Fred's Files for Bankruptcy Protection, to Close All of its Stores
Discount retailer Fred’s announced Monday it is filing for Chapter 11 bankruptcy protection and closing all of its stores. The company said liquidation sales at retail locations will be completed over the next 60 days. The bankruptcy is a sign that cost-cutting measures such as the shuttering of hundreds of unprofitable stores and inventory clearance sales couldn't save the retailer. Fred’s has been reporting yearly losses since 2015, and it sold its pharmacy files to Walgreens in 2018. Merger talks with Walgreens and Rite Aid had also fallen through in June 2017 amid federal antitrust concerns, leaving the fate of the company uncertain. As of May 4, the company operated 556 discount merchandise stores in 15 states across the Southeast, according to a recent filing with the SEC.
Total Retail's Take: The retail pharmacy industry has seen disruption in recent years, including consolidation — e.g., Amazon.com acquiring PillPack, CVS Health buying Aetna — as well as the entrance of online players into the marketplace. The latter trend is attributed to a rise in the number of online shoppers, increased access to web-based and online health services, and rising implementation of e-prescriptions in hospitals and other healthcare services. Traditional brick-and-mortar pharmacy chains, from local drug stores to more established brands like Fred's, have been weakened by these developments in the marketplace. Much like department stores and mall-based specialty apparel retailers have been challenged by increased online competition, declining store traffic, among other factors, leading to a glut of store closures and bankruptcy filings in these sectors, retail pharmacy is beginning to see the same. In this category, the leading players are strengthening themselves, while others, such as Fred's, are being forced to drop out of the game.
