Fred's, Inc. (NASDAQ: FRED) today reported financial results for the first quarter ended April 28, 2012. For the first quarter ended April 28, 2012, Fred's net income increased to $10.5 million compared with net income of $9.5 million in the year-earlier period, with earnings per diluted share rising 17% to $0.28 from $0.24 in the first quarter last year. Fred's total sales for the first quarter of fiscal 2012 increased 3% to $500.5 million from $484.4 million for the same period last year. Comparable store sales for the quarter declined 0.4% versus an increase of 1.0% for the first quarter last year. Commenting on the results, Bruce A. Efird, Chief Executive Officer, said, "We are pleased that Fred's delivered solid earnings per diluted share for the first quarter, up 17% from the prior-year period to hit the high end of our expected range for the quarter. Had it not been for the expiration of certain federal tax credits at the end of 2011, which benefited the year-earlier quarter and resulted in a lower tax rate last year, Fred's first quarter earnings per diluted share would have increased 21% on a comparable quarter basis. "The Company's higher earnings for the first quarter demonstrated the success of strategic and tactical initiatives that have been implemented to drive improved operating performance," Efird continued. "These initiatives produced solid top-line growth in our pharmacy department, in particular, and helped strengthen gross margins in all merchandise areas of our stores. Looking ahead, we will continue with our initiatives to leverage store and pharmacy growth, putting strong emphasis in the general merchandising departments and initiating a series of new programs with a fresh new look. Our goals for 2012 remain firm as we work to drive increased operating margins and earnings per diluted share throughout the year." Fred's gross profit for the first quarter of 2012 increased 7% to $147.8 million from $137.9 million in the prior-year period. Gross margin for the quarter increased 100 basis points to 29.5% compared with 28.5% in the same quarter last year. The significant increase in gross margin results from improvements throughout most areas of the store. These improvements reflected better management of promotional markdowns in general merchandise and increased vendor rebates and allowances.