Fred’s Inc. Announces the Cancellation of the Dividend, an Update to the Share Repurchase Program & a Review of Alternative...
December 06 2017 - 7:01AM
Business Wire
Fred’s, Inc. (“Fred’s” or “Company”) (NASDAQ:FRED) today
announced that its board of directors (the “Board”) has cancelled
its quarterly cash dividend in order to retain free cash flow for
debt reductions, share repurchases and other general corporate
purposes. The declaration of future cash dividends will be subject
to the discretion of the Board based on a number of factors,
including but not limited to, the Company’s financial performance,
its available cash resources, capital requirements and its
investment opportunities.
In connection with the cancellation of the dividend the Board
has amended the Company’s previously disclosed 2012 stock
repurchase program. The amended program will allow for the
repurchase of up to 3.8 million shares of the Company’s outstanding
Class A voting common stock (the “common stock”). Under the amended
program, the common stock may be purchased through a combination of
a Rule 10b5-1 automatic trading plan and discretionary purchases on
the open market, block trades or in privately negotiated
transactions. The amount and timing of any purchases will depend on
a number of factors, including trading price, trading volume and
general market conditions. No assurance can be given that any
particular amount of common stock will be repurchased. This
repurchase program is valid for up to two years and may be
modified, extended or terminated by the Board at any time. The
Company intends to finance the repurchases with available cash and
with funds drawn from that certain Credit Agreement dated as of
April 9, 2015, as amended, by and among Fred’s, certain of its
subsidiaries, the lenders named therein and Regions Bank, as the
administrative agent.
Moreover, in shifting the Company’s focus towards driving
increased traffic, improving its gross margin, reducing SG&A,
and generating free cash flow per share, the Board is considering
various strategic transactions and alternatives for certain
non-core assets, including real estate and the specialty pharmacy
business. The decision to consider and explore these strategic
alternatives is not in response to any third party proposal and no
decision has been made to engage in any of these particular
transactions.
Michael K. Bloom, Chief Executive Officer of Fred’s, stated, “We
are excited about the progress we have made in executing our
strategic turnaround plan, which followed an exhaustive and
comprehensive evaluation of our business, and which has prioritized
driving traffic, reducing SG&A expenses as a percentage of
sales, reducing our leverage levels over time, driving
profitability and generating free cash flow per share. We believe
that we now are in a position to further enhance our strategic plan
by exploring a variety of strategic initiatives and by investing in
our common stock which we believe, given current share prices,
represents an attractive use of funds and provides us an additional
opportunity to build long-term value for our shareholders.”
About Fred’s, Inc.
Tracing its history back to an original store in Coldwater,
Mississippi, opened in 1947, today Fred’s, Inc. operates
approximately 600 general merchandise and pharmacy stores,
including 13 franchised locations, and three specialty
pharmacy-only locations. With unique store formats and strategies
that combine the best elements of a value-focused retailer with a
healthcare-focused drug store, Fred’s stores offer frequently
purchased items that address the everyday needs of its customers.
This includes nationally recognized brands, proprietary Fred’s
label products, and a full range of value-priced selections.
For more information about the Company, visit Fred’s website at
www.fredsinc.com.
Forward Looking Statements
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. A reader can identify
forward-looking statements because they are not limited to
historical facts or they use such words as “outlook,” “guidance,”
“may,” “should,” “could,” “believe,” “anticipate,” “plan,”
“expect,” “estimate,” “forecast,” “goal,” “intend,” “committed,”
“continue,” or “will likely result” and similar expressions that
concern the Company’s strategy, plans, intentions or beliefs about
future occurrences or results. These risks and uncertainties
include, but are not limited to (i) the competitive nature of the
industries in which we operate; (ii) the implementation of our
strategic plan, and its impact on our sales, costs and operations;
(iii) utilizing our existing and new stores and increasing our
pharmacy department presence in new and existing stores; (iv) our
reliance on a single supplier of pharmaceutical products; (v) our
pharmaceutical drug pricing; (vi) reimbursement rates and the terms
of our agreements with pharmacy benefit management companies; (vii)
our private brands; (viii) the seasonality of our business and the
impact of adverse weather conditions; (ix) operational
difficulties; (x) merchandise supply and pricing; (xi) consumer
demand and product mix; (xii) delayed openings and operating new
stores and distribution facilities; (xiii) our employees; (xiv)
risks relating to payment processing; (xv) our computer system, and
the processes supported by our information technology
infrastructure; (xvi) our ability to protect the personal
information of our customers and employees; (xvii) cyber-attacks;
(xviii) changes in governmental regulations; (xix) the outcome of
legal proceedings, including claims of product liability; (xx)
insurance costs; (xxi) tax assessments and unclaimed property
audits; (xxii) current economic conditions; (xxiii) changes in
third-party reimbursements; (xxiv) the terms of our existing and
future indebtedness; (xxv) our acquisitions and the ability to
effectively integrate businesses that we acquire; (xxvi) our
ability to pay dividends; and the factors listed under “Risk
Factors” in the Company’s most recent Annual Report on Form 10-K
and any subsequent quarterly filings on Form 10-Q filed with the
Securities and Exchange Commission. Forward-looking statements
speak only as of the date made. The Company 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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version on businesswire.com: http://www.businesswire.com/news/home/20171206005318/en/
Fred’s, Inc.Jason Jenne, 901-238-2787Executive Vice President,
Chief Financial Officer and SecretaryorJoele Frank, Wilkinson
Brimmer KatcherEd Trissel / Dan Moore, 212-355-4449
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