building for all the stuff that is in that store. Also that way they could accept EBT food stamps. Thanks for reading.
Amanda Jones - 2009-04-03 22:45:00 EDT
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