Fred's Reports Higher March Sales

MEMPHIS, Tenn.--(Business Wire)--
Fred's Inc. (NASDAQ:FRED) today reported sales for the five-week
fiscal month of March, which ended April 5, 2008.

Fred's total sales for the month rose 4% to $178.3 million from
$171.6 million in March 2007. Comparable store sales for the month
increased 1.2% versus 4.4% in the same period last year. Excluding the
75 stores and 22 pharmacies that have been or will be closed under the
Company's previously announced strategic plan to improve Company
performance, comparable store sales for the month would have been
1.7%.

Fred's total sales for the first two months of fiscal 2008
increased 4% to $326.8 million compared with $315.4 million for the
same period last year. On a comparable store basis, year-to-date sales
increased 1.1% compared with 4.1% in the year-earlier period. Again,
excluding stores and pharmacies that have been or will be closed,
comparable store sales for the month would have been 1.5%.

Commenting on the announcement, Michael J. Hayes, Chief Executive
Officer, said, "We are pleased that Fred's sales momentum continued in
March, translating into positive customer traffic and comparable store
sales that were in line with our expectations. This progress reflects
the ongoing benefit of our announced strategic plan, which focuses on
improving merchandise in-stock levels and elevating performance in our
top stores and pharmacies. With implementation of the longer-term
aspects of the plan now underway, we began closing our underperforming
stores and pharmacies this month. While the retail and economic
environment remains skittish, putting pressure on our gross margin in
the short term, our earnings outlook for the first quarter has not
changed and we remain confident about the long-term benefits of our
strategic plan."

During March, Fred's opened two new stores and one new pharmacy.
The Company expects to open a total of 18 stores and 15 pharmacies in
2008. Fred's also closed eight stores and seven pharmacies during
March. The Company expects to close a total of 75 underperforming
stores and 22 underperforming pharmacies during the year.

Fred's Inc. operates 719 discount general merchandise stores,
including 24 franchised Fred's stores in the southeastern United
States. For more information about the Company, visit Fred's Website
at www.fredsinc.com.

Comments in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those projected
in the forward-looking statements. These risks and uncertainties
include, but are not limited to, those associated with the Company's
announced strategic plan, lease buyouts and the underlying assumptions
and projections upon which they are based, as well as risks that
intended results may not be achieved or may not occur as quickly as
expected; general economic trends; changes in consumer demand or
purchase patterns; delays or interruptions in the flow of merchandise
between the Company's distribution centers and its stores or between
the Company's suppliers and same; a disruption in the Company's data
processing services; costs and delays in acquiring or developing new
store sites; and other contingencies discussed in the Company's
Securities and Exchange Commission filings. Fred's undertakes no
obligation to release revisions to these forward-looking statements to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unforeseen events, except as required to be reported
under the rules and regulations of the Securities and Exchange
Commission.

Fred's Inc.
Jerry A. Shore, 901-362-3733, ext. 2217
Executive Vice President and Chief Financial Officer

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