Memphis, Tenn. Fred’s said Tuesday its profit for the quarter ended Oct. 31 dropped to $5 million, from $6.1 million a year ago. The general-merchandise retailer cited significant increases in promotional programs and associated expenses as the reason for the 17% decline in earnings.
Fred's total sales for the third quarter of fiscal 2009 increased 1% to $422.4 million, from $418.0 million for the same period last year. Comparable-store sales for the quarter increased 1.0%, compared with a 1.4% increase in the third quarter last year.
Bruce A. Efird, CEO, said, "The company's third-quarter sales and financial results did not meet expectations. During the quarter, we ramped up our promotions and advertising programs to drive traffic, and while those efforts produced a substantial increase in sales of the featured items, sales and traffic did not increase sufficiently to offset the higher markdowns and expenses.”
Fred’s opened its 300th pharmacy during the period, however, and opened eight new pharmacies during the third quarter. The company also opened one new store and closed nine stores during the quarter.
Fred's operates 665 discount general-merchandise stores, including 24 franchised Fred's stores at year-end.