(Reuters) - Discount store operator Fred’s Inc (FRED.O) said on Wednesday it had canceled its quarterly cash dividend and was exploring alternatives for some of its assets, sending its shares plunging 25 percent to their lowest in more than 18 years.
Walgreens later agreed to buy some of Rite Aid stores.
Fred‘s, which operates about 600 general merchandise and pharmacy stores in the United States, has cut costs, shut underperforming stores and introduced beverages such as beer and wine to attract customers to its stores.
But on Wednesday, the company reported its sixth straight decline in quarterly sales and a bigger loss.
“I think that if we do nothing, we run the risk of being irrelevant in the space,” Timothy Liebmann, chief operating officer of pharmacy at Fred‘s, said on a conference call.
Drugstore operators are also under pressure from the growing possibility of ecommerce giant Amazon.com’s (AMZN.O) entry into the business.
Fred‘s, however, said its decision to evaluate alternatives for its non-core assets, including real estate and specialty pharmacy business, was not a response to a third party proposal.
The company’s shares were down 21 percent at $3.99 in late morning trading on Wednesday. They have lost nearly 60 percent of their value since the failed Rite Aid deal.
Reporting by Sruthi Ramakrishnan and Yashaswini Swamynathan in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila