The review will include a thorough evaluation of the company’s current operating plan, as well as all other potential alternatives to maximize value.
The company said it does not intend to discuss or disclose further developments related to its review unless and until the board has approved a specific action or otherwise determined that further disclosure is appropriate, or if disclosure is required by applicable law.
Fred’s decision to close underperforming stores follows a comprehensive evaluation of the company’s store portfolio, including historical and recent store performance and the timing of lease expirations, among other factors. Liquidation sales at the 159 stores currently designated for closure will begin today while the company’s 398 other stores will remain open.
“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 Joseph Anto, Fred’s chief executive officer. “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,” he added.
Fred’s intends to close all 159 impacted stores by the end of May 2019. Fred’s has partnered with Malfitano Advisors and SB360 Capital Partners to help manage the process and ensure a seamless experience for customers. A list of impacted stores may be found at the end of this release.
Fred’s is also continuing to pursue the sale of its remaining pharmacy assets as part of its previously announced plan to unlock shareholder value by monetizing noncore assets. In September 2018, Fred’s announced that it had reached an agreement with Walgreens to sell the pharmacy patient prescription files and related pharmacy inventory of 179 Fred’s stores located across 10 Southeastern states; the transaction closed in the company’s fourth fiscal quarter.