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Fred's First Quarter 2012 EPS Increase 17%

Currently, Fred's, Inc. operates 707 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States. For more information about the Company, visit Fred's website at www.fredsinc.com.

A public, listen-only simulcast and replay of Fred's first quarter 2012 conference call may be accessed at the Company's web site or at www.earnings.com. The simulcast will begin at approximately 10:00 a.m. Eastern Time today; a replay of the call will be available beginning at approximately 1:00 p.m. Eastern Time and will run until June 24, 2012.

Comments in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, those associated with the Company's announced strategic plan, lease buyouts and the underlying assumptions and projections upon which they are based, as well as risks that intended results may not be achieved or may not occur as quickly as expected; general economic trends; changes in consumer demand or purchase patterns; delays or interruptions in the flow of merchandise between the Company's distribution centers and its stores or between the Company's suppliers and same; a disruption in the Company's data processing services; costs and delays in acquiring or developing new store sites; and other contingencies discussed in the Company's Securities and Exchange Commission filings. Fred's undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

FRED'S, INC.

Unaudited Financial Highlights

(In thousands, except per share amounts)

     

13 Weeks Ended

April 28, 2012

13 Weeks Ended

April 30, 2011

Percent

Change

 
Net sales $ 500,505 $ 484,399 3.3 %
Operating Income $ 17,101 $ 15,123 13.1 %
Net income $ 10,458 $ 9,514 9.9 %
Net income per share:
Basic $ 0.28 $ 0.24 16.7 %
Diluted $ 0.28 $ 0.24 16.7 %
Average shares outstanding:
Basic 36,977 39,149
Diluted 37,110 39,246

Unaudited Fiscal 2012 First Quarter Results

(in thousands, except per share amounts)

       
13 Weeks Ended

April 28, 2012

% of

Total

13 Weeks Ended

April 30, 2011

% of

Total

Net sales $ 500,505 100.0 % $ 484,399 100.0 %
Cost of goods sold   352,663 70.5 %   346,457 71.5 %
Gross profit 147,842 29.5 % 137,942 28.5 %
Depreciation & amortization 9,364 1.9 % 7,773 1.6 %
Selling, general and administrative expenses   121,377 24.2 %   115,046 23.8 %
Operating Income 17,101 3.4 % 15,123 3.1 %
Interest expense, net   137 0.0 %   70 0.0 %
Income before income taxes 16,964 3.4 % 15,053 3.1 %
Provision for income taxes   6,506 1.3 %   5,539 1.1 %
Net income $ 10,458 2.1 % $ 9,514 2.0 %
Net income per share:
Basic $ 0.28 $ 0.24
Diluted $ 0.28 $ 0.24
Weighted average shares outstanding:
Basic 36,977 39,149
Diluted 37,110 39,246

FRED'S, INC.

Unaudited Balance Sheet

(in thousands)

   

April 28, 2012

April 30, 2011

ASSETS:
Cash and cash equivalents $ 7,819 $ 57,051
Inventories 360,298 331,302
Receivables 33,064 29,723
Other non-trade receivables 28,192 20,535
Prepaid expenses and other current assets   12,220   11,635
Total current assets 441,593 450,246
Property and equipment, net 160,145 152,060
Intangibles 35,226 22,242
Other non-current assets   3,276   3,332
Total assets $ 640,240 $ 627,880
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 110,529 $ 104,493
Current portion of indebtedness 1,299 378
Current portion of capital lease obligation - 138
Accrued expenses and other 45,268 41,445
Income taxes payable 685 -
Deferred income taxes   25,352   22,275
Total current liabilities 183,133 168,729
 
Long-term portion of indebtedness 5,912 7,189
Deferred income taxes 4,747 1,563
Other non-current liabilities   20,827   18,461
Total liabilities 214,619 195,942
Shareholders' equity   425,621   431,938
Total liabilities and shareholders' equity $ 640,240 $ 627,880




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