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bostonangler

Fred’s to close more than a quarter of its stores

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The board of directors for Fred’s Inc. has approved the closure of 159 “underperforming stores.”  

According to an April 11 U.S. Securities and Exchange Commission (SEC) filing from the Memphis-based discount retail chain, "The decision to close these stores is the result of a comprehensive evaluation of the company’s store portfolio, which examined historical and recent store performance and the timing of lease expirations, among other factors."

The 159 stores are expected to close by the end of May. The closure list, that includes multiple Mid-South stores, can be found at the end of the article.

The SEC filing goes on to state:

“The Company is currently unable in good faith to make a determination of an estimate of the amount or range of amounts expected to be incurred in connection with the Plan, both with respect to each major type of cost associated therewith and with respect to the total cost, or an estimate of the amount or range of amounts that will result in future cash expenditures. The Company will file an amendment to this Current Report on Form 8-K after it determines such estimates or ranges of estimates."

In conjunction with today’s SEC filing, Fred’s also issued a press release that stated it had retained financial advisory firm PJ Solomon April 10 to “evaluate strategic alternatives to maximize value for all shareholders.” PJ Solomon will review Fred’s operating plan and strategic alternatives.

The Wall Street Journal reported April 5 that Fred’s had hired a financial adviser and was looking at store reductions. According to the April 11 SEC filing, the board approved the store closures April 5.

“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,” said Fred's CEO Joe Anto in a release. “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.”

   

Liquidation sales will start at the 159 Fred’s stores today. After the closures, Fred’s will have 398 stores remaining in its portfolio, representing 71.5 percent of its former holdings. The company also has plans to try and sell its remaining pharmacy assets. In January, Fred’s completed the transfer of pharmacy patient prescription files and pharmacy inventory for 179 Fred’s stores to Walgreens as part of a $177 million deal.

Fred’s has hired SB360 Capital Partners and Malfitano Partners to assist in the store liquidation.

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