Fred’s Retains PJ Solomon to Evaluate Strategic Alternatives to Maximize Value

MEMPHIS, Tenn., April 11, 2019 (GLOBE NEWSWIRE) -- Fred’s, Inc. (NASDAQ: FRED) today announced the retention of PJ Solomon to evaluate strategic alternatives to maximize value for all shareholders.  The Company also announced that it will begin to close underperforming and unprofitable stores.

Strategic Alternatives Review
Fred’s has retained PJ Solomon to advise it in connection with a review of strategic alternatives to maximize value for all shareholders.  The review will include a thorough evaluation of the Company's current operating plan, as well as all other potential alternatives to maximize value.

There can be no assurance that the strategic review will result in any specific action, or any assurance as to its outcome or timing. The Company does not intend to discuss or disclose further developments related to its review unless and until the Board has approved a specific action or otherwise determined that further disclosure is appropriate, or if disclosure is required by applicable law.

Store Closures
Fred’s decision to close underperforming stores follows a comprehensive evaluation of the Company's store portfolio, including historical and recent store performance and the timing of lease expirations, among other factors.  Liquidation sales at the 159 stores currently designated for closure will begin today while the Company’s 398 other stores will remain open. 

Joseph Anto, Fred’s Chief Executive Officer, stated: “After a careful review, we have made the decision to rationalize our footprint by closing underperforming stores, with a particular focus on locations with shorter duration leases.  Most of these stores have near-term lease expirations and limited remaining lease obligations.  Decisions that impact our associates in this way are difficult, but the steps we are announcing are necessary.  We will make every effort to transition impacted associates to other stores where possible.”

Fred’s intends to close all 159 impacted stores by the end of May 2019.  Fred’s has partnered with Malfitano Advisors, LLC and SB360 Capital Partners to help manage the process and ensure a seamless experience for customers.  A list of impacted stores may be found at the end of this release.

Pharmacy Sales
Fred’s is also continuing to pursue the sale of its remaining pharmacy assets as part of its previously announced plan to unlock shareholder value by monetizing noncore assets.  In September 2018, Fred’s announced that it had reached an agreement with Walgreens to sell the pharmacy patient prescription files and related pharmacy inventory of 179 Fred’s stores located across 10 Southeastern states; the transaction closed in the Company’s fourth fiscal quarter.

About Fred’s Inc.
Since 1947, Fred’s, Inc. has been an integral part of the communities it serves throughout the southeastern United States. Today, Fred’s operates 557 discount value stores and its mission is to make it easy AND exciting to save money. Its unique format offers customers a full range of value-priced everyday items, along with terrific deals on closeout merchandise throughout the store. For more information about the Company, visit Fred’s website at www.fredsinc.com.

Forward Looking Statement
Comments in this news release that are not historical facts are forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. A reader can identify forward-looking statements because they are not limited to historical facts or they use such words as “outlook,” “guidance,” “may,” “should,” “could,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “committed,” “continue,” or “will likely result” and similar expressions that concern the Company’s strategy, plans, intentions or beliefs about future occurrences or results. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Forward-looking statements include, but are not limited to, statements about future financial and operating results, the Company’s plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales growth, comparable sales, earnings and performance, shareholder value, capital expenditures, cash flows, demand for products, share repurchases, strategic initiatives, including those relating to store closures and acquisitions and dispositions by the Company and the expected impact of such transactions on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing and other statements that are not historical facts. Although we believe that the expectations, opinions, projections and comments reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to risks and uncertainties associated with: (i) the competitive nature of the industries in which we operate; (ii) our turnaround plan and the implementation of our strategic initiatives, and their impact on our sales, costs and operations; (iii) our store closures and the related sales of inventory and real estate issues; (iv) our divestitures; (v) utilizing our existing and new stores and the extent of our pharmacy department presence in new and existing stores; (vi) conditions affecting the retail sector as a whole; (vii) our reliance on a single supplier of pharmaceutical products; (viii) our pharmaceutical drug pricing; (ix) reimbursement rates and the terms of our agreements with pharmacy benefit management companies; (x) consolidation in the healthcare industry; (xi)  our private brands; (xii) the seasonality of our business and the impact of adverse weather conditions; (xiii) operational, supply chain and distribution difficulties; (xiv) merchandise supply and pricing; (xv) consumer demand and product mix; (xvi) delayed openings and operating new stores and distribution facilities; (xvii) our employees; (xviii) risks relating to payment processing; (xix) our computer systems, and the processes supported by our information technology infrastructure; (xx) our ability to protect the personal information of our customers and employees; (xxi) cyber-attacks; (xxii) changes in governmental regulations; (xxiii) the outcome of legal proceedings, including claims of product liability; (xxiv) insurance costs; (xxv) tax assessments and unclaimed property audits; (xxvi) current economic conditions;  (xxvii) our indebtedness and our ability to satisfy our debt obligations; (xxviii) the terms of our existing and future indebtedness, including the covenants set forth in the documents governing such indebtedness; (xxix) any acquisitions we may pursue and the ability to effectively integrate businesses that we acquire; (xxx) our ability to maintain effective internal controls over financial reporting; (xxxi) our largest stockholder holding a significant percentage of our outstanding equity; (xxxii) our ability to pay dividends and/or repurchase shares of our Class A voting common stock; (xxxiii) our ability to attract and retain talented executives; (xxxiv) any strategic alternatives that we decide to pursue, if any; and (xxxv) the factors listed under “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and any subsequent quarterly filings on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made. The Company undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

Contacts
Fred’s Inc:
Jen Ehlers
817-369-5772
jen.ehlers@fredsinc.com

LIST OF STORE LOCATIONS TO BE CLOSED