Fred’s Inc. (FRED - Free Report) continued with its dismal comparable-store sales (comps) performance. After witnessing a decline of 3% and 4.9% in the August and September months, comps again fell 3.4% in October. Total sales also slipped 4.2% to $157.3 million for the month under review, following a decrease of 5.5% and 3.5% in the preceding two months.
Sales were lower primarily due to unfavorable year-over-year comparisons. Further, the front store categories were negatively affected due to transition to a third-party distributor. Additionally, calendar shift of Halloween to the month of November affected sales during the period. Lower SNAP payments and unusually warm weather also impacted sales negatively.
Moreover, the pharmacy department continued to perform dismally, mainly due to shift to 90-day prescriptions. Further, the pharmacy department was affected negatively due to industry wide slowdown in Hepatitis C drugs.
Along with the sales results for the month of October the company also came up with preliminary sales results for the third quarter fiscal 2016. For the third quarter, Fred’s sales dipped 4.5% to $516.7 million from same period last year, while comps decreased 3.8% versus an increase of 2.7% for the year-ago period.
Given the disappointing sales performance, Fred’s suspended its guidance for the second half of the year.
Fred’s currently carrying a Zacks Rank #5 (Strong Sell).
Better ranked stocks in the broader retail wholesale sector includes Burlington Stores Inc. (BURL - Free Report) , Darden Restaurants Inc. (DRI - Free Report) and Tilly’s Inc.(TLYS - Free Report) . All of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
While Burlington Stores carries an expected long term earnings growth of 18.4%, Darden Restaurants and Tilly’s Group has expected earnings growth of 11.4% and 15.5% respectively in the upcoming thre to five years.
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