Discount chain Fred’s is joining the growing list of retailers shuttering stores amid slumping sales.
The Memphis-based company announced Thursday that it would close 159 underperforming stores by the end of May with “going out of business” sales starting Thursday as it looks to reduce its store footprint and “evaluate strategic alternatives.”
The retailer said in a statement that it retained investment banking advisory firm PJ Solomon to assess its options “to maximize value” and hired liquidation firms Malfitano Advisors and SB360 Capital Partners “to help manage the process and ensure a seamless experience for customers.”
When companies announce they are considering “strategic alternatives,” it often involves a potential sale or restructuring.
The closing stores represent nearly 29% of Fred’s 557 stores and are located in 13 states, with Mississippi, Alabama, Georgia and Tennessee losing the most stores.
Sales at Fred’s stores open at least a year fell 4.9% in the first nine months of 2018, compared with a year earlier.
“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,” Fred’s CEO Joseph Anto said in the statement. “Most of these stores have near‐term lease expirations and limited remaining lease obligations.”
Shares of Fred’s were down nearly 5.8% at $1.97 in midday Thursday trading after the announcement.
The liquidation
Also Thursday, SB360 Capital Partners, which is managing the closing sales, announced the firm was launching “Total Inventory Blowout” clearance sales at an additional 360 Fred’s stores.
Discounts are 5% to 20% off the lowest ticketed price with some exclusions at both the closing locations and stores holding clearance sales, SB360 officials told USA TODAY.
“Fred’s stores bring the everyday necessities closer to home, and they do it at discount prices,” said Ziggy Schaffer, an executive vice president with SB360. “The store closing and total inventory blowout events will bring value on top of value.”
With most of Fred’s stores in smaller communities, Aaron Miller, an executive vice president with SB360, said they’re expecting “a pretty strong response from the customers.”
“Fred’s has a loyal following and we’re expecting increased traffic,” Miller said. “The merchandise will go quickly.”
SB360 has managed liquidation sales for more than 50 years and is an affiliate of the Schottenstein family, which also owns DSW Inc. and American Eagle Outfitters. It recently handled the Charlotte Russe liquidation.
Fred’s will remain “a one-stop shop with continued replenishment of food staples,” Miller said, noting milk, eggs, beverages and frozen items would be restocked throughout the sale.
Only 37 stores, or 7%, of stores are not included in either the clearance or liquidation sales.
What happened
In 2017, a deal for Fred’s to acquire hundreds of Rite Aid or Walgreens stores collapsed when a mega-merger between the pharmacy giants deteriorated.
Months later, Fred’s announced it was considering “strategic transactions and alternatives for certain non-core assets,” including real estate and specialty pharmacy business.
Last September, Fred’s reached an agreement to sell the pharmacy patient prescription files and related pharmacy inventory of 179 Fred’s stores located across 10 southeastern states to Walgreens for $165 million.
With Thursday’s announcement, Fred’s said it is “continuing to pursue the sale of its remaining pharmacy assets as part of its previously announced plan.”
Fred’s is part of a wave of recent retail closures. Based on figures from global marketing research firm Coresight Research, bankruptcy filings and company earnings reports, more than 6,500 stores are slated to close locations in 2019.
The brick-and-mortar downturn is expected to continue, according to a new report released this week from UBS Securities. Investment bank analysts said 75,000 more stores would need to be shuttered by 2026 if e-commerce “penetration rises from 16% currently to 25%.”
What’s next for Fred’s
In Fred’s statement Thursday, the company said PJ Solomon would do a “thorough evaluation” of the company’s plan and look for alternatives.
“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 statement said.
The number of employees affected was not immediately available.
“Decisions that impact our associates in this way are difficult, but the steps we are announcing are necessary,” Anto said. “We will make every effort to transition impacted associates to other stores where possible.”
There are no plans to close a majority or all Fred’s stores or to file for bankruptcy, The Wall Street Journal reported last week.
Stores closings
Liquidation is getting underway at 159 Fred’s stores in 13 states with discounts ranging from 5% to 20% on most items with some exclusions. The stores are expected to close by the end of May.
Alabama
- Anniston: 1544 Greenbrier Ln
- Branchville: 13254 Hwy 411
- Center Point: 1683 Center Point Pkwy
- Centre: 710 Cherokee Plz
- Enterprise: 621 Boll Weevil Cir
- Florence: 321 N Court St
- Florence: 4150 Florence Blvd
- Foley: 1200 N Mckenzie Street
- Guntersville: 1477 Sunset Dr
- Hoover: 3317 Lorna Rd
- Hueytown: 3056 Allison Bonnett Memorial Dr
- Lanett: 622 Cherry Dr
- Marion: 1549 Highway 5 S
- Monroeville: 1318 S Highway 21 Byp
- Roanoke: 3077 Highway 431
- Russellville: 13150 Highway 43
- Sylacauga: 212 W Fort Williams St
- Talladega: 65364 Hwy 77
- Tuscumbia: 1401 Woodmont Dr
Arkansas
- Bryant: 3395 Highway 5 N
- Cabot: 207 S 2nd St
- Conway: 245 Oak St
- Conway: 1125 Morningside Dr
- El Dorado: 430 S Bradley Ave
- Forrest City: 2227 N Washington St
- Harrison: 617 Highway 62 65 N
- Hope: 535 N Hervey St
- Jonesboro: 2308 S Caraway Rd
- Mena: 1201 Highway 71 S
- Mountain Home: 509 Hwy 62 E.
- Newport: 1705 Malcolm Ave
- Osceola: 1324 W Keiser Ave
- Paragould: 1723 W Kings highway
- Prescott: 1426 W 1st St N
- Russellville: 3303 W Main Pl
- Searcy: 2706 E Race Ave
- Stamps: 1110 E Antigo St
- West Memphis: 606 E Broadway St
Georgia
- Adel: 1014 S Hutchinson Ave
- Bainbridge: 1602 E Shotwell St
- Barnesville: 790 Veterans Pkwy
- Blakely: 800 Columbia Rd
- Brunswick: 5485 New Jesup Hwy
- Calhoun: 325 Curtis Pkwy Se
- Camilla: 500 Us Highway 19 S
- Cedartown: 550 N Main St
- Cleveland: 156 Wanderway Dr
- Cordele: 102 E 14th Ave
- Covington: 6179 Highway 278 Ne
- Dillard: 7230 Highway 441 N
- Hinesville: 767 Veterans Parkway
- Jasper: 970 E Church St
- Kingsland: 925 E King Ave
- Mcdonough: 1550 S. Zach Hinton Pkwy
- Quitman: 1315 W Screven St
- Ringgold: 1426 West 1st North
- Riverdale: 94 Upper Riverdale Rd Sw
- Rome: 1916 Redmond Cir Nw
- Royston: 411 Smith St
- Swainsboro: 501 S Main St
- Thomasville: 2730 E Pinetree Blvd
- Tunnel Hill: 3593 Chattanooga Rd
- Zebulon: 9215 Highway 19 N
Illinois
- Benton: 215 Bailey Ln
Kentucky
- Hopkinsville: 3129 Canton Pike
- Murray: 928 S 12th St
- Princeton: 300 Hwy 62 W
- Russell Springs: 2385 Lakeway Dr
Louisiana
- Baton Rouge: 10710 Greenwell Springs Road
- Bossier City: 5751 Shed Rd
- Carencro: 806 Veterans Dr
- Franklin: 1801 West Main Street
- Gonzales: 228 W Highway 30
- Hammond: 125 Hwy 51 North
- Jonesboro: 310 E Main St
- Lafayette: 2490 W Congress St
- Monroe: 2350 Sterlington Rd
- Natchitoches: 400 Dixie Plz
- Pineville: 4628 Highway 28 E
- Shreveport: 5907 Old Mooringsport Road
- St. Martinville: 1114 South Main Street
- Westlake: 1514 Sampson Street
Missouri
- Cape Girardeau: 121a South Sprigg Street
- Poplar Bluff: 441 Highway 53
Mississippi
- Aberdeen: 107 N Meridian St
- Brookhaven: 218 S Whitworth Ave
- Byram: 7261 S Siwell Rd
- Cleveland: 306 E Sunflower Rd
- Coldwater: 520 Central Ave
- Columbia: Hwy 13 Northgate S/C
- Columbus: 304 5th St S
- Columbus: 201 G Alabama St
- Florence: 2932 Highway 49 S
- Forest: 237 Woodland Dr
- Gautier: 1693 Highway 90
- Greenville: 7616 Highway 80
- Greenville: 1600 S Colorado St
- Greenwood: 813 W Park Ave
- Hattiesburg: 1000 Broadway Dr
- Holly Springs: 148 W Van Dorn Ave
- Horn Lake: 3031 Goodman Rd W
- Jackson: 225 Meadowbrook Rd
- Jackson: 540 Raymond Rd
- Leland: 302 North Main St.
- Magee: 1700 Simpson Hwy
- Meridian: 626 22nd Ave S
- Ocean Springs: 3176 Bienville Blvd
- Pascagoula: 2511 Ingalls Ave
- Pearl: 235 George Wallace Dr
- Philadelphia: 714 Pecan Ave
- Terry: 422 W Cunningham Ave
- Tupelo: 809 Varsity Dr
- Tupelo: 1776 McCullough Blvd
- West Point: 26591 E Main St
- Yazoo City: 1200 Jerry Clower Blvd
North Carolina
- Dunn: 988 Erwin Rd.
- Marion: 1155 N Main St
- Spruce Pine: 11931 S 226 Hwy
Oklahoma
- Wagoner: 700 E Cherokee St
South Carolina
- Anderson: 122 E Shocky Ferry Rd
- Chester: 109 Cestrain Sq
- Clinton: 105 B Jacobs Hwy
- Hodges: 4905 Emerson St
- Iva: 9710 Highway 81 S
- Ladson: 119 College Park Rd
- Landrum: 213 W Rutherford St
- Liberty: 315 W Front St
- North Augusta: 401 W Martintown Rd
- Orangeburg: 1180 Five Chop Rd
- Pickens: 310 Hampton Ave
Tennessee
- Brownsville: 337 E Main St
- Clarksville: 390 Highway 149
- Collierville: 450 Hwy 72 West
- Dayton: 260 16th Ave
- Decherd: 1755 Decherd Blvd
- Dyersburg: 805 Pennell Ln
- Gallatin: 420 W Main St
- Hartsville: 230 Broadway
- Jackson: 1688 S Highland Ave
- Jasper: 3600 Main St
- Lebanon: 230 E Gay St
- McMinnville: 912 N Chancery St
- Medina: 211 Three Oaks Drive
- Memphis: 4280 Getwell Rd
- Memphis: 5016 Old Summer Rd
- Mt. Pleasant: 700 North Main Street
- Murfreesboro: 1664 Middle Tennessee Blvd
- Newport: 122 Five Rivers Plaza Way
- Paris: 850 Volunteer Dr
- Portland: 114 W Knight St
- Pulaski: 1670 W College St
- Selmer: 399 Mulberry Ave
- Woodbury: 1130 S Mccrary St
Texas
- Gladewater: 601 Broadway Ave
- Kilgore: 605 N Henderson Blvd
- Lindale: 1601 S Main St
- Mc Gregor: 1000 S Main St
- Tyler: 1803 E Gentry Pkwy
- Whitehouse: 1123 State Highway 110 N
