Fred's Swings to 4Q Loss on Charges

Fred's loss was $4.4 million, or 11 cents per share, in the three months ended Feb. 2. That compares with a profit of $9.2 million, or 23 cents per share, in the year-ago period.

The most recent quarter included $9.9 million in charges for store closures. Excluding those charges, Fred's would have posted a profit of 14 cents per share. Analysts polled by Thomson Financial expected a profit of 16 cents per share, on average. Those estimates typically exclude one-time items.

Fred's also experienced a 2.5 percent drop in same-store sales and a 2 percent drop in adjusted overall sales. Fred's total fourth-quarter sales were $494.1 million, down 8 percent from $535.6 million in the year-ago period, which had an extra week because of a calendar shift.

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance, since it measures growth at existing stores rather than newly opened ones.

Sales also fell short of Wall Street's average forecast for revenue of $498.2 million.

Though the quarter met Fred's revised expectations, "it was nevertheless disappointing," Chief Executive Michael Hayes said in a statement. "The rapid changes in discretionary income for our customer base made us face some very tough decisions," he added.

For the full year, Fred's profit dropped nearly 60 percent to $10.7 million, or 27 cents per share, from $26.7 million, or 67 cents per share. Revenue edged up to $1.78 billion from $1.77 billion.