(By Balaseshan) Fred's Inc. (NASDAQ:FRED) shares fell sharply after the discount general merchandise stores operator reported a lower than expected quarterly earnings due to higher expenses.
Earnings for the second quarter were $6.1 million or $0.17 per share, higher than last year's $5.1 million or $0.13 per share. In the latest quarter, a favorable adjustment to the company's income tax rate added $0.11 per share to earnings.
Sales increased 4% to $470.82 million. Comparable store sales for the quarter declined 1.0%.
Analysts, on average, polled by Thomson Reuters had expected profit of $0.18 per share on revenue of $466.80 million for the second quarter.
Looking ahead into the third quarter, the company expects earnings of $0.22 to $0.26 per share and sales growth of 2% to 4%, while Street predicts profit of $0.26 per share on revenue growth of 2.80%. Comparable store sales for the third quarter are expected to decline in the range of 1% to 3%.
For the fiscal 2012, the company narrowed its earnings outlook to range of $0.97 to $1.04 per share from previous forecast of $0.98 to $1.04 per share, while Street predicts $1.02 per share.
FRED is trading down 9.03% at $13.82 on Thursday. The stock has been trading between $10.27 and $15.98 for the past 52 weeks.