Discount Store Operator Fred's 2Q Profit Triples

MEMPHIS, Tenn. (AP) — Fred's Inc. said Thursday its second-quarter profit tripled as the discount store operator cut expenses, more than offsetting a decline in sales.

For the three months ended Aug. 1, profit jumped to $4.2 million, or 11 cents per share, from $1 million, or 3 cents per share, in the year-earlier period.

Excluding one-time items, the company earned 13 cents per share in the latest quarter, meeting the average estimate of analysts polled by Thomson Reuters.

Selling, general and administrative expenses, including depreciation and amortization, fell to 25.9 percent of sales from 27.3 percent of sales in the year-earlier period.

"The 140-basis-point expense leverage came from managing store and distribution costs throughout the quarter and costs associated with store closings incurred during the second quarter last year," CEO Bruce A. Efird.

Sales slipped 3 percent to $434.2 million from $447.1 million. Analysts expected $437.6 million in revenue.

On a same-store basis, second-quarter sales declined 1.3 percent. Same-store sales are an important indicator or retailer performance because they measure growth at existing stores rather than newly opened ones.

The company, which runs about 670 stores, also issued third-quarter and full-year guidance within range of Wall Street expectations.