Fred's, Inc. (NASDAQ: FRED) today reported financial results for the second quarter and six months ended August 3, 2013.
For the second quarter ended August 3, 2013, Fred's net income was $3.3 million or $0.09 per diluted share compared with net income of $6.1 million or $0.17 per diluted share in the year-earlier period. However, the prior-year quarter included a benefit of approximately $4.0 million or $0.11 per diluted share for favorable tax credits related to a state income tax settlement as well as adjustments for other tax related assumptions and estimates. Excluding the favorable tax credits, Fred's net income for the second quarter of 2013 increased 63% from the second quarter of 2012 while earnings per diluted share increased 50%. Fred's net income for the first half of 2013, excluding the tax benefit recorded last year, increased 18% to $0.40 per diluted share.
Fred's total sales for the second quarter of fiscal 2013 increased 2% to $482.2 million from $470.8 million for the same period last year. Comparable store sales for the quarter increased 2.2% compared with a decline of 1.0% in the second quarter last year. Fred's total sales for the first half of fiscal 2013 increased 1% to $983.7 million from $971.3 million for the same period last year. Comparable store sales for the first half of 2013 increased 0.5% compared with a decrease of 0.5% in the same period last year.
Commenting on the results, Bruce A. Efird, Chief Executive Officer, said, "We are pleased by the Company's performance during the second quarter, which was highlighted by a strong increase in both operating income and net income, excluding last year's tax benefits. Sales growth, customer traffic, average ticket, gross margin, and expense management were all positive factors in the quarter. We also were pleased with the progress of the first phase of our reconfiguration plan as the penetration of stores with pharmacies increased from 50% to 52% and we experienced strong comparable sales performance in our expanded Hometown Auto & Hardware departments.