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CONTACT: FRED'S REPORTS APRIL SALES MEMPHIS, Tenn. (May 10, 2007) – Fred's Inc. (NASDAQ:FRED) today reported record sales for the four-week fiscal month of April, which ended May 5, 2007, versus the four-week period last year that ended April 29, 2006. Fred's total sales for the month rose 1% to $126.7 million from $125.3 million in April 2006. Comparable store sales for the month declined 2.5% versus an increase of 6.3% in the same period last year. Fred's total sales for the first quarter of fiscal 2007 increased 6% to $442.2 million compared with $416.7 million for the same period last year. On a comparable store basis, year-to-date sales increased 1.9% compared with 2.3% in the year-earlier period. Commenting on the announcement, Michael J. Hayes, Chief Executive Officer, said, "We knew that the earlier occurrence of Easter this year would hurt our April comparable store sales. However, the combination of the unusually cold weather, the Easter shift, and a rapid rise in gas prices exacerbated our results, with the slowdown affecting mainly our apparel, domestics and lawn and garden categories. "On the positive side, the increase in comparable store sales through the first quarter was off only moderately from the same period last year, and was only slightly below our expected range of 2% to 4%," Hayes added. "This occurred despite the disruption to store operations experienced as we began rolling out our merchandise refresher program in April, along with a new checkout program and the re-painting and re-signing of the interior of our stores. Happily, we are getting positive feedback on the updated look of our stores and those completed are out-performing the chain." During the first quarter, Fred's opened 11 new stores, closed 10 stores, opened six pharmacies, and closed four pharmacies. In 2007, the Company plans to open 35 to 40 new stores, 15 to 25 new pharmacies, and expects to close 20 to 25 stores, netting growth in selling square footage in the range of 1% to 3% for the year. Fred's Inc. operates 701 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 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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