MEMPHIS, Tenn. (December 6, 2007) – Fred's Inc. (NASDAQ:FRED) today reported record sales the four-week fiscal month of November and the 10-month period ended December 1, 2007.

Fred's total sales for the month increased 1% to $151.3 million from $150.5 million in November last year. Comparable store sales for the month declined 4.5% versus a 2.0% increase in November 2006 comparable store sales.

Total sales for the year to date increased 4% to $1.438 billion compared with $1.382 billion in the year-earlier period. On a comparable store basis, year-to-date sales for 2007 increased 0.6% compared with a 2.5% gain posted in the first 10 months of 2006.

Commenting on the announcement, Michael J. Hayes, Chief Executive Officer, said, "We were disappointed with November sales, particularly in light of the expectations we had for our merchandise refresher program. Clearly, November was a tale of two periods: for the first two weeks of the month, our comparable store sales were positive, but for the final two weeks, which included "Black Friday" and the Thanksgiving weekend, we experienced sharp declines in our more discretionary departments. Key areas under plan included softlines, trim-a-home, home furnishings, consumables and giftware. Our six-hour sale on Black Friday was itself close to plan, indicating that, at least from a promotional standpoint, our customers are willing to spend, but by the end of November, as we have seen in recent months, discretionary spending did not materialize to any meaningful extent. We know customers are more cautious now, but as Christmas nears, we believe we will see increased traffic in our stores. Based on these trends and outlook, we are revising our forecast for fourth quarter comparable stores sales to flat to down 2% and our fourth quarter earnings per share range to $0.23 to $0.28 cents." Hayes noted that Fred's opened five stores and one pharmacy in November.

Fred's Inc. operates 713 discount general merchandise stores, including 24 franchised Fred's stores in the southeastern United States. For more information about the Company, visit Fred's Website at www.fredsinc.com.

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. Theserisks and uncertainties include, but are not limited to, 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.