Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
2-May-15 | Jun. 05, 2015 | |
Document Information [Line Items] | ||
Entity Registrant Name | FREDS INC | |
Entity Central Index Key | 724571 | |
Current Fiscal Year End Date | -29 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | FRED | |
Entity Common Stock, Shares Outstanding | 37,160,604 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 2-May-15 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | 2-May-15 | Jan. 31, 2015 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $7,119 | $6,440 |
Receivables, less allowance for doubtful accounts of $2,748 and $2,404, respectively | 62,361 | 41,370 |
Inventories | 328,413 | 315,678 |
Other non-trade receivables | 45,388 | 43,487 |
Prepaid expenses and other current assets | 11,814 | 12,983 |
Total current assets | 455,095 | 419,958 |
Property and equipment, at depreciated cost | 142,462 | 143,985 |
Goodwill | 45,575 | 87 |
Other intangibles, net | 96,521 | 79,542 |
Other noncurrent assets, net | 5,432 | 5,674 |
Total assets | 745,085 | 649,246 |
Current liabilities: | ||
Accounts payable | 133,924 | 143,250 |
Current portion of indebtedness | 643 | 4,331 |
Accrued expenses and other | 76,884 | 45,599 |
Deferred income taxes | 13,386 | 13,386 |
Total current liabilities | 224,837 | 206,566 |
Long-term portion of indebtedness | 80,355 | 2,259 |
Other noncurrent liabilities | 24,107 | 24,785 |
Total liabilities | 329,299 | 233,610 |
Commitments and Contingencies (See Note 9 - Legal Contingencies) | ||
Shareholders' equity: | ||
Retained earnings | 308,165 | 310,571 |
Accumulated other comprehensive income | 570 | 570 |
Total shareholders’ equity | 415,786 | 415,636 |
Total liabilities and shareholders' equity | 745,085 | 649,246 |
Preferred stock, nonvoting | ||
Shareholders' equity: | ||
Preferred stock | 0 | 0 |
Preferred stock, Series A junior participating nonvoting | ||
Shareholders' equity: | ||
Preferred stock | 0 | 0 |
Common stock, Class A voting | ||
Shareholders' equity: | ||
Common stock | 107,051 | 104,495 |
Common stock, Class B nonvoting | ||
Shareholders' equity: | ||
Common stock | $0 | $0 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | 2-May-15 | Jan. 31, 2015 |
In Thousands, except Share data, unless otherwise specified | ||
Receivables, allowance for doubtful accounts (in dollars) | $2,748 | $2,404 |
Preferred stock, nonvoting | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, outstanding | 0 | 0 |
Preferred stock, Series A junior participating nonvoting | ||
Preferred stock, shares authorized | 224,594 | 224,594 |
Preferred stock, outstanding | 0 | 0 |
Common stock, Class A voting | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 37,155,560 | 36,969,268 |
Common stock, shares outstanding | 37,155,560 | 36,969,268 |
Common stock, Class B nonvoting | ||
Common stock, shares authorized | 11,500,000 | 11,500,000 |
Common stock, shares outstanding | 0 | 0 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | 2-May-15 | 3-May-14 |
Net sales | $509,047 | $498,264 |
Cost of goods sold | 371,956 | 355,790 |
Gross profit | 137,091 | 142,474 |
Depreciation and amortization | 10,882 | 9,839 |
Selling, general and administrative expenses | 126,134 | 122,606 |
Operating income (loss) | 75 | 10,029 |
Interest expense | 262 | 135 |
Income (loss) before income taxes | -187 | 9,894 |
Provision (benefit) for income taxes | -158 | 3,776 |
Net income (loss) | ($29) | $6,118 |
Net income (loss) per share | ||
Basic (in dollars per share) | $0 | $0.17 |
Diluted (in dollars per share) | $0 | $0.17 |
Weighted average shares outstanding | ||
Basic (in shares) | 36,497 | 36,606 |
Effect of dilutive stock options (in shares) | 0 | 228 |
Diluted (in shares) | 36,497 | 36,834 |
Dividends per common share (in dollars per share) | $0.06 | $0.06 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | 2-May-15 | 3-May-14 |
Net income (loss) | ($29) | $6,118 |
Other comprehensive income (expense), net of tax postretirement plan adjustment | 0 | 0 |
Comprehensive income | ($29) | $6,118 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | 2-May-15 | 3-May-14 |
Cash flows from operating activities: | ||
Net income (loss) | ($29) | $6,118 |
Adjustments to reconcile net income to net cash flows from operating activities: | ||
Depreciation and amortization | 10,883 | 9,839 |
Net gain on asset disposition | -43 | -607 |
Benefit for store closures and asset impairment | -1,952 | -145 |
Stock-based compensation | 219 | 665 |
Provision for uncollectible receivables | 344 | 115 |
LIFO reserve increase | 404 | 617 |
Deferred income tax benefit | -160 | -1,624 |
Income tax charge upon exercise of stock options | -214 | -54 |
(Increase) decrease in operating assets: | ||
Trade and non-trade receivables | -22,491 | -27 |
Insurance receivables | -189 | 0 |
Inventories | -8,910 | -21,361 |
Other assets | 1,247 | -408 |
Increase (decrease) in operating liabilities: | ||
Accounts payable and accrued expenses | 791 | 18,617 |
Income taxes payable | 12,143 | 2,648 |
Other noncurrent liabilities | -1,678 | 2,483 |
Net cash provided by (used in) operating activities | -9,635 | 16,876 |
Cash flows from investing activities: | ||
Capital expenditures | -5,566 | -5,210 |
Proceeds from asset dispositions | 110 | 843 |
Asset acquisition, net (primarily intangibles) | -2,793 | -8,419 |
Acquisition of Reeves-Sain Drug Store, Inc., net of cash | -42,805 | 0 |
Net cash used in investing activities | -51,054 | -12,786 |
Cash flows provided by (used in) financing activities: | ||
Proceeds from revolving line of credit | 248,012 | 146,970 |
Payments on revolving line of credit | -185,685 | -146,962 |
Payments of indebtedness and capital lease obligations | -489 | -933 |
Proceeds from other long-term liabilities | -430 | 0 |
Excess tax charges from stock-based compensation | 214 | 54 |
Proceeds from exercise of stock options and employee stock purchase plan | 1,965 | 452 |
Cash dividends paid | -2,219 | -2,207 |
Net cash provided by (used in) financing activities | 61,368 | -2,626 |
Increase in cash and cash equivalents | 679 | 1,464 |
Cash and cash equivalents: | ||
Beginning of year | 6,440 | 6,725 |
End of period | 7,119 | 8,189 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 262 | 135 |
Income taxes paid | 144 | 2,120 |
Non-cash investing and financial activities: | ||
Acquisition related note payable, see Note 10 - Indebtedness | 13,000 | 0 |
Acquisition related contingent liability | $1,000 | $0 |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
2-May-15 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1: BASIS OF PRESENTATION |
Fred's, Inc. and subsidiaries ("Fred's", “We”, “Our”, “Us” or “Company”) operates, as of May 2, 2015, 662 discount general merchandise stores, including 19 franchised Fred's stores and three specialty pharmacy-only locations, in 15 states in the southeastern United States. There are 375 full service pharmacy departments located within our discount general merchandise stores. | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q, and therefore, do not include all information and notes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with GAAP. The statements reflect all adjustments (consisting of only normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of financial position in conformity with GAAP. The statements should be read in conjunction with the Notes to the Consolidated Financial Statements for the fiscal year ended January 31, 2015 incorporated into Our Annual Report on Form 10-K. | |
Certain prior year amounts have been reclassified to conform to the 2015 presentation (for changes in the balance sheet for state and franchise tax receivables in accrued expenses). | |
The results of operations for the thirteen week period ended May 2, 2015 are not necessarily indicative of the results to be expected for the full fiscal year. | |
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||
Inventory Disclosure [Text Block] | NOTE 2: INVENTORIES | |||||||||||||
Merchandise inventories are valued at the lower of cost or market using the retail first-in, first-out (FIFO) method for goods in our stores and the cost FIFO method for goods in our distribution centers. The retail inventory method is a reverse mark-up, averaging method which has been widely used in the retail industry for many years. This method calculates a cost-to-retail ratio that is applied to the retail value of inventory to determine the cost value of inventory and the resulting cost of goods sold and gross margin. The assumptions that the retail inventory method provides for valuation at lower of cost or market and the inherent uncertainties therein are discussed in the following paragraphs. In order to assure valuation at the lower of cost or market, the retail value of our inventory is adjusted on a consistent basis to reflect current market conditions. These adjustments include increases to the retail value of inventory for initial markups to set the selling price of goods or additional markups to adjust pricing for inflation and decreases to the retail value of inventory for markdowns associated with promotional, seasonal or other declines in the market value. Because these adjustments are made on a consistent basis and are based on current prevailing market conditions, they approximate the carrying value of the inventory at net realizable value (market value). Therefore, after applying the cost to retail ratio, the cost value of our inventory is stated at the lower of cost or market as is prescribed by GAAP. | ||||||||||||||
Because the approximation of net realizable value (market value) under the retail inventory method is based on estimates such as markups, markdowns and inventory losses (shrink), there exists an inherent uncertainty in the final determination of inventory cost and gross margin. In order to mitigate that uncertainty, the Company has a formal review by product class which considers such variables as current market trends, seasonality, weather patterns and age of merchandise to ensure that markdowns are taken currently, or a markdown reserve is established to cover future anticipated markdowns. This review also considers current pricing trends and inflation to ensure that markups are taken if necessary. The estimation of inventory losses (shrink) is a significant element in approximating the carrying value of inventory at net realizable value, and as such the following paragraph describes our estimation method as well as the steps we take to mitigate the risk of this estimate in the determination of the cost value of inventory. | ||||||||||||||
The Company calculates inventory losses (shrink) based on actual inventory losses occurring as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between yearly physical inventory counts. The estimate for shrink occurring in the interim period between physical counts is calculated on a store-specific basis and is based on history, as well as performance on the most recent physical count. It is calculated by multiplying each store’s shrink rate, which is based on the previously mentioned factors, by the interim period’s sales for each store. Additionally, the overall estimate for shrink is adjusted at the corporate level to a three-year historical average to ensure that the overall shrink estimate is the most accurate approximation of shrink based on the Company’s overall history of shrink. The three-year historical estimate is calculated by dividing the “book to physical” inventory adjustments for the trailing 36 months by the related sales for the same period. In order to reduce the uncertainty inherent in the shrink calculation, the Company first performs the calculation at the lowest practical level (by store) using the most current performance indicators. This ensures a more reliable number, as opposed to using a higher level aggregation or percentage method. The second portion of the calculation ensures that the extreme negative or positive performance of any particular store or group of stores does not skew the overall estimation of shrink. This portion of the calculation removes additional uncertainty by eliminating short-term peaks and valleys that could otherwise cause the underlying carrying cost of inventory to fluctuate unnecessarily. The methodology that we have applied in estimating shrink has resulted in variability that is not material to our financial statements. | ||||||||||||||
Management believes that the Company’s retail inventory method provides an inventory valuation which reasonably approximates cost and results in carrying inventory at the lower of cost or market. For pharmacy inventories, which were approximately $41.1 million and $43.5 million at May 2, 2015 and January 31, 2015, respectively, cost was determined using the retail last-in, first-out (LIFO) method in which inventory cost is maintained using the retail inventory method, then adjusted by application of the Producer Price Index published by the U.S. Department of Labor for the cumulative annual periods. The current cost of inventories exceeded the LIFO cost by approximately $40.4 million at May 2, 2015 and $39.9 million at January 31, 2015. | ||||||||||||||
The Company has historically included an estimate of inbound freight and certain general and administrative costs in merchandise inventory as prescribed by GAAP. These costs include activities surrounding the procurement and storage of merchandise inventory such as merchandise planning and buying, warehousing, accounting, information technology and human resources, as well as inbound freight. The total amount of procurement and storage costs and inbound freight, inclusive of the accelerated recognition of freight capitalization expense, included in merchandise inventory at May 2, 2015 is $20.4 million, with the corresponding amount of $19.4 million at January 31, 2015. | ||||||||||||||
In the second quarter of 2014, the Company established a reserve for inventory clearance of product that management identified as low-productive and does not fit our go-forward convenient and pharmacy healthcare services model. The Company recorded a below-cost inventory adjustment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 330, "Inventory," of approximately $11.6 million (including $1.6 million, for the accelerated recognition of freight capitalization expense) in cost of goods sold to value inventory at the lower of cost or market on inventory identified as low-productive, which the Company began liquidating late in the second quarter of 2014, in accordance with our reconfiguration strategy. During the first three months of fiscal 2015, the Company utilized $2.3 million of the reserve associated with goods sold in 2015. | ||||||||||||||
The following table illustrates the inventory markdown reserve activity related to the low-productive inventory discussed in the previous paragraph (in millions): | ||||||||||||||
Balance at | Additions | Utilization | Ending Balance | |||||||||||
January 31, 2015 | May 2, 2015 | |||||||||||||
Inventory markdown on low-productive inventory | $ | 7 | $ | - | $ | -2.2 | $ | 4.8 | ||||||
Inventory provision for freight capitalization expense | $ | 0.5 | $ | - | $ | -0.1 | $ | 0.4 | ||||||
Total | $ | 7.5 | $ | - | $ | -2.3 | $ | 5.2 | ||||||
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | |||||||||||
2-May-15 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 3: STOCK-BASED COMPENSATION | |||||||||||
The Company accounts for its stock-based compensation plans in accordance with the FASB ASC 718 “Compensation – Stock Compensation.” Under FASB ASC 718, stock-based compensation expense is based on awards ultimately expected to vest, and therefore has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant based on the Company’s historical forfeiture experience and will be revised in subsequent periods if actual forfeitures differ from those estimates. | ||||||||||||
FASB ASC 718 also requires the benefits of income tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required prior to FASB ASC 718. A summary of the Company’s stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands): | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
May 2, 2015 | May 3, 2014 | |||||||||||
Stock option expense | $ | -369 | $ | 202 | ||||||||
Restricted stock expense | 540 | 408 | ||||||||||
ESPP expense | 48 | 55 | ||||||||||
Total stock-based compensation | $ | 219 | $ | 665 | ||||||||
Income tax benefit on stock-based compensation | $ | 21 | $ | 176 | ||||||||
The fair value of each option granted during the thirteen week periods ended May 2, 2015 and May 3, 2014 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: | ||||||||||||
Thirteen Weeks Ended | ||||||||||||
May 2, 2015 | May 3, 2014 | |||||||||||
Stock Options | ||||||||||||
Expected volatility | 30.2 | % | 36.9 | % | ||||||||
Risk-free interest rate | 1.6 | % | 1.7 | % | ||||||||
Expected option life (in years) | 5.84 | 5.84 | ||||||||||
Expected dividend yield | 1.58 | % | 1.54 | % | ||||||||
Weighted average fair value at grant date | $ | 4.61 | $ | 5.37 | ||||||||
Employee Stock Purchase Plan | ||||||||||||
Expected volatility | 32.6 | % | 41.1 | % | ||||||||
Risk-free interest rate | 0.3 | % | 0.2 | % | ||||||||
Expected option life (in years) | 0.25 | 0.25 | ||||||||||
Expected dividend yield | 0.38 | % | 0.45 | % | ||||||||
Weighted average fair value at grant date | $ | 3.57 | $ | 4.15 | ||||||||
The following is a summary of the methodology applied to develop each assumption: | ||||||||||||
Expected Volatility - This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of our stock to calculate expected price volatility because management believes that this is the best indicator of future volatility. The Company calculates weekly market value changes from the date of grant over a past period representative of the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense. | ||||||||||||
Risk-free Interest Rate - This is the yield of a U.S. Treasury zero-coupon bond issue effective at the grant date with a remaining term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense. | ||||||||||||
Expected Lives - This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted have a maximum term of seven and one-half years. An increase in the expected life will increase compensation expense. | ||||||||||||
Dividend Yield – This is based on the historical yield for a period equivalent to the expected life of the option. An increase in the dividend yield will decrease compensation expense. | ||||||||||||
Forfeiture Rate - This is the estimated percentage of options granted that are expected to be forfeited or cancelled before becoming fully vested. This estimate is based on historical experience. An increase in the forfeiture rate will decrease compensation expense. | ||||||||||||
Employee Stock Purchase Plan | ||||||||||||
The 2004 Employee Stock Purchase Plan (the “2004 Plan”), which was approved by Fred’s shareholders, permits eligible employees to purchase shares of our common stock through payroll deductions at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. There were 12,119 shares issued during the thirteen weeks ended May 2, 2015. There are 1,410,928 shares approved to be issued under the 2004 Plan and as of May 2, 2015, there were 791,454 shares available. | ||||||||||||
Stock Options | ||||||||||||
The following table summarizes stock option activity during the thirteen weeks ended May 2, 2015: | ||||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||
Average | Average | Intrinsic | ||||||||||
Exercise Price | Remaining | Value | ||||||||||
Contractual Life | (Thousands) | |||||||||||
(Years) | ||||||||||||
Outstanding at January 31, 2015 | 946,553 | $ | 13.56 | 3.4 | $ | 2,954 | ||||||
Granted | 166,800 | $ | 17.91 | |||||||||
Forfeited / Cancelled | -252,500 | $ | 13.65 | |||||||||
Exercised | -189,376 | $ | 10.3 | |||||||||
Outstanding at May 2, 2015 | 671,477 | $ | 15.51 | 4.6 | $ | 1,235 | ||||||
Exercisable at May 2, 2015 | 79,393 | $ | 14.36 | 3.6 | $ | 217 | ||||||
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Fred’s closing stock price on the last trading day of the period ended May 2, 2015 and the exercise price of the option multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that date. As of May 2, 2015, total unrecognized stock-based compensation expense net of estimated forfeitures related to non-vested stock options was approximately $1.3 million, which is expected to be recognized over a weighted average period of approximately 3.8 years. The total fair value of options vested during the thirteen weeks ended May 2, 2015 was $44.7 thousand. | ||||||||||||
Restricted Stock | ||||||||||||
The following table summarizes restricted stock activity during the thirteen weeks ended May 2, 2015: | ||||||||||||
Number of Shares | Weighted Average | |||||||||||
Grant Date Fair | ||||||||||||
Value | ||||||||||||
Non-vested Restricted Stock at January 31, 2015 | 557,521 | $ | 14.72 | |||||||||
Granted | 72,768 | $ | 17.26 | |||||||||
Forfeited / Cancelled | -77,658 | $ | 13.25 | |||||||||
Vested | -28,654 | $ | 13.56 | |||||||||
Non-vested Restricted Stock at May 2, 2015 | 523,977 | $ | 15.27 | |||||||||
The aggregate pre-tax intrinsic value of restricted stock outstanding as of May 2, 2015 is $8.9 million with a weighted average remaining contractual life of 7.2 years. The unrecognized compensation expense net of estimated forfeitures, related to the outstanding stock is approximately $5.6 million, which is expected to be recognized over a weighted average period of approximately 7.6 years. The total fair value of restricted stock awards that vested during the thirteen weeks ended May 2, 2015 was $378.8 thousand. | ||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Fair Value Disclosures [Text Block] | NOTE 4 — FAIR VALUE MEASUREMENTS | |||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. | ||||||||||||||
⋅ | Level 1, defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. | |||||||||||||
⋅ | Level 2, defined as inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. | |||||||||||||
⋅ | Level 3, defined as unobservable inputs for the asset or liability. | |||||||||||||
Due to their short-term nature, the Company’s financial instruments, which include cash and cash equivalents, receivables and accounts payable, are presented on the Condensed Consolidated Balance Sheets at a reasonable estimate of their fair value as of May 2, 2015 and January 31, 2015. The Company was borrowing $65.7 million and $3.8 million on the revolving line of credit as of May 2, 2015, and January 31, 2015, respectively. The fair value of the revolving line of credit and our mortgage loans are estimated using Level 2 inputs based on the Company's current incremental borrowing rate for comparable borrowing arrangements. | ||||||||||||||
The table below details the fair value and carrying values for the mortgage loans as of the following dates: | ||||||||||||||
May 2, 2015 | January 31, 2015 | |||||||||||||
(in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||
Revolving line of credit | $ | 65,674 | $ | 65,674 | $ | 3,777 | $ | 3,777 | ||||||
Notes Payable, see Note 10 - Indebtedness | 13,000 | 12,924 | - | - | ||||||||||
Mortgage loans on land & buildings | 2,324 | 2,572 | 2,813 | 3,072 | ||||||||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended | |||||||
2-May-15 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Plant and Equipment Disclosure [Text Block] | NOTE 5: PROPERTY AND EQUIPMENT | |||||||
Property and Equipment are carried at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Improvements to leased premises are amortized using the straight-line method over the shorter of the initial term of the lease or the useful life of the improvement. Leasehold improvements added late in the lease term are amortized over the shorter of the remaining term of the lease (including the upcoming renewal option, if the renewal is reasonably assured) or the useful life of the improvement. Assets under capital leases are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term (regardless of renewal options), if shorter, and the charge to earnings is included in depreciation expense in the consolidated financial statements. Gains or losses on the sale of assets are recorded as a component of selling, general and administrative expenses. | ||||||||
The following illustrates the breakdown of the major categories within Property and Equipment (in thousands): | ||||||||
May 2, 2015 | January 31, 2015 | |||||||
Property and equipment, at cost: | ||||||||
Buildings and building improvements | $ | 116,667 | $ | 115,863 | ||||
Leasehold improvements | 78,002 | 76,822 | ||||||
Automobiles and vehicles | 5,990 | 5,764 | ||||||
Airplane | 4,697 | 4,697 | ||||||
Furniture, fixtures and equipment | 269,352 | 267,397 | ||||||
474,708 | 470,543 | |||||||
Less: Accumulated depreciation and amortization | -345,815 | -339,195 | ||||||
128,893 | 131,348 | |||||||
Construction in progress | 4,965 | 4,033 | ||||||
Land | 8,604 | 8,604 | ||||||
Total Property and equipment, at depreciated cost | $ | 142,462 | $ | 143,985 | ||||
EXIT_AND_DISPOSAL_ACTIVITIES
EXIT AND DISPOSAL ACTIVITIES | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||
Disposal Groups Including Discontinued Operations Disclosure [Text Block] | NOTE 6: EXIT AND DISPOSAL ACTIVITIES | |||||||||||||
Fixed Assets | ||||||||||||||
The Company’s policy is to review the carrying value of all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure impairment losses of fixed assets and leasehold improvements as the amount by which the carrying amount of a long-lived asset exceeds its fair value as prescribed by FASB ASC 360, "Impairment or Disposal of Long-Lived Assets." If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s fair value. The fair value is based on estimated market values for similar assets or other reasonable estimates of fair market value based upon using a discounted cash flow model. | ||||||||||||||
During fiscal 2014, in association with the planned closure of stores not meeting the Company's operational performance targets, we recorded a charge of $2.9 million in selling, general and administrative expense for the impairment of fixed assets and leasehold improvements. Fifty-two stores closed in accordance with the Company's reconfiguration plan, and during 2014, the Company utilized $2.5 million of the reserve associated with fixed assets and leasehold improvements for the closed stores leaving $0.4 million remaining in the reserve as of January 31, 2015. In the first quarter of 2015, the Company recorded an additional charge of $0.3 million for fixed assets and leasehold improvements related to the 2014 store closures leaving $0.7 million remaining in the reserve as of May 2, 2015. | ||||||||||||||
Inventory | ||||||||||||||
As discussed in Note 2 - Inventories, we adjust inventory values on a consistent basis to reflect current market conditions. In accordance with FASB ASC 330, "Inventories," we write down inventory to net realizable value in the period in which conditions giving rise to the write-downs are first recognized. | ||||||||||||||
In the fourth quarter of 2013, a reserve in the amount of $1.7 million, was established for the discontinuance of product categories that the Company has decided to exit in line with the strategies that are part of the Company's reconfiguration plan. Product categories the Company has decided to exit are furniture, electronics, and footwear. During 2014, the Company reserved an additional $0.3 million for the discontinuance of product categories that the Company has decided to exit and utilized $1.6 million of the reserve associated with goods sold in 2014. During the first three months of 2015, the Company utilized $0.1 million of the reserve associated with goods sold in 2015. | ||||||||||||||
Lease Termination | ||||||||||||||
For lease obligations related to closed stores, we record the estimated future liability associated with the rental obligation on the cease use date (when the stores were closed). The lease obligations are established at the cease use date for the present value of any remaining operating lease obligations, net of estimated sublease income, and at the communication date for severance and other exit costs, as prescribed by FASB ASC 420, “Exit or Disposal Cost Obligations.” Key assumptions in calculating the liability include the timeframe expected to terminate lease agreements, estimates related to the sublease potential of closed locations, and estimates of other related exit costs. If actual timing and potential termination costs or realization of sublease income differ from our estimates, the resulting liabilities could vary from recorded amounts. These liabilities are reviewed periodically and adjusted when necessary. | ||||||||||||||
A lease obligation still exists for some store closures that occurred in 2008. During the first three months of fiscal 2015, we utilized and added less than $0.1 million of the remaining lease liability for the fiscal 2008 store closures, leaving $0.1 million in the reserve at May 2, 2015. | ||||||||||||||
The following table illustrates the exit and disposal reserves related to the store closures and strategic initiatives discussed in the previous paragraphs (in millions): | ||||||||||||||
Balance at | Additions | Utilization | Ending Balance | |||||||||||
January 31, 2015 | May 2, 2015 | |||||||||||||
Inventory markdowns for discontinuance of exit categories | $ | 0.4 | $ | - | $ | -0.1 | $ | 0.3 | ||||||
Inventory provision for freight capitalization expense, exit categories | $ | 0.1 | $ | - | $ | - | $ | 0.1 | ||||||
Impairment charge for the disposal of fixed assets for 2014 planned closures | $ | 0.4 | $ | 0.3 | $ | - | $ | 0.7 | ||||||
Lease contract termination liability, 2008 closures | $ | 0.1 | $ | - | $ | - | $ | 0.1 | ||||||
Total | $ | 1 | $ | 0.3 | $ | -0.1 | $ | 1.2 | ||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended | ||||||||||
2-May-15 | |||||||||||
Stockholders Equity Note [Abstract] | |||||||||||
Comprehensive Income (Loss) Note [Text Block] | NOTE 7: ACCUMULATED OTHER COMPREHENSIVE INCOME | ||||||||||
Comprehensive income consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. The Company’s accumulated other comprehensive income includes the unrecognized prior service costs, transition obligations and actuarial gains/losses associated with our postretirement benefit plan. | |||||||||||
The following table illustrates the activity in accumulated other comprehensive income: | |||||||||||
Thirteen Weeks Ended | Year Ended | ||||||||||
(in thousands) | May 2, 2015 | May 3, 2014 | January 31, 2015 | ||||||||
Accumulated other comprehensive income | $ | 570 | $ | 703 | $ | 703 | |||||
Amortization of postretirement benefit | - | - | -133 | ||||||||
Ending balance | $ | 570 | $ | 703 | $ | 570 | |||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
2-May-15 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 8: RELATED PARTY TRANSACTIONS |
Atlantic Retail Investors, LLC, which is partially owned by Michael J. Hayes, a director of the Company and Chairman of the Board, owns the land and buildings occupied by three Fred’s stores. The terms and conditions regarding the leases on these locations are consistent in all material respects with other stores leases of the Company with unrelated landlords. The total rental payments related to related party leases were $139.8 thousand and $75.2 thousand for the thirteen weeks ended May 2, 2015 and May 3, 2014, respectively. The increase is entirely due to the timing of property tax and insurance payments for these locations. | |
On April 10, 2015, the Company completed the acquisition of Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services. As part of the total consideration for the purchase, Fred’s provided notes payable totaling $13.0 million to the sellers of Reeves-Sain Drug Store, Inc. who joined Fred’s as part of the acquisition. The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 and are subordinate to the revolving line of credit. The notes payable have a potential to earn additional contingent consideration if certain growth objectives are met for which the Company has accrued an additional $1.0 million. See Note 11 – Business Combinations for further discussion of the acquisition. | |
LEGAL_CONTINGENCIES
LEGAL CONTINGENCIES | 3 Months Ended |
2-May-15 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters and Contingencies [Text Block] | NOTE 9: LEGAL CONTINGENCIES |
In July 2008, a lawsuit styled Jessica Chapman, on behalf of herself and others similarly situated, v. Fred's Stores of Tennessee, Inc. was filed in the United States District Court for the Northern District of Alabama, Southern Division, in which the plaintiff alleges that she and other female assistant store managers were paid less than comparable males and seeks compensable damages, liquidated damages, attorney fees and court costs. The plaintiff filed a motion seeking collective action. On or about March 15, 2013, the Magistrate Judge issued a Report and Recommendation that the case be conditionally certified as a collective action, which the District Court Judge affirmed. As a result, notice of a collective action was sent to the appropriate class as required by the Court. One hundred ninety four plaintiffs opted into the suit, and approximately one hundred seventy plaintiffs currently remain in the suit. Although, the Company believed that all of its assistant managers were always properly paid and that the matter was not appropriate for collective action treatment, the Company and its insurance company participated in mediation with the plaintiffs. On March 26, 2015, the plaintiffs, their counsel, the Company and the Company’s insurance carrier reached a tentative agreement whereby the case would be settled for a total of $315,000, and the plaintiffs would be bound by the terms of a settlement agreement, and the case dismissed with prejudice. The Company has tendered the matter to its Employment Practices Liability Insurance (“EPLI”) carrier for coverage under its EPLI policy. As stated above, the EPLI carrier participated in the resolution of the suit. The settlement agreement has been signed, and the parties are working towards the final distribution of the settlement proceeds. The Court has been notified of the settlement and that the matter will be dismissed with prejudice. | |
In addition to the matters disclosed above, the Company is party to several pending legal proceedings and claims arising in the normal course of business. Although the outcome of the proceedings and claims cannot be determined with certainty, management of the Company is of the opinion that these proceedings and claims should not have a material adverse effect on the financial statements as a whole. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the financial statements as a whole. | |
INDEBTEDNESS
INDEBTEDNESS | 3 Months Ended |
2-May-15 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 10: INDEBTEDNESS |
On April 9, 2015, the Company entered into a New Agreement with Regions Bank and Bank of America to replace the January 25, 2013 Revolving Loan and Credit Agreement. The proceeds were used to refinance our existing agreement and to support acquisitions and our working capital needs. The New Agreement provides for a $150.0 million secured revolving line of credit, which will include a sublimit for letters of credit and swingline loans. The New Agreement will expire on April 9, 2020 and will bear interest at 1.25% or 1.50% plus either LIBOR or the LIBOR index rate depending on our FIFO inventory balance. The Company’s interest rates for the unused portion of the credit line are 20.0 basis points over LIBOR. The New Agreement also bears a credit facility fee which will be amortized over the agreement term. | |
BUSINESS_COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended | |||||||
2-May-15 | ||||||||
Business Combinations [Abstract] | ||||||||
Business Combination Disclosure [Text Block] | NOTE 11: BUSINESS COMBINATIONS | |||||||
On April 10, 2015, we completed the stock purchase agreement to acquire Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services. The total consideration for the purchase was approximately $67.0 million, less working capital adjustments of $10.2 million, which yielded an adjusted purchase consideration of $56.8 million. The adjusted consideration consisted of $42.8 million in cash at the time of closing and $13.0 million in notes payable in three equal installments on January 31st of 2021, 2022 and 2023. The sellers have a potential to earn additional contingent consideration if certain growth objectives are met for which the Company has accrued an additional $1.0 million. | ||||||||
A summary of the preliminary purchase price allocation for Reeve-Sain Drug Store, Inc. is as follows: | ||||||||
Total purchase consideration: | ||||||||
Cash | $ | 42,805.00 | ||||||
Notes payable | 13,000.00 | |||||||
Contingent liability | 1,000.00 | |||||||
Total purchase consideration | $ | 56,805.00 | ||||||
Allocation of the purchase consideration: | ||||||||
Accounts receivables | $ | 12,473.00 | ||||||
Inventory | 1,962.00 | |||||||
Other assets | 260 | |||||||
Goodwill | 45,488.00 | |||||||
Identifiable intangible assets | 18,180.00 | |||||||
Total assets acquired | $ | 78,363.00 | ||||||
Accounts payable | $ | 20,007.00 | ||||||
Other current liabilities | 1,551.00 | |||||||
Total liabilities assumed | $ | 21,558.00 | ||||||
Net assets acquired | $ | 56,805.00 | ||||||
The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands): | ||||||||
Amount | Weighted | |||||||
Average Life | ||||||||
(Years) | ||||||||
Customer prescription files | $ | 7,820.00 | 4 | |||||
Referral and relationships | 1,400.00 | 2 | ||||||
Trade name | 6,900.00 | - | ||||||
Non-compete agreements | 1,800.00 | 8 | ||||||
Business licenses | 260 | 1 | ||||||
$ | 18,180.00 | |||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||
Schedule of Inventory, Current [Table Text Block] | The following table illustrates the inventory markdown reserve activity related to the low-productive inventory discussed in the previous paragraph (in millions): | |||||||||||||
Balance at | Additions | Utilization | Ending Balance | |||||||||||
January 31, 2015 | May 2, 2015 | |||||||||||||
Inventory markdown on low-productive inventory | $ | 7 | $ | - | $ | -2.2 | $ | 4.8 | ||||||
Inventory provision for freight capitalization expense | $ | 0.5 | $ | - | $ | -0.1 | $ | 0.4 | ||||||
Total | $ | 7.5 | $ | - | $ | -2.3 | $ | 5.2 | ||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||||||
2-May-15 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||
Schedule of Share-based Compensation, Activity [Table Text Block] | A summary of the Company’s stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands): | |||||||||||
Thirteen Weeks Ended | ||||||||||||
May 2, 2015 | May 3, 2014 | |||||||||||
Stock option expense | $ | -369 | $ | 202 | ||||||||
Restricted stock expense | 540 | 408 | ||||||||||
ESPP expense | 48 | 55 | ||||||||||
Total stock-based compensation | $ | 219 | $ | 665 | ||||||||
Income tax benefit on stock-based compensation | $ | 21 | $ | 176 | ||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair value of each option granted during the thirteen week periods ended May 2, 2015 and May 3, 2014 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: | |||||||||||
Thirteen Weeks Ended | ||||||||||||
May 2, 2015 | May 3, 2014 | |||||||||||
Stock Options | ||||||||||||
Expected volatility | 30.2 | % | 36.9 | % | ||||||||
Risk-free interest rate | 1.6 | % | 1.7 | % | ||||||||
Expected option life (in years) | 5.84 | 5.84 | ||||||||||
Expected dividend yield | 1.58 | % | 1.54 | % | ||||||||
Weighted average fair value at grant date | $ | 4.61 | $ | 5.37 | ||||||||
Employee Stock Purchase Plan | ||||||||||||
Expected volatility | 32.6 | % | 41.1 | % | ||||||||
Risk-free interest rate | 0.3 | % | 0.2 | % | ||||||||
Expected option life (in years) | 0.25 | 0.25 | ||||||||||
Expected dividend yield | 0.38 | % | 0.45 | % | ||||||||
Weighted average fair value at grant date | $ | 3.57 | $ | 4.15 | ||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | The following table summarizes stock option activity during the thirteen weeks ended May 2, 2015: | |||||||||||
Options | Weighted | Weighted | Aggregate | |||||||||
Average | Average | Intrinsic | ||||||||||
Exercise Price | Remaining | Value | ||||||||||
Contractual Life | (Thousands) | |||||||||||
(Years) | ||||||||||||
Outstanding at January 31, 2015 | 946,553 | $ | 13.56 | 3.4 | $ | 2,954 | ||||||
Granted | 166,800 | $ | 17.91 | |||||||||
Forfeited / Cancelled | -252,500 | $ | 13.65 | |||||||||
Exercised | -189,376 | $ | 10.3 | |||||||||
Outstanding at May 2, 2015 | 671,477 | $ | 15.51 | 4.6 | $ | 1,235 | ||||||
Exercisable at May 2, 2015 | 79,393 | $ | 14.36 | 3.6 | $ | 217 | ||||||
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | The following table summarizes restricted stock activity during the thirteen weeks ended May 2, 2015: | |||||||||||
Number of Shares | Weighted Average | |||||||||||
Grant Date Fair | ||||||||||||
Value | ||||||||||||
Non-vested Restricted Stock at January 31, 2015 | 557,521 | $ | 14.72 | |||||||||
Granted | 72,768 | $ | 17.26 | |||||||||
Forfeited / Cancelled | -77,658 | $ | 13.25 | |||||||||
Vested | -28,654 | $ | 13.56 | |||||||||
Non-vested Restricted Stock at May 2, 2015 | 523,977 | $ | 15.27 | |||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | The table below details the fair value and carrying values for the mortgage loans as of the following dates: | |||||||||||||
May 2, 2015 | January 31, 2015 | |||||||||||||
(in thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||
Revolving line of credit | $ | 65,674 | $ | 65,674 | $ | 3,777 | $ | 3,777 | ||||||
Notes Payable, see Note 10 - Indebtedness | 13,000 | 12,924 | - | - | ||||||||||
Mortgage loans on land & buildings | 2,324 | 2,572 | 2,813 | 3,072 | ||||||||||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | |||||||
2-May-15 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Plant and Equipment [Table Text Block] | The following illustrates the breakdown of the major categories within Property and Equipment (in thousands): | |||||||
May 2, 2015 | January 31, 2015 | |||||||
Property and equipment, at cost: | ||||||||
Buildings and building improvements | $ | 116,667 | $ | 115,863 | ||||
Leasehold improvements | 78,002 | 76,822 | ||||||
Automobiles and vehicles | 5,990 | 5,764 | ||||||
Airplane | 4,697 | 4,697 | ||||||
Furniture, fixtures and equipment | 269,352 | 267,397 | ||||||
474,708 | 470,543 | |||||||
Less: Accumulated depreciation and amortization | -345,815 | -339,195 | ||||||
128,893 | 131,348 | |||||||
Construction in progress | 4,965 | 4,033 | ||||||
Land | 8,604 | 8,604 | ||||||
Total Property and equipment, at depreciated cost | $ | 142,462 | $ | 143,985 | ||||
EXIT_AND_DISPOSAL_ACTIVITIES_T
EXIT AND DISPOSAL ACTIVITIES (Tables) | 3 Months Ended | |||||||||||||
2-May-15 | ||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block] | The following table illustrates the exit and disposal reserves related to the store closures and strategic initiatives discussed in the previous paragraphs (in millions): | |||||||||||||
Balance at | Additions | Utilization | Ending Balance | |||||||||||
January 31, 2015 | May 2, 2015 | |||||||||||||
Inventory markdowns for discontinuance of exit categories | $ | 0.4 | $ | - | $ | -0.1 | $ | 0.3 | ||||||
Inventory provision for freight capitalization expense, exit categories | $ | 0.1 | $ | - | $ | - | $ | 0.1 | ||||||
Impairment charge for the disposal of fixed assets for 2014 planned closures | $ | 0.4 | $ | 0.3 | $ | - | $ | 0.7 | ||||||
Lease contract termination liability, 2008 closures | $ | 0.1 | $ | - | $ | - | $ | 0.1 | ||||||
Total | $ | 1 | $ | 0.3 | $ | -0.1 | $ | 1.2 | ||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended | ||||||||||
2-May-15 | |||||||||||
Stockholders Equity Note [Abstract] | |||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following table illustrates the activity in accumulated other comprehensive income: | ||||||||||
Thirteen Weeks Ended | Year Ended | ||||||||||
(in thousands) | May 2, 2015 | May 3, 2014 | January 31, 2015 | ||||||||
Accumulated other comprehensive income | $ | 570 | $ | 703 | $ | 703 | |||||
Amortization of postretirement benefit | - | - | -133 | ||||||||
Ending balance | $ | 570 | $ | 703 | $ | 570 | |||||
BUSINESS_COMBINATIONS_Tables
BUSINESS COMBINATIONS (Tables) | 3 Months Ended | |||||||
2-May-15 | ||||||||
Business Combinations [Abstract] | ||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | A summary of the preliminary purchase price allocation for Reeve-Sain Drug Store, Inc. is as follows: | |||||||
Total purchase consideration: | ||||||||
Cash | $ | 42,805.00 | ||||||
Notes payable | 13,000.00 | |||||||
Contingent liability | 1,000.00 | |||||||
Total purchase consideration | $ | 56,805.00 | ||||||
Allocation of the purchase consideration: | ||||||||
Accounts receivables | $ | 12,473.00 | ||||||
Inventory | 1,962.00 | |||||||
Other assets | 260 | |||||||
Goodwill | 45,488.00 | |||||||
Identifiable intangible assets | 18,180.00 | |||||||
Total assets acquired | $ | 78,363.00 | ||||||
Accounts payable | $ | 20,007.00 | ||||||
Other current liabilities | 1,551.00 | |||||||
Total liabilities assumed | $ | 21,558.00 | ||||||
Net assets acquired | $ | 56,805.00 | ||||||
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands): | |||||||
Amount | Weighted | |||||||
Average Life | ||||||||
(Years) | ||||||||
Customer prescription files | $ | 7,820.00 | 4 | |||||
Referral and relationships | 1,400.00 | 2 | ||||||
Trade name | 6,900.00 | - | ||||||
Non-compete agreements | 1,800.00 | 8 | ||||||
Business licenses | 260 | 1 | ||||||
$ | 18,180.00 | |||||||
INVENTORIES_Details
INVENTORIES (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 2-May-15 | Aug. 02, 2014 |
Inventory [Line Items] | ||
Inventory Valuation Reserves, Beginning Balance | $7.50 | |
Inventory Valuation Reserves Additions | 0 | 11.6 |
Inventory Valuation Reserves Utilization | -2.3 | |
Inventory Valuation Reserves, Ending Balance | 5.2 | |
Inventory Markdown on Low Productive Inventory [Member] | ||
Inventory [Line Items] | ||
Inventory Valuation Reserves, Beginning Balance | 7 | |
Inventory Valuation Reserves Additions | 0 | |
Inventory Valuation Reserves Utilization | -2.2 | |
Inventory Valuation Reserves, Ending Balance | 4.8 | |
Inventory Provision For Freight Capitalization Expense [Member] | ||
Inventory [Line Items] | ||
Inventory Valuation Reserves, Beginning Balance | 0.5 | |
Inventory Valuation Reserves Additions | 0 | 1.6 |
Inventory Valuation Reserves Utilization | -0.1 | |
Inventory Valuation Reserves, Ending Balance | $0.40 |
INVENTORIES_Details_Textual
INVENTORIES (Details Textual) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | 2-May-15 | Aug. 02, 2014 | Jan. 31, 2015 |
Inventory [Line Items] | |||
LIFO Inventory Amount | $41.10 | $43.50 | |
Excess of Replacement or Current Costs over Stated LIFO Value | 40.4 | 39.9 | |
Retail Related Inventory, Merchandise | 20.4 | 19.4 | |
Inventory Valuation Reserves Utilization | 2.3 | ||
Inventory Valuation Reserves Additions | 0 | 11.6 | |
Inventory Provision For Freight Capitalization Expense [Member] | |||
Inventory [Line Items] | |||
Inventory Valuation Reserves Utilization | 0.1 | ||
Inventory Valuation Reserves Additions | $0 | $1.60 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | 2-May-15 | 3-May-14 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $219 | $665 |
Income tax benefit on stock-based compensation | 21 | 176 |
Stock Option Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | -369 | 202 |
Restricted Stock Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 540 | 408 |
Employee Stock Purchase Plan (ESPP) Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $48 | $55 |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details 1) (USD $) | 3 Months Ended | |
2-May-15 | 3-May-14 | |
Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 30.20% | 36.90% |
Risk-free interest rate | 1.60% | 1.70% |
Expected option life (in years) | 5 years 10 months 2 days | 5 years 10 months 2 days |
Expected dividend yield | 1.58% | 1.54% |
Weighted average fair value at grant date | $4.61 | $5.37 |
Employee Stock Purchase Plan (ESPP) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Expected volatility | 32.60% | 41.10% |
Risk-free interest rate | 0.30% | 0.20% |
Expected option life (in years) | 3 months | 3 months |
Expected dividend yield | 0.38% | 0.45% |
Weighted average fair value at grant date | $3.57 | $4.15 |
STOCKBASED_COMPENSATION_Detail2
STOCK-BASED COMPENSATION (Details 2) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | 2-May-15 | Jan. 31, 2015 |
Options, Outstanding Beginning Period (in shares) | 946,553 | |
Options, Granted (in shares) | 166,800 | |
Options, Forfeited / Cancelled (in shares) | -252,500 | |
Options, Exercised (in shares) | -189,376 | |
Options, Outstanding Ending Period (in shares) | 671,477 | 946,553 |
Options, Exercisable (in shares) | 79,393 | |
Weighted Average Exercise Price, Outstanding Beginning Period (in dollars per share) | $13.56 | |
Weighted Average Exercise Price, Granted (in dollars per share) | $17.91 | |
Weighted Average Exercise Price, Forfeited / Cancelled (in dollars per share) | $13.65 | |
Weighted Average Exercise Price, Exercised (in dollars per share) | $10.30 | |
Weighted Average Exercise Price, Outstanding Ending Period (in dollars per share) | $15.51 | $13.56 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $14.36 | |
Weighted Average Remaining Contractual Life (Years), Outstanding | 4 years 7 months 6 days | 3 years 4 months 24 days |
Weighted Average Remaining Contractual Life (Years), Exercisable | 3 years 7 months 6 days | |
Aggregate Intrinsic Value, Outstanding (in dollars) | $1,235 | $2,954 |
Aggregate Intrinsic Value, Exercisable (in dollars) | $217 |
STOCKBASED_COMPENSATION_Detail3
STOCK-BASED COMPENSATION (Details 3) (Restricted Stock [Member], USD $) | 3 Months Ended |
2-May-15 | |
Restricted Stock [Member] | |
Options, Non-vested Restricted Stock Beginning Period (in shares) | 557,521 |
Options, Granted (in shares) | 72,768 |
Options, Forfeited / Cancelled (in shares) | -77,658 |
Options, Vested (in shares) | -28,654 |
Options, Non-vested Restricted Stock (in shares) Ending Period | 523,977 |
Weighted Average Grant Date Fair Value, Non-vested Restricted Stock (in dollars per share) Beginning Period | $14.72 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $17.26 |
Weighted Average Grant Date Fair Value, Forfeited / Cancelled (in dollars per share) | $13.25 |
Weighted Average Grant Date Fair Value, Vested (in dollars per share) | $13.56 |
Weighted Average Grant Date Fair Value, Non-vested Restricted Stock (in dollars per share) Ending Period | $15.27 |
STOCKBASED_COMPENSATION_Detail4
STOCK-BASED COMPENSATION (Details Textual) (USD $) | 3 Months Ended |
2-May-15 | |
Employee Stock Purchase Plan 2004 (ESPP) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Employee Stock Purchase Plan Eligible Employees To Purchase Shares, Description | The 2004 Employee Stock Purchase Plan (the 2004 Plan), which was approved by Freds shareholders, permits eligible employees to purchase shares of our common stock through payroll deductions at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. |
Share-Based Compensation Arrangement By Share-Based Payment Award, Shares Issued In Period | 12,119 |
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares Authorized | 1,410,928 |
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares Available For Grant | 791,454 |
Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized, Stock Options | 1,300,000 |
Employee Service Share-Based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized, Period For Recognition | 3 years 9 months 18 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | 44,700 |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Outstanding, Weighted Average Remaining Contractual Terms | 7 years 2 months 12 days |
Share Based Compensation Arrangement By Share Based Payment Award, Equity Instruments Other Than Options, Forfeited Weighted Average Remaining Contractual Term | 7 years 7 months 6 days |
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Vested In Period, Total Fair Value | 378,800 |
Share Based Compensation Arrangement By Share Based Payment Award Other Than Options Outstanding Pre Tax Intrinsic Value | 8,900,000 |
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Forfeitures Intrinsic Fair Value | 5,600,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 2-May-15 | Jan. 31, 2015 |
In Thousands, unless otherwise specified | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Mortgage loans on land & buildings, Carrying Value | $2,324 | $2,813 |
Mortgage loans on land & buildings, Fair Value | 2,572 | 3,072 |
Notes Payable, Other Payables [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Mortgage loans on land & buildings, Carrying Value | 13,000 | 0 |
Mortgage loans on land & buildings, Fair Value | 12,924 | 0 |
Revolving Credit Facility [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Mortgage loans on land & buildings, Carrying Value | 65,674 | 3,777 |
Mortgage loans on land & buildings, Fair Value | $65,674 | $3,777 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details Textual) (USD $) | 2-May-15 | Jan. 31, 2015 |
In Millions, unless otherwise specified | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Long-term Line of Credit | $65.70 | $3.80 |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 2-May-15 | Jan. 31, 2015 |
In Thousands, unless otherwise specified | ||
Property and equipment, at cost: | ||
Buildings and building improvements | $116,667 | $115,863 |
Leasehold improvements | 78,002 | 76,822 |
Automobiles and vehicles | 5,990 | 5,764 |
Airplane | 4,697 | 4,697 |
Furniture, fixtures and equipment | 269,352 | 267,397 |
Property, Plant and Equipment, Gross | 474,708 | 470,543 |
Less: Accumulated depreciation and amortization | -345,815 | -339,195 |
Property and Equipment Less Accumulated Depreciation | 128,893 | 131,348 |
Construction in progress | 4,965 | 4,033 |
Land | 8,604 | 8,604 |
Total Property and equipment, at depreciated cost | $142,462 | $143,985 |
EXIT_AND_DISPOSAL_ACTIVITIES_D
EXIT AND DISPOSAL ACTIVITIES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | 2-May-15 | Feb. 01, 2014 | 4-May-13 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Restructuring Reserve, Beginning Balance | $1 | ||
Restructuring Reserve, Additions | 0.3 | ||
Restructuring Reserve, Utilization | -0.1 | ||
Restructuring Reserve, Ending Balance | 1.2 | ||
Impairment charge for the disposal of fixed assets for 2014 planned closures [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Restructuring Reserve, Beginning Balance | 0.4 | ||
Restructuring Reserve, Additions | 0.3 | ||
Restructuring Reserve, Utilization | 0 | ||
Restructuring Reserve, Ending Balance | 0.7 | ||
Lease contract termination liability, 2008 closures [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Restructuring Reserve, Beginning Balance | 0.1 | ||
Restructuring Reserve, Additions | 0 | ||
Restructuring Reserve, Utilization | 0 | ||
Restructuring Reserve, Ending Balance | 0.1 | ||
Inventory markdowns for discontinuance of exit categories [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Restructuring Reserve, Beginning Balance | 0.4 | 1.7 | |
Restructuring Reserve, Additions | 0 | ||
Restructuring Reserve, Utilization | -0.1 | -1.6 | |
Restructuring Reserve, Ending Balance | 0.3 | 1.7 | |
Inventory provision for freight capitalization expense, exit categories [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Restructuring Reserve, Beginning Balance | 0.1 | ||
Restructuring Reserve, Additions | 0 | ||
Restructuring Reserve, Utilization | 0 | ||
Restructuring Reserve, Ending Balance | $0.10 |
EXIT_AND_DISPOSAL_ACTIVITIES_D1
EXIT AND DISPOSAL ACTIVITIES (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | 2-May-15 | Feb. 01, 2014 | Jan. 31, 2015 | 4-May-13 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Selling, general and administrative expense for the impairment of fixed assets and leasehold improvements | $2.90 | |||
Impairment of Long-Lived Assets to be Disposed of | 2.5 | |||
Restructuring Reserve | 1.2 | 1 | ||
Restructuring Reserve, Period Increase (Decrease) | 0.3 | 0.3 | ||
Restructuring Reserve Utilizations | 0.1 | |||
Inventory Valuation Reserve [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Restructuring Reserve | 0.3 | 0.4 | 1.7 | |
Restructuring Reserve Utilizations | 0.1 | 1.6 | ||
2014 Store Closures [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Restructuring Reserve | $0.70 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | 2-May-15 | 3-May-14 | Jan. 31, 2015 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive income | $570 | $703 | $703 |
Amortization of postretirement benefit | 0 | 0 | -133 |
Ending balance | $570 | $703 | $570 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Textual) (USD $) | 3 Months Ended | |
2-May-15 | 3-May-14 | |
Related Party Transaction [Line Items] | ||
Noncash or Part Noncash Acquisition, Other Liabilities Assumed | $1,000,000 | $0 |
Reeves-Sain Drug Store, Inc [Member] | ||
Related Party Transaction [Line Items] | ||
Business Combination, Consideration Transferred, Liabilities Incurred | 13,000,000 | |
Noncash or Part Noncash Acquisition, Other Liabilities Assumed | 1,000,000 | |
Debt Instrument, Currency | The notes payable are due in three equal installments to be paid on January 31st of 2021, 2022 and 2023 | |
Atlantic Retail Investors [Member] | ||
Related Party Transaction [Line Items] | ||
Payments for Leasing Costs | $139,800 | $75,200 |
LEGAL_CONTINGENCIES_Details_Te
LEGAL CONTINGENCIES (Details Textual) (USD $) | 1 Months Ended |
Mar. 26, 2015 | |
Payments for Legal Settlements | $315,000 |
INDEBTEDNESS_Details_Textual
INDEBTEDNESS (Details Textual) (USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Apr. 09, 2015 |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Maximum Borrowing Capacity | $150 |
Line of Credit Facility, Expiration Date | 9-Apr-20 |
Line of Credit Facility, Interest Rate Description | 1.50% plus either LIBOR or the LIBOR index rate depending on our FIFO inventory balance. |
Line of Credit Facility, Interest Rate During Period | 1.25% |
Line Of Credit Facility Unused Portion Interest Rate Description | The Company’s interest rates for the unused portion of the credit line are 20.0 basis points over LIBOR. |
BUSINESS_COMBINATIONS_Details
BUSINESS COMBINATIONS (Details) (USD $) | 3 Months Ended | ||
2-May-15 | 3-May-14 | Jan. 31, 2015 | |
Total purchase consideration: | |||
Contingent liability | $1,000,000 | $0 | |
Allocation of the purchase consideration: | |||
Goodwill | 45,575,000 | 87,000 | |
Reeves-Sain Drug Store, Inc [Member] | |||
Total purchase consideration: | |||
Cash | 42,805,000 | ||
Notes payable | 13,000,000 | ||
Contingent liability | 1,000,000 | ||
Total purchase consideration | 56,805,000 | ||
Allocation of the purchase consideration: | |||
Accounts receivables | 12,473,000 | ||
Inventory | 1,962,000 | ||
Other assets | 260,000 | ||
Goodwill | 45,488,000 | ||
Identifiable intangible assets | 18,180,000 | ||
Total assets acquired | 78,363,000 | ||
Accounts payable | 20,007,000 | ||
Other current liabilities | 1,551,000 | ||
Total liabilities assumed | 21,558,000 | ||
Net assets acquired | $56,805,000 |
BUSINESS_COMBINATIONS_Details_
BUSINESS COMBINATIONS (Details 1) (USD $) | 3 Months Ended |
2-May-15 | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | $18,180,000 |
Trade name [Member] | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | 6,900,000 |
Weighted Average Life (Years) | 0 years |
Business licenses [Member] | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | 260,000 |
Weighted Average Life (Years) | 1 year |
Customer prescription files [Member] | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | 7,820,000 |
Weighted Average Life (Years) | 4 years |
Referral and relationships [Member] | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | 1,400,000 |
Weighted Average Life (Years) | 2 years |
Non-compete agreements [Member] | |
Business Acquisition [Line Items] | |
Identifiable Intangible Assets Acquired Amount | $1,800,000 |
Weighted Average Life (Years) | 8 years |
BUSINESS_COMBINATIONS_Details_1
BUSINESS COMBINATIONS (Details textual) (USD $) | 3 Months Ended | |
2-May-15 | 3-May-14 | |
Business Acquisition [Line Items] | ||
Noncash or Part Noncash Acquisition, Other Liabilities Assumed | $1,000,000 | $0 |
Reeves-Sain Drug Store, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Business Combination Total Consideration Gross | 67,000,000 | |
Working Capital Adjustments | 10,200,000 | |
Business Combination, Consideration Transferred | 56,805,000 | |
Payments to Acquire Businesses, Gross | 42,805,000 | |
Business Combination, Consideration Transferred, Liabilities Incurred | 13,000,000 | |
Noncash or Part Noncash Acquisition, Other Liabilities Assumed | $1,000,000 |