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CONTACT: FRED'S DECEMBER SALES INCREASE 8% AS COMPARABLE STORE SALES RISE 2.0% MEMPHIS, Tenn. (January 4, 2007) ñ Fred's, Inc. (NASDAQ:FRED) today reported sales for the five-week fiscal month of December and the 11-month period ended December 30, 2006. Fred's total sales for the month increased 8% to $221.5 million from $204.7 million in December 2005. Comparable store sales for December rose 2.0% compared with a 1.9% increase in the same month last year. Total sales for the year to date increased 9% to $1.60 billion from $1.47 billion in the first 11 months of 2005. On a comparable store basis, year-to-date sales for 2006 increased 2.4% versus a 1.3% gain in the same period last year. Commenting on the announcement, Michael J. Hayes, Chief Executive Officer, said, "We are pleased to report that December sales approached the high end of our revised forecast for the month. While holiday shopping was bargain-driven and the competitive environment was intense, as expected, the additional marketing programs and promotional incentives we had in place for the season were successful in driving sales growth. We also continued to see solid sales contributions from stores outside of last year's hurricane-affected areas as well as from our pharmacy department during December. With one month remaining in the fiscal year, we remain on target to reach our goals for fourth quarter of 2006." Fred's opened 12 stores and two pharmacies in December. Thus far this year, Fredís has opened 59 new stores and 16 new pharmacies. Fred's, Inc. operates 700 discount general merchandise stores mainly in the southeastern United States, including 24 franchised Fred's stores. 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 which 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, 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.
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