In the stores that are already upgraded, management sees single-digit sales growth so far, including significant improvements in the pet department, says Michael Hayes, the company's chief executive officer during its first-quarter conference call. The retailer's exterior renovations are on track to start next year, he says.
Management expects same-store sales to rise between 2% and 4% year over year in the second quarter. The renovation work is expected to disrupt sales during the first two months of the period, but Hayes says Fred's should see a pick up in the third part of the period.
During the first quarter, which ended May 9, same-store sales rose 1.9%, while total sales increased 6%, to $442.3 million. Net income inched up 2%, to $7.4 million.
Fred's opened 10 stores during the period and closed the same amount. The company is planning nine second-quarter store closings at unprofitable locations.
Speaking on the issue of the minimum-wage hike recently signed by President Bush, Hayes says the benefit of its consumers spending more will outweigh the requirement of an increase in pay to its employees. "The wind has definitely shifted more in favor of the industry than against it," he says.
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