Fred's Posts 4Q Profit On Fewer Charges

Sales dropped 5 percent to $469.4 million from $494.1 million a year ago, mostly due to store closings. The results missed Wall Street's estimate of $472.5 million.

Fred's closed 74 stores and 23 pharmacies in 2008, while opening 21 stores and 11 pharmacies.

The closings also impacted same-store sales, which dipped 1.1 percent during the quarter.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores while excluding sales at newly opened ones.

Aside from the closings, Chairman Michael J. Hayes said in a statement that deteriorating economic conditions and eroding consumer confidence also led shoppers to tighten spending during the holidays more than expected.

For the year, earnings surged 55 percent to $16.6 million, or 42 cents per share, from $10.7 million, or 27 cents per share. Annual revenue rose to $1.8 billion from $1.78 billion in the previous year.

Despite the consumer spending cutback, Fred's anticipates first-quarter profit in the range of Wall Street's expectations. The company forecast earnings of 19 cents to 21 cents per share. Analysts predict profit of 20 cents per share.