Fred's Reports February Sales

Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week month of February, the first month of fiscal 2014, which ended March 1, 2014.

Fred's total sales for the month were $157.5 million compared with $159.0 million in February 2013. Comparable store sales for the month decreased 2.2% compared with a decrease of 1.5% in the prior-year period.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "Extreme cold temperatures, ice and snow across the southeast during February were major factors behind the lower-than-expected comparable store sales for the month. Like January, this weather disrupted consumer shopping trends, resulting in store closings and reduced operating hours at a significant number of our locations. Despite the weather, we continued to see positive comparable store sales during February in the Hometown Auto & Hardware, Pet, and Pharmacy departments.

"During March and April, we will continue to implement our reconfiguration plan in 60 to 80 stores with the Hometown Auto & Hardware department and seasonal expansions," Efird added. "In the pharmacy department, we will continue to accelerate new pharmacy acquisitions and focus on our plan for EIRIS Health Services, Fred's specialty pharmacy unit, which is experiencing solid script and sales growth in this fast-expanding segment of the pharmacy industry."

During February, Fred's opened two new pharmacies within existing stores.

Fred's, Inc. operates 704 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.