MEMPHIS, Tenn. -- In yet another example of how discount stores are dominating the retail industry these days, Fred's Inc. reported strong earnings and sales growth for its fiscal fourth quarter. The company reported fourth-quarter net income of $8.6 million, or 22 cents per diluted share, a 49% increase over last year's reported net income of $5.8 million or 15 cents per diluted share. For the year ended Jan. 29, Fred's net income increased 25% to $29.6 million or 75 cents per diluted share compared with net income of $23.6 million or 59 cents per diluted share in the year-earlier period.
Fred's total sales for the fourth quarter of fiscal 2010 increased 3% to $485.6 million from $473.1 million for the same period last year. Comparable-store sales for the quarter increased 2.3% compared with a decline of 0.9% for the fourth quarter last year. Fred's total sales for 2010 increased 3% to $1.842 billion from $1.788 billion for the same period last year. Comparable-store sales for 2010 increased 2.2% on top of an increase of 0.4% in 2009.
Commenting on the results, Bruce Efird, CEO, said, "We are pleased to report a strong finish to fiscal 2010, with earnings per share up 47% for the fourth quarter. These results, which helped push earnings per share up 27% for the year, reflect the hard work and dedication of our team and their successful execution of our updated strategies – all within the context of a challenging retail climate. Through their efforts, we made significant progress during 2010 in upgrading our stores, improving our merchandise selection, and strengthening our customer service levels, which in turn helped drive increased sales and higher customer traffic."
During 2010, Fred's opened 15 store and 21 pharmacy locations and closed 7 store and 15 pharmacy locations. The company also refreshed 196 stores with its new Core 5 elements.
In the first quarter of 2011, the company expects total sales to increase 2% to 4%. Comparable-store sales are expected to increase 1% to 3% versus an increase of 2.2% in the first quarter last year. Earnings per diluted share are forecasted to increase 14% to 24% to a range of 24 cents to 26 cents for the first quarter compared with earnings per share of 21 cents in the same period last year. Based on this outlook, the company expects total earnings per diluted share for 2011 to be in the range of 84 cents to 90 cents, representing an increase of 12% to 20% over last year.