Fred’s income even on wider sales
May 29, 2008-- Home Textiles Today,
Memphis, Tenn. – While growing its first-quarter sales by 5% to $464.3 million, neighborhood general merchandiser Fred’s Inc. fought to keep profits roughly flat at $7.3 million, down from $7.4 million for the year-ago period.
Comp-store sales rose 2.1%.
While gross profit was up 4% to $132.5 million, gross margin was off 20 basis points to 28.5% of sales, as the company said “pricing pressure, a mix shift of general merchandise products and higher inbound freight costs” were to blame. At the same time, SG&A costs were trimmed by 20 basis points.
Michael Hayes, ceo, said Fred’s adherence to its strategic plan “has resulted in higher comparable-store sales this year vs. the year-earlier quarter, despite an arguably more challenging economic environment, and has driven per-share earnings to the top end of our forecasted range.”
Hayes emphasized, “A key to our first-quarter performance was the strong 1.7% improvement in comparable customer traffic. Although we will see pressure on the gross margin over the balance of the year due to a shift in sales mix and the impact of inflation, we are pushing forward aggressively on our performance initiatives to continue driving customer traffic into our stores.”
Related Content By Author
Politics & Percale at the New York Home Fashions Market