8-K/A

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               Amendment No. 1 to

                                    FORM 8-K

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



Date of Report (Date of earliest event reported):              July 1, 2004



                                  Fred's, Inc.
             (Exact name of registrant as specified in its charter)


         Tennessee                   1-14565                   62-0634010
(State or other jurisdiction       (Commission                (IRS Employer
     of incorporation)             File Number)             Identification No.)



  4300 New Getwell Road, Memphis, TN                              38118
(Address of Principal Executive Offices)                        (Zip Code)



       Registrant's Telephone Number, including area code: (901) 365-8880



Item 4.  Changes in Registrant's Certifying Accountants.

In its Proxy Statement dated May 21, 2004, the Company asked its stockholders to
approve the  appointment  of Ernst & Young LLP ("E&Y") as its  auditors  for the
fiscal year ending January 29, 2005 ("fiscal 2004"), but reserved discretion for
its Audit Committee to select a different  auditing firm "at any time during the
year if it determines  that such a change would be in the best  interests of the
Company  and its  stockholders,  including  economic  considerations"  (emphasis
added). Since April 30, 2004, Fred's has been disputing certain additional audit
fees for fiscal 2003 that E&Y  submitted to the Company  after the filing of our
Annual  Report on 10-K.  E&Y  completed  its services  with respect to the first
quarter ended May 1, 2004,  upon the filing of the related  Quarterly  Report on
Form 10-Q on June 10, 2004.  On June 11, 2004,  E&Y  submitted to the Company an
engagement  letter proposing fiscal 2004 auditing fees which were  significantly
higher than anticipated by the Company.  Therefor, the Company's Audit Committee
initiated the process of seeking 2004 quotes from other auditors, and instructed
management  to attempt  to resolve  the  unanticipated  year-end  2003 fee under
dispute  with E&Y before  making a decision  on which  auditing  firm to use for
fiscal 2004. On July 1, 2004,  E&Y notified the Company that, if the Company had
not engaged other  principal  accountants  in the interim,  E&Y would review the
Company's  second  quarter  2004  results  but  would  not act as the  Company's
independent  auditor  after that review and the filing of the related  Quarterly
Report on Form 10-Q. The Company's Audit Committee accepted E&Y's resignation on
the foregoing basis.

On July 30,  2004,  the  Company  engaged  BDO  Seidman,  LLP ("BDO") as its new
certifying accountants, at which time E&Y ceased to be the principal accountants
of the  Company.  The  Company  has not  consulted  with BDO during the two most
recent  fiscal  years and through July 30, 2004  regarding  the  application  of
accounting  principles to a proposed or completed  specified  transaction or the
type of audit  opinion  that might be  rendered  on the  Company's  consolidated
financial statements,  where either a written report was provided or oral advice
was provided  that BDO  concluded  was an  important  factor  considered  by the
Company in  reaching a decision  as to the  accounting,  auditing  or  financial
reporting issue or as to any  disagreement  or reportable  event as described in
Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K.

Each of the audit reports of E&Y on the consolidated financial statements of the
Company for each of the years in which they acted as the  Company's  auditors in
the two-year  period ended January 31, 2004 did not contain any adverse  opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.

During all  periods  in which E&Y acted as the  Company's  principal  accountant
through July 30, 2004,  there were no disagreements  with E&Y on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
E&Y,  would have caused  them to make  reference  to the  subject  matter of the



disagreement in their reports on the consolidated  financial statements for such
years.

During the past two fiscal  years and through the date of this  Report,  E&Y has
not  advised  the  Company  of  any  reportable   events  (as  defined  in  Item
304(a)(1)(v) of Regulation S-K), other than E&Y reported to the Company that, in
conducting its audit of the 2003 financial  statements,  it noted  weaknesses in
certain  internal  controls.  E&Y  has  not  informed  the  Company  that  those
weaknesses constitute "material weaknesses" as defined by the American Institute
of Certified Public  Accountants.  The weaknesses  related to (1) the number and
qualifications  of corporate  accounting  personnel,  (2) procedures  related to
accounting  for  consideration  received  from  vendors,  and (3) the  financial
statement closing process. At the direction of its Audit Committee,  the Company
had taken steps to address the concerns expressed by E&Y during its work for the
Company.  Specifically,  the Company has enhanced  its internal  controls by (i)
hiring  additional  skilled  accounting  staff,  including  a  certified  public
accountant  (who reports  directly to the Audit  Committee) to oversee  internal
controls and the  Sarbanes-Oxley  Act ("SOA")  compliance process and engaging a
third-party  accounting firm experienced in SOA compliance to assist the Company
in achieving timely and complete compliance on a timeline suggested by E&Y, (ii)
focused  additional  personnel  and reviews upon  accounting  for  consideration
received  from  vendors,  and (iii)  instituted  more  testing of results in the
closing  process  before  public  reporting  of  quarterly  and fiscal  year end
results.

The Company provided E&Y with a copy of this Form 8-K. Attached, as Exhibit 16.1
is a copy of E&Y's letter to the Securities and Exchange Commission,  dated July
30, 2004.

The Company  requested that BDO review the disclosure  provided in this Form 8-K
prior to its filing, and provided BDO with an opportunity to furnish the Company
with a letter addressed to the Securities and Exchange  Commission in accordance
with Item  304(a)(2)(ii)(D)  of Regulation S-K. BDO affirmed to the Company that
it had no new information or clarification of the Company's expression,  and did
not  disagree  with  any  comments  related  to BDO in  respect  to  this  item.
Therefore, BDO had no need to furnish such a letter.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(a)      Financial Statements.

         Not applicable.

(b)      Pro Forma Financial Information.

         Not applicable.



(c)      Exhibits.

Exhibit No      Description

16.1            Letter of E&Y LLP dated July 30, 2004



                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                          FRED'S INC.

                                          By:   /s/ Jerry A. Shore
                                               ---------------------------------
                                          Its: Executive Vice President and
                                               Chief Financial Officer

Date: July 30, 2004



                                INDEX TO EXHIBITS

Exhibit
   No.      Description
- -------     -----------

16.1        Letter of E&Y LLP dated July 30, 2004 regarding change in
            certifying accountant.

EX-16

                                                                    EXHIBIT 16.1




July 30, 2004



Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549


We have  read Item 4 of  Amendment  No.1 to Form 8-K dated  July 30,  2004,  of
Fred's,  Inc. and are in agreement  with the  statements  contained in paragraph
one, sentences one, three, and six;  paragraphs three and four;  paragraph five,
sentences  one, two, and three;  and paragraph six on pages one and two therein.
We have no basis to agree or disagree with other  statements  of the  registrant
contained therein.

Regarding  the  registrant's  statement  concerning  the  weaknesses in internal
control  to  prepare  financial  statements,  included  in the fifth  paragraph,
sentences one and three,  on page two therein,  we had considered such matter in
determining the nature,  timing, and extent of procedures performed in our audit
of the registrant's 2003 financial statements.



                                          /s/ Ernst & Young LLP