Fred’s Comp Store Sales Improve

Fred’s Inc. (FRED: 10.35 -0.26 -2.45%) reported total sales of $209.3 million for December 2009, up 4% from $201.4 million in December 2008. Comparable store sales for the month increased 1.3%. This was an improvement compared to the comparable store sales growth of 1% reported in the third quarter. The company had posted flat comparable store sales in December 2008.

Fred witnessed increased customer traffic, continued pharmacy department script growth and better clearance of seasonal inventory during the reported month. Moreover, the company was successful in executing its expanded layaway program, which experienced an increase of approximately 320% over last year. As a result, the company managed to reduce its per-store inventory at the end of December by 7% from the year-ago level. The other factor that drove the inventory reduction was better merchandise planning.

For the first eleven months of the current fiscal year, Fred posted $1.66 billion in sales, which was down 1% from $1.673 billion in the comparable period last year. Year-to-date, comparable store sales increased 0.5%. Excluding closed stores, total sales from ongoing stores increased 1% in the 2009 year-to-date period versus the year-ago period.

As per the guidance provided during the third quarter conference call, fourth quarter net sales are expected to increase in the range of 1% to 3% compared to last year. Quarterly earnings are expected to be in the range of 17 cents to 24 cents per share, while annual earnings for fiscal 2009 are expected in the range of 62 cents to 69 cents per share.