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Flash Report

Fred’s Files for Bankruptcy Protection, Plans to Close All Stores

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Coresight Research

Key Points

On September 9, 2019, retail discounter Fred’s announced that it had filed for Chapter 11 bankruptcy protection and plans to close all its stores.

  • The company will begin to wind down operations and close locations over the next 60 days.
  • As of May 4, 2019, Fred’s had 556 stores in 15 states in the US, including 169 with full-service pharmacies.

On September 9, 2019, retail discounter Fred’s announced it had filed for Chapter 11 bankruptcy protection and plans to close all its stores.

Fred’s also filed a motion with the US Bankruptcy Court for the District of Delaware, seeking a financing agreement with certain lenders up to $35 million. Management stated that despite the company’s best efforts, the company was unable to avoid this outcome.

Based in Memphis, Fred’s operates stores throughout the US southeast. As of May 4, 2019, Fred’s had 556 stores in 15 states in the US, including 169 with full-service pharmacies. Since 2015, the company has been reporting losses and has closed hundreds of stores in a bid to increase profitability.

The company will begin to wind down operations and close locations over the next 60 days

The company announced it will begin “an orderly wind-down of its operations, and has commenced liquidation sales at all retail locations,” which it will close over the next 60 days.

The company stressed it will continue filling pharmacy prescriptions at most of its pharmacy locations as it looks for buyers for the pharmacy business.

In June 2017, Fred’s planned deal to buy 865 Rite Aid stores ended with Walgreens receiving regulatory approval for its roughly $7 billion acquisition of Rite Aid. The unsuccessful bid to acquire Rite Aid stores ended the company’s effort to transform itself by expanding its pharmacy business. Had the deal gone through, Fred’s would have become the third-largest drugstore chain in the US.

Source: Company reports/Coresight Research

 

In filing for bankruptcy, Fred’s joins names such as Gymboree, Payless ShoeSource, Barneys New York and Avenue. Below, we list major US retail bankruptcies so far this year.

*A’gaci filed for bankruptcy for the second time after entering and exiting bankruptcy in 2018
Source: Company reports/Coresight Research

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