Cool, damp spring held down sales at Fred’s
But discount retailer’s slump less than Wall Street forecast
America’s wet spring held down sales in May for discount retailer Fred’s Inc.
The Memphis company, which operates more than 700 stores in Southeastern states, on Thursday reported May revenue at stores open at least a year fell 0.5 percent.
Unusually cool weather continued to reduce demand for summer items, including toys and lawn and garden merchandise, said Fred’s chief executive officer Bruce Efird.
Sales at the company’s pharmacy department also were hurt by the continued shift toward generic drugs, he said.
Same-store sales are considered a key measure of a retailer’s performance, because it excludes revenue at stores that recently opened or closed.
Fred’s’ drop was smaller than Wall Street expected. Analysts polled by Thomson Reuters expected a decrease of 0.8 percent. Fred’s stock price rose 9 cents to close Thursday at $16.05 per share.
Total sales for the fourweek period ended June 1 increased 0.2 percent to $152.4 million from $152.1 million a year ago. For the first four months of the year, revenue at stores open at least a year fell 1.1 percent, while total sales increased 0.2 percent to $653.9 million.
Despite the lackluster sales, the Memphis retailer has managed a profit. For the three months ended May 4, Fred’s earned $11.4 million, or 31 cents per share, up from $10.5 million, or 28 cents per share, in 2012’s first quarter.
Other chains have fared better. Throughout the nation, retailers’ revenue at stores open at least a year rose 3.2 percent in May compared with the same month a year ago, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers.
Among the best performers were warehouse club operator Costco Wholesale Corp. and department store operator Stein Mart. Fresh food and tools for home repair were standout categories, Costco said.
Same-store sales are expected to rise 3 percent to 3.5 percent in June, the shopping center council said.