Fred’s on a Decline

Fred’s Inc., a nearly two billion dollar company, has recently announced intentions to close 159 store locations by May of 2019.  Fred’s is a pharmacy and discount chain with stores in 15 states located primarily in the south and midwestern sections of the US. Since 2014, according to CSG data, Fred’s has been drastically reducing their number of stores going from 704 at the end of 2014 to 551 stores a quarter way through 2019. Even with stores closing, which would typically signify a reduction in sales, between 2014 and 2016 their sales rose nearly 11% before dropping 1% in 2017 then a staggering 15% the following year.

The rapid decline of sales was a likely contributor to Fred’s decision to sell 185 pharmacies to Walgreens. The pharmacy has been purchasing competitor pharmacies for years now, from Duane Reede to Rite Aid and now Fred’s for $165 million. Fred’s original intention was to buy roughly 850 Rite Aid pharmacies to boost sales, but the purchase couldn’t satisfy regulatory standards, and the deal fell through leaving Fred’s to come up with a new financial plan. By selling their pharmacies to Walgreens, the retailer can focus on discount convenience store products to pull them out of their economic slump.  This new direction is a great opportunity for companies trying to break into the retail market since Fred’s will be looking for new products to line their shelves and entice more customers. CSG’s Drug Stores & HBC Retailers PLUS subscribers can get up to date information on Fred’s buyers and decision makes as well as many other retailers selling similar products.

Below are two charts showing the rise and decline in both sales and units for the last five years. This custom data was researched and gathered by CSG’s in-house analytic team; a unique service we offer companies that do business in the retail and foodservice industries.

Source: CSG’s Drug Stores & HBC Chains Database