Memphis, Tenn. – Fred’s Inc. cited higher income taxes as contributing to declining net income in the first quarter of fiscal 2014. Net income totaled $6.1 million, down 46% from $11.4 million in the same quarter in the previous year.
Fred's total sales for the first quarter of fiscal 2014 were $498.3 million, down slightly from $501.5 million for the first quarter last year. Same-store sales for the quarter declined 1.9%.
"As we outlined in our April sales release, the first quarter was a challenging period for Fred's due to a number of headwinds,” said Bruce A. Efird, CEO. “These challenges included intense competitive promotions and poor weather throughout much of the spring, which affected general merchandising. In addition to the sales impact of these issues, we also encountered extraordinary inflationary pressures on generic drugs in the first quarter, as we forecasted in our year-end 2013 press release.”
Fred’s is planning an overhaul of its stores and marketing strategy that includes a new front end, adjacencies and fixtures in late June, with substantial completion early in the fourth quarter and the balance in first quarter 2015. The store layout will better serve the needs of shoppers making convenience-based trips, which Fred’s sees as an area for growth.