UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________________
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): May 30, 2013
FRED'S,
INC.
(Exact
Name of Registrant as Specified in Charter)
Commission
File Number 001-14565
Tennessee |
|
62-0634010 |
(State or Other Jurisdiction of Incorporation) |
|
(I.R.S. Employer Identification No.) |
4300 New Getwell Road, Memphis, Tennessee 38118 |
(Address of principal executive offices) |
(901) 365-8880
Registrant’s
telephone number, including area code
Not
Applicable
(Former
Name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 30, 2013, Fred's, Inc. issued a press release announcing its financial results for the first quarter ended May 4, 2013.
A copy of the press release announcing these events is furnished as Exhibit 99.1 to this report and is incorporated herein by reference. The information in this report, including the exhibit attached hereto, is furnished pursuant to Item 2.02 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
99.1 Press Release issued by Fred's, Inc., dated May 30, 2013.
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. |
|||||
(Registrant) | |||||
Date: |
May 30, 2013 |
By: |
/s/ |
Jerry A. Shore |
|
|
|
Jerry A. Shore |
|||
|
Executive Vice President and |
||||
Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
||
Number |
Description of Exhibit(s) |
|
99.1 |
Copy of press release issued by Fred's, Inc. on May 30, 2013. |
Exhibit 99.1
Fred's Earnings Per Share Increases 11% to $0.31 for the First Quarter of 2013
MEMPHIS, Tenn.--(BUSINESS WIRE)--May 30, 2013--Fred's, Inc. (NASDAQ: FRED) today reported financial results for the first quarter ended May 4, 2013.
For the first quarter ended May 4, 2013, Fred's net income increased 9.1% to $11.4 million compared with net income of $10.5 million in the first quarter ended April 28, 2012. Earnings per diluted share increased 10.7% to $0.31 for the first quarter from $0.28 for the same period last year.
Fred's total sales for the first quarter of fiscal 2013 increased 0.2% to $501.5 million from $500.5 million for the same period last year. Comparable store sales for the quarter declined 1.3% versus a decrease of 0.4% for the first quarter last year.
Commenting on the results, Bruce A. Efird, Chief Executive Officer, said, "We are very pleased with our first quarter results, which topped the high end of our earnings guidance for the period. These improvements reflected the immediate impact of our recently launched reconfiguration plan, as we outperformed in gross margin results and expense management. Given the unusual weather conditions that affected top-line growth during the quarter, our team's ability to control expenses was one of the primary reasons we were at the high end of expectations.
"As we outlined in our recent year-end conference call, the team has set an aggressive plan for 2013," Efird continued. "This includes implementing the initiatives of our reconfiguration plan targeting pharmacy department growth, expanding our specialty drug program, and rolling out our expanded auto and hardware program. We also will continue to update and refine our new prototypes and launch the test of the destination stores. We are guardedly optimistic about the second quarter and expect that earnings from operations for the quarter will improve in the range of approximately 25% to 75% compared with the same period last year. The $0.12 per share tax rate benefit recorded in the second quarter last year will not be available in 2013."
Fred's gross profit for the first quarter of 2013 increased 2.1% to $151.0 million from $147.8 million in the prior-year period. Gross margin for the quarter increased to 30.1% compared with 29.5% in the same quarter last year. The margin improvement is primarily attributed to the pharmacy department effect of the brand to generic mix shift.
Selling, general and administrative expenses for the quarter, including depreciation and amortization, deleveraged 50 basis points to 26.6% of sales from 26.1% of sales in the prior-year quarter. The deleveraging of expenses was primarily attributable to new store and pharmacy department growth.
For the first quarter of 2013, operating income, which is equivalent to earnings before interest and taxes or EBIT, a non-GAAP measure, improved to $17.8 million or 3.5% of sales from $17.1 million or 3.4% of sales in the prior-year period.
For the first quarter of 2013, earnings before interest, taxes, depreciation and amortization or EBITDA, also a non-GAAP measure that further excludes depreciation and amortization from EBIT, was $28.1 million or 5.6% of sales compared with $26.5 million or 5.3% of sales in the year-earlier quarter.
During the first quarter, Fred's opened one full-service store and three Xpress pharmacy locations, which were offset by the closure of one full-service store.
The Company provides the following guidance for the second quarter of 2013:
Currently, Fred's, Inc. operates 715 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 2013 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 30, 2013.
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 May 4, 2013 |
13 Weeks April 28, 2012 |
Percent
Change |
|||||||
Net sales | $ | 501,495 | $ | 500,505 | 0.2 | % | |||
Operating income | $ | 17,784 | $ | 17,101 | 4.0 | % | |||
Net income | $ | 11,411 | $ | 10,458 | 9.1 | % | |||
Net income per share: | |||||||||
Basic | $ | 0.31 | $ | 0.28 | 10.7 | % | |||
Diluted | $ | 0.31 | $ | 0.28 | 10.7 | % | |||
Average shares outstanding: | |||||||||
Basic | 36,507 | 36,977 | |||||||
Diluted | 36,621 | 37,110 | |||||||
FRED'S, INC. Unaudited Fiscal 2013 First Quarter Results (in thousands, except per share amounts) |
||||||||||||
13 Weeks May 4, 2013 |
% of
Total |
13 Weeks April 28, 2012 |
% of
Total |
|||||||||
Net sales | $ | 501,495 | 100.0 | % | $ | 500,505 | 100.0 | % | ||||
Cost of goods sold | 350,476 | 69.9 | % | 352,663 | 70.5 | % | ||||||
Gross profit | 151,019 | 30.1 | % | 147,842 | 29.5 | % | ||||||
Depreciation & amortization | 10,301 | 2.1 | % | 9,364 | 1.9 | % | ||||||
Selling, general and administrative expenses | 122,934 | 24.5 | % | 121,377 | 24.2 | % | ||||||
Operating income | 17,784 | 3.5 | % | 17,101 | 3.4 | % | ||||||
Interest expense, net | 135 | 0.0 | % | 137 | 0.0 | % | ||||||
Income before income taxes | 17,649 | 3.5 | % | 16,964 | 3.4 | % | ||||||
Provision for income taxes | 6,238 | 1.2 | % | 6,506 | 1.3 | % | ||||||
Net income | $ | 11,411 | 2.3 | % | $ | 10,458 | 2.1 | % | ||||
Net income per share: | ||||||||||||
Basic | $ | 0.31 | $ | 0.28 | ||||||||
Diluted | $ | 0.31 | $ | 0.28 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 36,507 | 36,977 | ||||||||||
Diluted | 36,621 | 37,110 | ||||||||||
FRED'S, INC. Unaudited Balance Sheet (in thousands) |
||||||
|
May 4,
2013 |
April 28,
2012 |
||||
ASSETS: | ||||||
Cash and cash equivalents | $ | 7,795 | $ | 7,819 | ||
Inventories | 369,883 | 360,298 | ||||
Receivables | 34,875 | 33,064 | ||||
Other non-trade receivables | 30,667 | 28,192 | ||||
Prepaid expenses and other current assets | 13,058 | 12,220 | ||||
Total current assets | 456,278 | 441,593 | ||||
Property and equipment, net | 157,031 | 160,145 | ||||
Intangibles | 41,162 | 35,226 | ||||
Other non-current assets | 3,258 | 3,276 | ||||
Total assets | $ | 657,729 | $ | 640,240 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||
Accounts payable | $ | 112,906 | $ | 110,529 | ||
Current portion of indebtedness | 594 | 1,299 | ||||
Accrued expenses and other | 50,910 | 45,268 | ||||
Income taxes payable | 1,418 | 685 | ||||
Deferred income taxes | 23,876 | 25,352 | ||||
Total current liabilities | 189,704 | 183,133 | ||||
Long-term portion of indebtedness | 5,190 | 5,912 | ||||
Deferred income taxes | 3,745 | 4,747 | ||||
Other non-current liabilities | 17,522 | 20,827 | ||||
Total liabilities | 216,161 | 214,619 | ||||
Shareholders' equity | 441,568 | 425,621 | ||||
Total liabilities and shareholders' equity | $ | 657,729 | $ | 640,240 | ||
CONTACT:
Fred's, Inc.
Jerry A. Shore, 901-362-3733, Ext. 2217
Executive
Vice President and
Chief Financial Officer