VOL. 133 | NO. 120 | Friday, June 15, 2018
Fred's Prepares to Sell Retail Pharmacy Business
By Bill Dries
Memphis-based Fred's Inc. has hired a consultant to prepare to sell its retail pharmacies after closing on the deal to sell its speciality pharmacy business earlier this week.
Memphis-based Fred’s Inc. wants to sell its retail pharmacies, which would effectively reverse much, if not all, of its efforts to shed its discount-store identity in a transition to personal health care. Fred’s has hired an adviser to talk with potential buyers of its retail pharmacy business, company leaders announced Thursday, June 14, as it reported quarterly financial results to analysts.
The hiring of P.J. Solomon & Co. follows Fred’s sale of its specialty pharmacy business to CVS in a $40 million deal that closed last week.
Fred’s bulked up in both the specialty and retail pharmacy divisions as the most visible part of its planned transition into health care.
The company also made a push last year to buy hundreds of Rite Aid stores that Walgreens Boots Alliance and Rite Aid needed to divest to gain regulatory approval for their merger. But the bid came apart when Walgreens and Rite Aid reworked the terms of their plan, cutting Fred’s out of the deal in the process.
“We continue to explore other strategic transactions and expect to generate additional cash proceeds which should meaningfully reduce our debt balance,” Fred’s chief financial officer and interim CEO Joe Anto said during Thursday’s conference call. “Additionally we continue to aggressively reduce expenses in every part of the business, while executing on various initiatives to increase sales and gross margin.”
Fred’s reported its first-quarter profits were $111.6 million, compared with $128.6 million a year ago, with weaker sales that were down nearly 6 percent from the first quarter of 2017 getting most of the blame.
Fred’s shares have struggled in the past year. Shares of common stock rose as high as $13.15 last June, just before the Walgreens-Rite Aid deal fell through. Since then, the price has fallen roughly 90 percent, hitting a 52-week low of $1.30 on June 1.