Another discount chain that depends upon brick and mortar stores is beginning the process of closing outlets and selling off its merchandise. The chain is Fred's, a chain based in Memphis.
In a statement issued last week, the chain announced that it plans to close 159 underperforming stores by the end of May and to evaluate strategic alternatives. The chain also announced that it has retained an advisory firm to assess its options and help it maximize value as it restructures. Fred's also hired two liquidation firms to provide assistance in the downsizing process. The president of the company said that a 4.9% drop in sales in the first nine months of 2018 caused its executives to search for a more rational footprint by closing underperforming stores. The company's shares also lost 5.8% of their value.
Fred's operates 557 stores, mostly in the south. Tennessee, Mississippi, Alabama and Georgia will lose the most stores. The 159 outlets marked for closing represent 29% of the company's total stores. The chain has already sold its pharmacy customer prescription files and its pharmacies in 10 southern states to Walgreen's for a total of $169 million.
The company's downturn began when its plan to acquire a number of RiteAid and Walgreen's stores collapsed when the two companies canceled their plans to merge. The company's CEO said that it will continue its search for another business plan. At this point, Fred's does plan to file for bankruptcy, but that decision could change at any time.