After closing hundreds of stores that were not profitable, Fred’s is filing for Chapter 11 bankruptcy protection and shuttering all of its locations. Liquidation sales at its retail stores will be held over the next two months, CNBC reported.
Per the outlet, the bankruptcy is an indication that steps to cut costs, like inventory clearance sales and the closing of hundreds of unprofitable stores, were not helpful. Fred’s sold its pharmacy files to Walgreens last year and since 2015 has been reporting yearly losses. Merger talks with Rite Aid and Walgreens fell through in 2017 amid federal concerns.
CEO Joe Anto said, according to the outlet, “Despite our team’s best efforts, we were not able to avoid this outcome. 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 company expects to continue filling prescriptions at most of its pharmacy stores, and has filed a motion to go into a debtor-in-possession financing agreement. Fred’s operated 556 discount merchandise locations in 15 southeastern states as of May 4, per a Securities and Exchange Commission (SEC) filing, with the inclusion of 169 full-service pharmacies.
As of 2017, once-giants like Toys R Us, Mattress Firm and Sears have also filed for bankruptcy. And with a liquidity crunch brought on by a rise in rent at its flagship New York City store, Barneys New York was reportedly preparing for a bankruptcy filing. A Barneys spokesperson said, per reports at the time, “Our customers remain our top priority and we are committed to providing them [with] the excellent services, products, and experiences they have come to expect. Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”