For the first quarter ended
Fred's total sales for the first quarter of fiscal 2014 were
Commenting on the results,
"We were pleased with sales trends in our pharmacy department, reflecting ongoing comparable script growth, and its continued expansion, as we added seven new pharmacies during the quarter," Efird added. "
"Realizing that customers' shopping habits are changing faster than ever, we recognize that we need to adapt to these changes and meet customers' needs on their terms," Efird continued. "Using internal resources, focus groups and consultants, we have identified several key opportunities, after factoring out the impact of the slower economic recovery in the southeast and the unusually harsh winter. What we learned from the four months of research is exciting and has provided the basis for an action plan. In mid-April, we implemented a two-part strategy designed to address pharmacy opportunities and the general merchandising changes we will be making to become the convenient, small-box store of choice.
"Fred's new strategy takes into consideration the ongoing emergence of internet shopping," said Efird. "This trend continues to reduce trips to conventional brick-and-mortar stores, but, at the same time, potentially expands the number of convenience, need-based shopping trips. We will be marketing the diverse categories we carry compared with other small box competitors to emphasize convenience, using a new marketing and signage strategy. The front end of our stores will be re-laid with power displays and pallets, along with a faster check-out configuration, all focused on ease of shopping and designed to emphasize the advantages of shopping at Fred's 15,000-square-foot box. With these changes, Fred's will be better positioned to serve more of the need-based categories, providing our customers with an easier and more convenient shopping experience.
"We are now engaged in a robust reworking of our current pharmacy distribution agreement, with benefits expected to begin in the second half of 2014 and with the full impact anticipated in 2015," Efird added. "We will be making the general merchandising changes over the balance of this year, which include cleaning out unproductive SKUs and exiting categories that do not align with Fred's enlarged convenience model. The costs of these branding, marketing and merchandising strategies will be finalized by the end of the second quarter. We currently estimate the book write-down of cleared inventory to be in the range of
In closing, Efird said, "Our new marketing program began in late May and is scheduled to be fully implemented in mid-July. Our plan is to begin implementing the new front end, adjacencies and fixtures in late June, with substantial completion early in the fourth quarter and the balance in the first quarter of 2015. Based on this outlook, we expect that second quarter earnings per share will be in the range of
Fred's gross profit for the first quarter of 2014 decreased to
Selling, general and administrative expenses for the quarter, including depreciation and amortization, were flat compared with the prior-year at 26.6% of sales. Increasing occupancy-related costs were offset by controlling other store-controllable expenses and insurance-related expenses.
For the first quarter of 2014, earnings before interest, taxes, depreciation and amortization, or EBITDA, a non-GAAP measure, decreased to
For the first quarter of 2014, operating income, which is equivalent to earnings before interest and taxes, or EBIT, also a non-GAAP measure, decreased to
During the first quarter, Fred's net new locations were unchanged, but activity consisted of two full-service store openings, four new Xpress pharmacy locations and the closure of four full-service stores and two Xpress pharmacy locations, one of which was converted to a full-service store.
Keywords for this news article include: Marketing, Advertising,
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