Fred’s Inc.’s (FRED) shares plummeted over 10% in premarket hours on Thursday after the company missed market estimates on both revenue and earnings for the third quarter of 2018.
Net sales dropped 5.5% to $306.4 million compared to the same quarter last year. Comparable sales fell 5.3% versus a decline of 1% last year.
Net loss from continuing operations was $30.8 million, or $0.83 per share, versus $50.4 million, or $1.35 per share, in the same period last year.
Gross margin increased 353 basis points to 25.1% from last year, driven mainly by a one-time markdown reserve charge recorded in 2017 that did not reoccur in 2018.
Joe Anto, Interim CEO and CFO, stated “We have made significant progress against our goal of strengthening the balance sheet and as of December 12, 2018 our ABL balance stood at $51.9 million versus $153.4 million as of the beginning of this fiscal year. As of December 12, 2018 we completed the sale of script files associated with approximately 138 locations to Walgreens and expect to complete the remaining 41 location transfers to Walgreens by the end of January 2019. As we have stated in the past, we are continuing to evaluate potential opportunities to monetize all our non-core assets including our retail pharmacy script portfolio as well as our real estate.”