Fred’s files for bankruptcy, plans to shutter all stores

Discount merchandise retailer and pharmacy chain Fred’s filed for Chapter 11 bankruptcy Monday with plans to close all of its stores.

The company plans to liquidate its assets, punctuating a swift collapse of its operations that involved a cascading series of store closures in recent months.

Going-out-of-business sales are likely to wrap up within 60 days. It will continue to fill prescriptions during that period.

Fred’s had 568 stores in 15 states in the southeastern U.S. as of Feb. 2, including 169 with full-service pharmacies, according to a court filing.

But after multiple rounds of store closures, the company was left with about 80 locations in recent weeks.

The fate of Fred’s had been shrouded in uncertainty since the company’s plans to profit from a mega-merger between pharmacy giants Walgreens Boots Alliance and Rite Aid collapsed in late June 2017 amid federal antitrust concerns.

Fred’s, which was set to dramatically increase its store count as part of that deal, was instead left with no clear path to growth.

The retailer slashed costs aggressively, cut jobs and sold assets in pursuit of a sustainable business model.

“Despite our team’s best efforts, we were not able to avoid this outcome,” Fred’s CEO Joe Anto said in a statement. “I want to thank all of our employees for their hard work and continued support of the Company as we wind-down our operations.”

More than 7,000 store closings already are in the works or completed so far in 2019 across the retail sector, according to Coresight Research.

Founded in 1947, Fred’s targets “value-oriented and budget-conscious” consumers, mostly in towns with populations of 15,000 or fewer, according to a court filing.

Stores average 14,684 square feet and carry brand-name and off-brand merchandise. Fewer than a third of the stores had pharmacies as of May.

The company had nearly 6,600 employees as of Feb. 2, according to a court filing.

Fred’s tried a variety of lastminute moves to bring about a comeback, including flash sales, cost cuts and asset sales. The company announced 159 store closures in April, 104 in May, 49 in early July and 129 in mid-July.