Fred’s filed for Chapter 11 bankruptcy on Monday and will close all of its remaining 80 discount stores and pharmacies over the next 60 days. The discount retailer and pharmacy’s attempt at cost cutting measures didn’t work, and continued to report yearly losses since 2015.
In early February, the company had 568 stores in 15 states in the Southeastern U.S., including 169 with full-service pharmacies, according to the court filing. But after multiple rounds of store closures, about 80 locations remained.
Fred’s future has faced uncertainty since a 2017 collapse of a mega-merger between two pharmacy companies, Walgreens Boots Alliance and Rite Aid, amid-federal anti-trust concerns. As part of that effort, Fred’s was poised to increase its store count, but its growth floundered after the deal.
Liquidation sales have begun at all Fred’s retail locations, which are expected to close over the next 60 days as part of the company’s commitment to “an orderly wind-down” of its operations.
Fred’s expects to continue fulfilling pharmacy prescriptions at most of its primary locations, while it continues to pursue the sale of its pharmacies as part of the court’s supervised proceedings.
“Despite our team’s best efforts, we were not able to avoid this outcome,” said Fred’s CEO Joe Anto. “I want to thank all of our employees for their hard work and continued support of the company as we wind-down our operations.”
The retailer also filed a motion to enter into a proposed debtor-in-possession financing agreement with existing lenders, which would provide for up to $35 million in new funding.
The company is seeking a variety of “first-day” relief for the filing entities, including authorization to continue paying employee wages and salaries and to continue providing employee benefits without interruption.
Fred’s store closures are part of a growing U.S. trend. More than 7,000 store closings are already in the works or completed so far in 2019, according to Coresight Research’s report in July. Reports also show that the number of retail store closures could reach 12,000 by the year’s end.
The massive retail closings include Payless ShoeSource, Kmart/Sears, Walgreens, Charming Charlie, Gymboree/Crazy 8, Avenue, and Dressbarn.