Retailer Fred’s Inc. (NASDAQ: FRED) said Monday morning that it has voluntarily filed for Chapter 11 bankruptcy protection. The company is seeking bankruptcy court approval to enter into a debtor-in-possession financing agreement with some of its existing lenders that could provide up to $35 million in new funding for the company.
Fred’s operates about 550 retail stores, including 169 pharmacies and 11 franchised stores, in 15 states, primarily in the southeastern United States. The company’s headquarters are located in Memphis, Tennessee.
In its announcement, Fred’s said it had begun liquidation sales at all its locations and that it expects to close all those stores over the next 60 days. The pharmacies will continue to fill prescriptions as the company seeks a buyer for its pharmacy locations. In April, the company said it planned to close 159 stores this year in an effort to reduce costs.
The company listed more than 200 creditors in its filing, all of which have until October 7 to file claims. Fred’s is also the target of several announced class-action shareholder lawsuits.
In 2017, Fred’s made an offer to acquire 1,200 Rite Aid stores in a poorly timed move to triple its footprint. When the merger proposal for Walgreens and Rite Aid blew up, Fred’s hopes to become one of the three largest U.S. pharmacy chains blew up with it. At the time, according to the Daily Memphian, the U.S. Federal Trade Commission was said to doubt that Fred’s could have become a “viable operator” of an 1,800-store chain that extended well beyond its traditional geographic boundaries.
The retail pharmacy business has become a two-horse race between Walgreens and CVS, and there is now no place for an also-ran. Accordingly, Fred’s sold its specialty pharmacy business to CVS for $45.5 million last year and did a deal with Walgreens, receiving $176.7 million for data records and inventory from another 179 retail pharmacies. There’s little left for creditors to parcel out.
Shares closed at $0.24 on Friday and traded down more than 40% early Monday at $0.14, after posting a new 52-week low of $0.12. The 52-week high is $3.58.
Essential Tips for Investing: Sponsored
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
