Fred’s thriving in “alternative shopping industry”
September 8, 2006,
Memphis, Tenn. – To Fred’s Inc., the massive big-box retailer chains like Wal-Mart, Target and Kmart are “really our friends,” ceo Michael Hayes said at the Morgan Keegan Equity Conference late yesterday.
Hayes showed statistics to back his claim of a sweet spot. Referring to shopper buying patterns at various mass merchants, dollar stores and drug stores, he pointed to average tickets at Wal-Mart ($60 to $100), Walgreens ($55), Family Dollar ($9) and Dollar General ($9).
The Fred’s average ticket: $18.
The home segment at Fred’s is not huge; Home Textiles Today pegs the 2005 volume of home textiles at $70 million. The chain breaks out apparel and linens as 14% of total, with another 22% accounted for by “household goods.” Other components include food and tobacco, paper and cleaning supplies, health and beauty, and a major growth segment already at one-third of revenues – pharmacy.
Private label will play an increasing role at the chain, Hayes emphasized. The company stated full-year 2006 guidance of 11% - 15% sales gain and 3% to 5% comp gain, with a projected earnings per share of $0.72 to $0.78.
Jerry Shore, cfo, remarked that over the past five years the chain has doubled both revenues and store count.
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