By JACK WEATHERLY
With its history dating to 1947 in Coldwater, Miss., Fred’s Inc. is closing 49 more stores as it tightens up its balance sheet bleeding red ink.
Eighteen of the stores are in Mississippi. That means that since April, the chain has announced the closing of more than half of its stores, 260, leaving 240.
The announcement was made on Friday, two days after the Memphis-based discount retail chain released its fiscal first quarter financial statement.
Gross profit fell 16.2 percent, to $74.6 milion, in the quarter, compared with the year-earlier period.
Net sales for the period ending May 4 were down 5.2 percent to $319 million from $366.4 million. Comparable store sales – looking at stores that had been open at least one year – were down 8.5 percent.
“The sales decline was primarily the result in weak sales of consumables cause by the reduction in store traffic due to out-of-stock issues in certain categories,” the company said in its earnings report.
The company’s annual report filed with the Securities and Exchange Commission stated that “there is substantial doubt about Fred’s ability to continue as a going return.”
Its stock n the Nasdaq stood at about 38 cents per share when market opened on Wednesday. The 52-week range is 33 cents to $3.58.
Reports hold that the stock will be delisted from the Nasdaq, further hobbling its chances of being solvent.
The underperforming stores in Mississippi that are being closed are in Rolling Fork, Okolona, Calhoun City, Clarksville, Macon, Richton, Tylertown, Newton, Wiggins, Mantachie, Lexington, Woodville, Taylorsville, Indianola, Pelahatchie, Houston, Ackerman and Durant.
Rumors persist that Fred’s will move its headquarters from Memphis to Dallas.
Fred’s is not alone in its struggles. Yet another chain that caters to rural communities and low- to-middle income consumers, Dollar General, has benefited because of the “uneven recovery” in the national economy, which leaves many consumers looking for rock-bottom bargains.
The company in March it will open 975 new stores in the United States this year. Dollar General will remodel 1,000 older stores with new queue lines to drive last-minute impulse buys, according to CNN.
Dollar General has been growing for years in rural America. It opened 900 stores in 2018 and 1,315 the year prior. It has more than 15,300 stores across the country and sales have increased for 29 straight years.
Fred’s had hoped for a lifeboat with the purchase of of 865 Rite Aid pharmacies after a planned merger with Walgreen’s, but the merger was scrapped.
Meantime, Fred’s says its pharmacies will remain open at the otherwise shuttered locations.
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