Fred's, Inc. (FRED) Misses Q2 EPS by 2c, Offers Guidance

Fred's, Inc. (NASDAQ: FRED) reported Q2 EPS of ($0.19), $0.02 worse than the analyst estimate of ($0.17). Revenue for the quarter came in at $491.2 million versus the consensus estimate of $488.07 million. On a comparable store basis, year-to-date sales decreased 1.0% versus an increase of 0.5% in the same period last year.

The Company is implementing several key operational changes that will impact the results for the remainder of fiscal 2014, with positive financial returns in 2015 and beyond. These include:

• Addressing low-productive inventory that does not fit Fred's go-forward store model.
• The closing of 60 stores that have no pharmacies and do not meet operational performance targets.
• Supply chain and operational improvements at stores to improve productivity and remove costs associated with excessive inventory.
• Expanded general merchandise product sourcing capabilities.
• The transition to a new pharmacy prime vendor agreement with Cardinal Health.

Fred's, Inc. sees Q3 EPS of ($0.05)-($0.11), versus the consensus of $0.15. Total sales are expected to increase in the range of 3% to 5%.Comparable store sales are expected to increase in the range of 1% to 3%.

Fred's, Inc. sees FY2014 EPS of $0.72-$0.82, versus the consensus of $0.64. EBITDA in the range of $86 to $96 million.

For earnings history and earnings-related data on Fred's, Inc. (FRED) click here.

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