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CONTACT: FRED'S REPORTS OCTOBER SALES UP 4% AS COMPARABLE STORE SALES FOR THE MONTH INCREASE 0.6% MEMPHIS, Tenn. (November 8, 2007) – Fred's Inc. (NASDAQ:FRED) today reported record sales the four-week fiscal month of October and the nine-month period ended November 3, 2007. Fred's total sales for the month increased 4% to $129.5 million from $124.9 million in October last year. Comparable store sales for the month rose 0.6% compared with a 2.5% decline in September 2006 comparable store sales. Total sales increased 3% to $419.9 million for the third quarter of 2007 from $407.9 million in the same period last year. Comparable store sales for the quarter rose 1.1% on top of a 3.0% increase in the third quarter last year. Total sales for the first nine months of 2007 increased 4% to $1.287 billion compared with $1.232 billion in the year-earlier period. On a comparable store basis, year-to-date sales for 2007 increased 1.2% versus a 2.1% gain posted in the first nine months of 2006. Commenting on the announcement, Michael J. Hayes, Chief Executive Officer, said, "October sales were significantly affected by warm weather, as softlines made up the majority of the $2 million sales miss. With comparable store sales growth below our forecast of 1% to 3% for the month, we now believe third quarter earnings likely will fall a penny short of our $0.15 forecast for the quarter. "On the positive side, we completed our refresher program in October and should not face further disruption in store activities associated with that significant undertaking," Hayes continued. "When implementing this initiative, we expected the second and third quarters of this year to be challenging. As we move into the fourth quarter, our stores look good, our inventory is in good shape, and we're ready for the holidays." Fred's opened six stores in October, bringing total store openings to 28 for the year-to-date period. These new store openings have been offset largely by the Company's decision to close underperforming stores. For the first nine months, net store growth has been 1%. The Company plans to open six additional stores by year's end, with no further planned closings, which will result in a net increase in stores of 2% for 2007. Fred's Inc. operates 708 discount general merchandise
stores, including 24 franchised Fred's stores in the southeastern 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. 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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