Fred's delays filing its annual report

By Published: April 20, 2019 1:37 PM CT

Fred’s Inc. notified the U.S. Securities and Exchange Commission late Thursday it would miss the filing deadline for its annual report because of a significant decision it made recently that affects the course of its business.

The Memphis-based discount retailer announced April 11 it would close 159 stores – more than a quarter of its locations – by the end of May as part of a strategy to become profitable.

Natalie Martin: Fred's to close 159 stores by end of May

The company’s fiscal year ended Feb. 2, and the report, known as a 10-K, was due Thursday. But Fred’s management, accounting and legal teams are still assessing the impact of the store closures, which has contributed to a delay in preparing the report, according to the filing.

Fred’s also told the SEC it will have to report a loss of more than $144 million for the fiscal year ended Feb. 3, 2018, because, among other changes, it must reclassify those stores as “discontinued operations.”

The retailer told the SEC it expects to file within 15 days of the due date, but if it is unable to meet that deadline, it will file “as soon as practicable thereafter.”

Fred’s has undergone seismic shifts in the past fiscal year. Among the changes:

  • The company sold its specialty pharmacy unit, EntrustRx, to CVS Health for $40 million.
  • It sold the assets of 179 pharmacies to Walgreens for $156.1 million in cash, plus $20.6 million for inventory.
  • It announced 80 layoffs at its Memphis headquarters.
  • It replaced two local stores with a prototype concept called Fred’s Closeout Bonanza.

The annual report will give investors and analysts a glimpse at how those efforts have affected Fred’s bottom line, but it likely won’t show the broader view of a retailer in flux.

Alden Global Capital – a prominent New York hedge fund that controls around 100 newspapers through its MediaNews Group subsidiary and has made an aggressive push to buy Gannett Co. – now owns a 35% stake in Fred’s. And the retailer’s board of directors, under the leadership of Alden president Heath Freeman, hasn’t been shy about shaking up the executive ranks.

In April 2018, less than seven months after Freeman became board chairman, Fred’s CEO Michael Bloom was replaced by Joe Anto, a former MediaNews Group executive.

Anto was appointed permanent CEO on Feb. 3, one of four key executive changes made on the same day. One of those executives, chief operating officer Nathaniel Klein, has since left the company.

Natalie Martin: Fred's Inc. hires advisory firm as it looks to close stores


Fred's Inc.

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