Fred’s accelerates turnaround with ‘refresher’ plan

Memphis, Tenn. – Discount general merchandiser Fred’s Inc. said its “refresher” program is yielding positive results, as the company reported fiscal year 2006 net income increased 2% to $26.7 million or $0.67 per diluted share, from net income of $26.1 million or $0.66 per diluted share for 2005.

Quarterly earnings were $9.2 million or $0.23 per diluted share, off from net income in the prior-year period of $9.6 million or $0.24 per diluted share.

For 2006, total sales increased 11% to $1.77 billion compared with $1.59 billion in the year-earlier period, while fourth-quarter sales accelerated, growing 17% to $535.6 million from $456.5 million in the same period last year.

Michael Hayes, ceo of the 701-store southeastern chain, “I am pleased with the way we executed our plan in the fourth quarter, meeting goals for sales, expenses and operating income. On a comparable basis, excluding the effect of restructuring costs and stock option expense, fourth quarter operating income improved approximately 20% over the same period last year, as earnings per diluted share, excluding the impact of restructuring, reached the high end of our forecast.”

Hayes emphasized, “The roll-out of our store refresher program and new merchandising strategies will improve the look and feel of our stores. This will be backed by a new branding campaign.”

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