Freds, Inc. (FRED) swung to a net loss for the quarter ended Oct. 29, 2016. The company has made a net loss of $38.39 million, or $ 1.05 a share in the quarter, against a net profit of $1.44 million, or $0.04 a share in the last year period.
Revenue during the quarter dropped 4.50 percent to $516.64 million from $541 million in the previous year period. Gross margin for the quarter contracted 477 basis points over the previous year period to 21.52 percent. Operating margin for the quarter stood at negative 8.53 percent as compared to a positive 0.45 percent for the previous year period.
Operating loss for the quarter was $44.06 million, compared with an operating income of $2.41 million in the previous year period.
Michael Bloom, Chief Executive Officer, commented, "We continue to address and improve several key areas of our business, including a heightened focus on positioning Fred's as a leading healthcare-focused company. These ongoing initiatives are designed to strengthen all aspects of our operations as we seek to create a more dynamic platform to grow our business while maximizing returns on invested capital and, in turn, shareholder value. We look forward to providing additional updates in the months and quarters ahead."
Debt increases substantially
Freds, Inc. has witnessed an increase in total debt over the last one year. It stood at $77.29 million as on Oct. 29, 2016, up 421.69 percent or $62.48 million from $14.82 million on Oct. 31, 2015. Total debt was 10.43 percent of total assets as on Oct. 29, 2016, compared with 1.92 percent on Oct. 31, 2015. Debt to equity ratio was at 0.22 as on Oct. 29, 2016, up from 0.04 as on Oct. 31, 2015.
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