Memphis, Tenn. Fred's Inc. will close 75 stores this year as part of a new cost-cutting campaign aimed at increasing the chain's annual operating margin by 4.5%.
The company said 75 under-performing locations, representing more than 10% of the chain, will be shuttered. However, the retailer plans to open 18 stores and 15 pharmacies in 2008.
Other goals of Fred's cost-cutting campaign include reducing corporate overhead by 10%, generating $11 million in annualized cash savings beginning in the second half of 2008, and launching merchandising programs to enhance margin.
“Taking actions now will increase our operating margin by more than 150 basis points and generate over $100 million in free cash flow over the next three years,” said CEO Michael J. Hayes.