Fred's Inc. (FRED)  announced Thursday it will close nearly 30% of its stores as the struggling retailer attempts to turn around.

The Memphis, Tennessee-based company said in a statement that it had begun liquidation sales at 159 stores with the goal of closing the underperforming and unprofitable outlets by the end of May. The company said 398 other stores will remain open.

The company said it had retained PJ Solomon "to evaluate strategic alternatives to maximize value for all shareholders." Fred's is also continuing to pursue the sale of its remaining pharmacy assets, the statement said. In September, Fred's announced that it had reached an agreement with Walgreens (WAG) to sell the pharmacy patient prescription files and related pharmacy inventory of 179 Fred's stores located across 10 Southeastern states. The transaction closed in the company's fourth fiscal quarter.

"After a careful review, we have made the decision to rationalize our footprint by closing underperforming stores, with a particular focus on locations with shorter duration leases," CEO Joseph Anto said in a statement. "Most of these stores have near-term lease expirations and limited remaining lease obligations. Decisions that impact our associates in this way are difficult, but the steps we are announcing are necessary. We will make every effort to transition impacted associates to other stores where possible."

Shares were down 5% to $1.98.