MEMPHIS, Tenn. (October 11, 2007) – Fred's Inc. (NASDAQ:FRED) today reported record sales for the five-week and eight-month periods ended October 6, 2007.

Fred's total sales for the month increased 2% to $161.4 million from $158.7 million in September 2006. Comparable store sales for the month rose 1.0% on top of a 5.0% increase in September last year.

Total sales for the year-to-date period increased 5% to $1.157 billion compared with $1.108 billion in the year-earlier period. On a comparable store basis, sales increased 1.3% through the first eight months of fiscal 2007 compared with a 2.7% gain in the year-earlier period.

Commenting on the announcement, Michael J. Hayes, Chief Executive Officer, said, "September sales came in at the low end of our forecasted range of a 1% to 3% increase, affected by unusually warm weather across our markets and the disruption caused by the updating of 98 stores under our refresher program. We look forward to finishing our refresher program in October with the last 60 stores and to a better economic environment for our customers going forward, as the benefits of the minimum wage increase and the focus of Federal Reserve Board on the credit crunch take hold."

Fred's opened four stores at the end of September, bringing total store openings to 22 for the year-to-date period. These new store openings have been offset by the Company's decision to close underperforming stores. In the remaining months, the Company plans to open 14 additional stores, with no further planned closings, which will result in a net increase in stores of 2% for the year.

Fred's Inc. operates 702 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. 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.