Fred's Reports September Sales

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

Fred's total sales for the month increased 3.3% to $183.6 million from $177.8 million in September 2013. Comparable store sales for the month increased 0.2% on top of an increase of 2.8% in the same period last year.

Fred's total sales for the year-to-date period increased 1.5% to $1.320 billion from $1.301 billion for the same period last year. On a comparable store basis, year-to-date sales decreased 0.5% versus an increase of 0.8% for the year-earlier period.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "Our September comparable store sales continued the positive trend we have experienced in recent months in spite of the strong sales performance posted in the same month last year. Our initiatives to emphasize our convenience-center model continue to gain traction throughout the business. Driving customer traffic remains a challenge in our markets, but the implementation of these initiatives is clearly beginning to produce positive results. General merchandise inventory has been significantly lowered and our clearance programs to address unproductive inventory, once again, exceeded the sales plan for September. Additionally, our pharmacy department performed well with increases in both comparable scripts and sales. We are very excited to have our new pharmacy prime vendor agreement in place, which will not only accelerate gross margin improvement in the pharmacy department, but will also support our pharmacy expansion initiatives."

Efird added, "We are confident about the success of our initiatives to reposition the convenience-center model, expand marketing and implement new technology. In addition, we are optimistic about the process changes taking place in general merchandising and the pharmacy prime vendor contract now in effect. These factors will help restore growth and position Fred's for enhanced financial performance in the fourth quarter of 2014 and next year."

During the month, Fred’s closed five full service stores and one Xpress location. Fred's operates 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. A reader can identify forward-looking statements because they are not limited to historical facts or they use such words as "outlook," guidance," "may," "should," "could," "believe," "anticipate," "plan," "expect," "estimate," "forecast," "goal," "intend," "committed," "continue," or "will likely result" and similar expressions that concern the Company's strategy, plans, intentions or beliefs about future occurrences or results. These risks and uncertainties include, but are not limited to, those associated with the Company's announced strategic plan, the ultimate terms of the reworked pharmacy distribution agreement, lease buyouts and the underlying assumptions and projections upon which they are based, as well as risks that intended results may not be achieved or may not occur as quickly as expected; 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 the factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and any subsequent quarterly filings on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made. 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.