MEMPHIS — Fred’s Inc. reported net income of $6.1 million for the second quarter, an increase of 19% over the prior-year period.

Fred’s Inc. reported net income of $6.1 million for the second quarter, an increase of 19% over the prior-year period.

The regional discounter’s total sales for the period were up 4% to $470.8 million, but comparable-store sales were down by 1%.

Chief executive officer Fred Efird said that the strong profit performance in the quarter was due in part to a number of unusual items, including a state income tax settlement. Some of the retailer’s marketing and merchandising initiatives have also paid off.

"Results in our pharmacy department were strong as we achieved comparable prescription growth, gross margin improvement and new acquisition growth," Efird noted. "Several merchandising initiatives that we have rolled out this year also did well in the quarter, including those for bedding, bath, housewares and financial services."

The chain expects to face increased competition in the second half of the year, during which it plans to open about 20 new stores. It expects a 10% to 20% profit gain for the year.