Fred’s Inc. (FRED) reported a 5.8% decline in net sales to $437.1 million during the first quarter of 2018 compared to the same period a year ago. Comparable store sales were down 3.9%. Comparable store sales for the front store dropped 4.3%, and in retail pharmacy, comp sales were down 3.4%.
During the quarter, Fred’s net loss narrowed to approximately $19.9 million or $0.54 per share compared to a loss of $37.8 million or $1.02 per share last year. Gross margin was 25.5%. Last week the company closed the sale of its specialty pharmacy business for about $40 million.
Fred’s Interim CEO and CFO, Joe Anto stated, “We are rapidly making progress on our two main goals of eliminating our debt balance and returning to significant profitability by Q4 of this year, but there is still much work to be done.”
The company’s borrowings against its ABL were $135 million, down from $162 million at the end of Q1, with over $60 million in available liquidity. Fred’s expects its ABL balance to decrease over the coming weeks, as all remaining receivables related to the specialty pharmacy business are collected. Fred’s is exploring other strategic transactions and expects to generate additional cash proceeds which should help reduce debt balance. Fred’s shares climbed more than 2% premarket.