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Fred's Q1 results on higher end of expectations

Memphis - Regional discount chain Fred's Inc. got the new fiscal year off to a decent start, with increases in net income and sales, albeit a slight decline in comps, in its first quarter.

Fred's net income for the first quarter, ended April 28, increased 10.5% to $10.5 million, with earnings per diluted share rising 17% to 28 cents.

Total sales were up 3% to $500.5 million, but comps slipped 0.4% versus on top of a 1.0% increase for the first quarter last year.

Bruce Efird, ceo of the 707-unit retailer, explained that had it not been for the expiration of certain federal tax credits at the end of 2011, which benefited the year-earlier quarter and resulted in a lower tax rate last year, Fred's first quarter earnings per diluted share would have jumped 21% on a comparable quarter basis.

Looking ahead, Fred's continues "to leverage store and pharmacy growth, putting strong emphasis in the general merchandising departments and initiating a series of new programs with a fresh new look," Efird added. "Our goals for 2012 remain firm as we work to drive increased operating margins and earnings per diluted share throughout the year."

In the second quarter, the company expects sales to increase in the range of 4% to 6% and comps to be about flat versus a decrease of 0.4% in the second quarter last year.



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