Memphis, Tenn. Fred's reported that its first-quarter total sales for its first quarter increased 3% to $471.6 million, compared with $458.4 million for the same period last year. The company also reported same-store sales increased 2.2% on top of a 2.8% increase in the first quarter last year.
However, net income totaled $8.2 million compared with net income of $8.6 million in the year-earlier period.
"Although we are still in the early stages of implementing current initiatives, the progress to date has been encouraging, along with the positive feedback we have received from our customers on Fred's new direction," said CEO Bruce A. Efird. "Looking forward, we will continue investing in our prototype stores, increasing the marketing of our Core 5 departments, and implementing the new merchandising layout in more than 200 stores this year. With the passage of the new healthcare bill, we see both opportunities and challenges, and remain committed to growing our pharmacy business -- both organically and through acquisitions.”
Fred's gross profit for first quarter 2010 increased 6% to $136.9 million, from $129.0 million in the prior-year period. Gross margin for the quarter increased to 29.0%, compared with 28.1% in the same quarter last year. The improvement in gross margin for the quarter resulted from an improved sales mix, higher pharmacy department margins, and lower store shrinkage.
Operating income for the quarter decreased to $13.2 million or 2.8% of sales, from $13.7 million or 3.0% of sales in the prior-year period.
During the first quarter, Fred's opened one new store and five new pharmacies.