Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2016 | Jun. 03, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | FREDS INC | |
Entity Central Index Key | 724,571 | |
Document Type | 10-Q | |
Trading Symbol | FRED | |
Document Period End Date | Apr. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-28 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,289,261 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 6,768 | $ 5,917 |
Receivables, less allowance for doubtful accounts of $2,670 and $2,936, respectively | 52,849 | 53,171 |
Inventories | 350,558 | 340,730 |
Other non-trade receivables | 38,383 | 40,049 |
Prepaid expenses and other current assets | 11,418 | 11,494 |
Total current assets | 459,976 | 451,361 |
Property and equipment, at depreciated cost | 137,007 | 138,993 |
Goodwill | 41,490 | 41,490 |
Other intangibles, net | 95,753 | 97,153 |
Other noncurrent assets, net | 1,515 | 1,515 |
Total assets | 735,741 | 730,512 |
Current liabilities: | ||
Accounts payable | 191,331 | 184,657 |
Current portion of indebtedness | 57 | 621 |
Accrued expenses and other | 53,352 | 56,074 |
Total current liabilities | 244,740 | 241,352 |
Long-term portion of indebtedness | 57,284 | 52,527 |
Deferred income taxes | 8,344 | 9,724 |
Other noncurrent liabilities | 21,321 | 22,698 |
Total liabilities | $ 331,689 | $ 326,301 |
Commitments and Contingencies (See Note 9 - Legal Contingencies) | ||
Shareholders' equity: | ||
Retained earnings | $ 293,161 | $ 294,140 |
Accumulated other comprehensive income | 475 | 475 |
Total shareholders' equity | 404,052 | 404,211 |
Total liabilities and shareholders' equity | $ 735,741 | $ 730,512 |
Nonvoting Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | ||
Nonvoting Series A Junior Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock | ||
Common Class A [Member] | ||
Shareholders' equity: | ||
Common stock | $ 110,416 | $ 109,596 |
Nonvoting Common Class B [Member] | ||
Shareholders' equity: | ||
Common stock |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 |
Allowance for doubtful accounts | $ 2,670 | $ 2,936 |
Nonvoting Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | ||
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, outstanding | 0 | 0 |
Nonvoting Series A Junior Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | ||
Preferred stock, authorized | 224,594 | 224,594 |
Preferred stock, outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | ||
Common stock, authorized | 60,000,000 | 60,000,000 |
Common stock, issued | 37,279,666 | 37,279,666 |
Common stock, outstanding | 37,232,785 | 37,232,785 |
Nonvoting Common Class B [Member] | ||
Common stock, par value (in dollars per share) | ||
Common stock, authorized | 11,500,000 | 11,500,000 |
Common stock, outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 549,548 | $ 509,047 |
Cost of goods sold | 408,226 | 371,956 |
Gross profit | 141,322 | 137,091 |
Depreciation and amortization | 11,563 | 10,882 |
Selling, general and administrative expenses | 127,331 | 126,134 |
Operating income | 2,428 | 75 |
Interest expense | 515 | 262 |
Income (loss) before income taxes | 1,913 | (187) |
Provision (benefit) for income taxes | 657 | (158) |
Net income (loss) | $ 1,256 | $ (29) |
Net income per share | ||
Basic (in dollars per share) | $ 0.03 | |
Diluted (in dollars per share) | $ 0.03 | |
Weighted average common shares outstanding | ||
Basic (in shares) | 37,073 | 36,497 |
Effect of dilutive stock options (in shares) | 20 | 0 |
Diluted (in shares) | 37,093 | 36,497 |
Dividends per common share (in dollars per share) | $ 0.06 | $ 0.06 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Comprehensive income (loss): | ||
Net income (loss) | $ 1,256 | $ (29) |
Other comprehensive income (expense), net of tax postretirement plan adjustment | ||
Comprehensive income (loss) | $ 1,256 | $ (29) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,256 | $ (29) |
Adjustments to reconcile net income (loss) to net cash flows from operating | ||
Depreciation and amortization | 11,563 | 10,883 |
Net (gain) loss on asset disposition | 40 | (43) |
Provision for store closures and asset impairment | 77 | 315 |
Stock-based compensation | 754 | 219 |
Provision for uncollectible receivables | (265) | 344 |
LIFO reserve increase | 930 | 404 |
Deferred income tax benefit | (1,380) | (160) |
Income tax charge upon exercise of stock options | 9 | (214) |
(Increase) decrease in operating assets: | ||
Trade and non-trade receivables | 5 | (22,491) |
Insurance receivables | 225 | (189) |
Inventories | (10,758) | (11,177) |
Other assets | 76 | 1,247 |
Increase (decrease) in operating liabilities: | ||
Accounts payable and accrued expenses | 3,953 | 791 |
Income taxes payable | 1,749 | 12,143 |
Other noncurrent liabilities | (1,377) | (1,678) |
Net cash provided by (used in) operating activities | 6,857 | (9,635) |
Cash flows provided by (used in) investing activities: | ||
Capital expenditures | (4,609) | (5,566) |
Proceeds from asset dispositions | 15 | $ 110 |
Insurance recoveries for replacement assets | 263 | |
Asset acquisition, net (primarily intangibles) | $ (3,700) | $ (2,793) |
Acquisition of Reeves-Sain Drug Store, Inc., net of cash | (42,805) | |
Net cash used in investing activities | $ (8,031) | (51,054) |
Cash flows provided by (used in) financing activities: | ||
Payments of indebtedness and capital lease obligations | (579) | (489) |
Proceeds from revolving line of credit | 222,402 | 248,012 |
Payments on revolving line of credit | (217,657) | (185,685) |
Debt issuance (costs) amortization | 26 | (430) |
Excess tax charges (benefit) from stock-based compensation | (9) | 214 |
Proceeds from exercise of stock options and employee stock purchase plan | 75 | 1,965 |
Cash dividends paid | (2,233) | (2,219) |
Net cash provided by financing activities | 2,025 | 61,368 |
Increase in cash and cash equivalents | 851 | 679 |
Cash and cash equivalents: | ||
Beginning of year | 5,917 | 6,440 |
End of period | 6,768 | 7,119 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 515 | 262 |
Income taxes paid | $ 518 | 144 |
Non-cash investing and financial activities: | ||
Acquisition related note payable, see Note 11 - Business Combinations | $ 13,000 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Apr. 30, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | NOTE 1: BASIS OF PRESENTATION Fred's, Inc. and subsidiaries ("Fred's", We, Our, Us or Company) operates, as of April 30, 2016, 660 discount general merchandise stores and three specialty pharmacy-only locations, in fifteen states in the southeastern United States. Included in the count of discount general merchandise stores are 18 franchised locations. There are 373 full service pharmacy departments located within our discount general merchandise stores, including four within franchised locations. 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 accompanying financial 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 accompanying financial statements should be read in conjunction with the Notes to the Consolidated Financial Statements for the fiscal year ended January 30, 2016 incorporated into our Annual Report on Form 10-K, which we filed with the Securities and Exchange Commission on April 14, 2016.. Certain prior year amounts have been reclassified to conform to the 2016 presentation. The results of operations for the thirteen week period ended April 30, 2016 are not necessarily indicative of the results to be expected for the full fiscal year. All references in this Report to 2015 and 2016 refer to the fiscal years ended January 30, 2016 and ending January 28, 2017, respectively. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Apr. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 2: INVENTORIES Merchandise inventories are valued at the lower of cost or market using the retail first-in, first-out (FIFO) inventory method for goods in our stores and the cost FIFO inventory 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 process, conducted 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 on a particular product class. 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 stores shrink rate, which is based on the previously mentioned factors, by the interim periods 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 Companys 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 Companys 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 $46.9 million and $41.1 million at April 30, 2016 and May 2, 2015, respectively, cost was determined using the retail last-in, first-out (LIFO) inventory 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 cumulative annual periods. The current cost of inventories exceeded LIFO cost by approximately $48.5 million at April 30, 2016 and $40.4 million at May 2, 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 April 30, 2016 is $21.2 million, with the corresponding amount of $20.4 million at May 2, 2015. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Apr. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 3: STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation plans in accordance with the Financial Accounting Standards Board Accounting Standards Codification (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 Companys 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 Companys stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands) Thirteen Weeks Ended April 30, 2016 May 2, 2015 Stock option expense $ (424 ) $ (369 ) Restricted stock expense 1,127 540 ESPP expense 51 48 Total stock-based compensation $ 754 $ 219 Income tax benefit on stock-based compensation $ 209 $ 21 The fair value of each option granted during the thirteen week period ended April 30, 2016 and May 2, 2015 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Thirteen Weeks Ended April 30, 2016 May 2, 2015 Stock Options Expected volatility 33.7 % 30.2 % Risk-free interest rate 1.5 % 1.6 % Expected option life (in years) 5.84 5.84 Expected dividend yield 1.78 % 1.58 % Weighted average fair value at grant date $ 4.08 $ 4.61 Employee Stock Purchase Plan Expected volatility 59.4 % 32.6 % Risk-free interest rate 0.9 % 0.3 % Expected option life (in years) 0.25 0.25 Expected dividend yield 0.40 % 0.38 % Weighted average fair value at grant date $ 3.88 $ 3.57 The following is a summary of the methodology applied to develop each assumption: Expected Volatility Risk-free Interest Rate Expected Lives Dividend Yield Employee Stock Purchase Plan 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. There were 13,285 shares issued during the thirteen weeks ended April 30, 2016. There are 1,410,928 shares approved to be issued under the 2004 Plan and as of April 30, 2016, there were 732,316 shares available. Stock Options The following table summarizes stock option activity during the thirteen weeks ended April 30, 2016: Options Weighted- Average Exercise Price Weighted-Average Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 30, 2016 839,859 $ 15.38 3.5 $ 1,371 Granted 157,832 14.68 Forfeited / Cancelled (237,500 ) 14.09 Exercised (900 ) 12.84 Outstanding at April 30, 2016 759,291 $ 15.64 5.8 $ 350 Exercisable at April 30, 2016 112,679 $ 15.09 4.2 $ 59 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Freds closing stock price on the last trading day of the period ended April 30, 2016 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 April 30, 2016, total unrecognized stock-based compensation expense net of estimated forfeitures related to non-vested stock options was approximately $1.7 million, which is expected to be recognized over a weighted average period of approximately 4.1 years. The total fair value of options vested during the thirteen weeks ended April 30, 2016 was $74.3 thousand. Restricted Stock The following table summarizes restricted stock activity during the thirteen weeks ended April 30, 2016: Number of Shares Weighted-Average Grant Date Fair Value Non-vested Restricted Stock at January 30, 2016 517,143 $ 15.61 Granted 34,734 15.35 Forfeited / Cancelled (1,340 ) 16.91 Vested (25,982 ) 15.45 Non-vested Restricted Stock at April 30, 2016 524,555 $ 15.61 The aggregate pre-tax intrinsic value of restricted stock outstanding as of April 30, 2016 is $7.7 million with a weighted average remaining contractual life of 6.7 years. The unrecognized compensation expense net of estimated forfeitures, related to the outstanding stock is approximately $5.3 million, which is expected to be recognized over a weighted average period of approximately 6.7 years. The total fair value of restricted stock awards that vested during the thirteen weeks ended April 30, 2016 was $402.9 thousand. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Apr. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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, which are based on an entitys own assumptions as there is little, if any, observable activity in identical assets or liabilities. Due to their short-term nature, the Companys 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 April 30, 2016 and January 30, 2016. There were $43.1 million and $38.3 million of borrowings on the Companys revolving line of credit as of April 30, 2016 and January 30, 2016, respectively. Refer to Note 10 Indebtedness. The fair value of the revolving lines 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 revolving line of credit, notes payable and mortgage loans as of the following dates: April 30, 2016 January 30, 2016 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 43,072 $ 43,072 $ 38,327 $ 38,327 Mortgage loans on land & buildings 1,681 1,881 2,259 2,451 Notes Payable 13,000 12,866 13,000 12,425 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Apr. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 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 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 Companys 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): April 30, 2016 January 30, 2016 Property and equipment, at cost: Buildings and building improvements $ 119,212 $ 118,907 Leasehold improvements 83,435 82,344 Automobiles and vehicles 5,357 5,433 Airplane 4,697 4,697 Furniture, fixtures and equipment 279,867 277,812 492,568 489,193 Less: Accumulated depreciation and amortization (367,783 ) (361,608 ) 124,785 127,585 Construction in progress 3,579 2,765 Land 8,643 8,643 Total Property and equipment, at depreciated cost $ 137,007 $ 138,993 |
EXIT AND DISPOSAL ACTIVITIES
EXIT AND DISPOSAL ACTIVITIES | 3 Months Ended |
Apr. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
EXIT AND DISPOSAL ACTIVITIES | NOTE 6: EXIT AND DISPOSAL ACTIVITIES Fixed Assets The Companys 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 assets fair value. The fair value is based on estimated market values for similar assets or other reasonable estimates of fair market value based upon a discounted cash flow model. In the first quarter of 2016, in association with the closure or scheduled relocation of certain stores, we recorded a charge of $0.1 million in selling, general and administrative expense for the impairment of fixed assets and leasehold improvements. No such charges were recorded in the first quarter of 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. No below-cost inventory adjustments were recorded during the thirteen weeks ended April 30, 2016 or May 2, 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 for some store closures that occurred in 2008 still existed as of May 2, 2015. No such reserve remained as of April 30, 2016. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Apr. 30, 2016 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 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 are recorded as an element of shareholders equity but are excluded from net income pursuant to GAAP. The Companys accumulated other comprehensive income includes the unrecognized prior service costs, transition obligations and actuarial gains/losses associated with our post-retirement benefit plan. The following table illustrates the activity in accumulated other comprehensive income: Thirteen Weeks Ended Year Ended (in thousands) April 30, 2016 May 2, 2015 January 30, 2016 Accumulated other comprehensive income $ 475 $ 570 $ 780 Amortization of post-retirement benefit - - (305 ) Ending balance $ 475 $ 570 $ 475 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Apr. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8: RELATED PARTY TRANSACTIONS Atlantic Retail Investors, LLC, which is partially owned by Michael J. Hayes, a director of the Company, owns the land and buildings occupied by three Freds stores. Richard H. Sain, Senior Vice President of Retail Pharmacy Business Development, owns the land and building occupied by one of Fred's Xpress Pharmacy locations. The terms and conditions regarding the leases on these locations were 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 $183.9 thousand and $139.8 thousand for the thirteen weeks ended April 30, 2016 and May 2, 2015, respectively. The increase is due to the addition of Mr. Sains Xpress pharmacy location. 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, Freds provided notes payable totaling $13.0 million to the sellers of Reeves-Sain Drug Store, Inc., who became employees of Freds as part of the acquisition. The notes payable are due in three equal installments to be paid on January 31 st |
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES | 3 Months Ended |
Apr. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL CONTINGENCIES | NOTE 9: LEGAL CONTINGENCIES On August 10, 2015, following an investigation by a third-party cyber-security firm, the Company reported that there had been unauthorized access to two Company servers through which payment card data is routed. The investigation uncovered malware on the two servers beginning on March 23, 2015, and that malware operated on one server until April 8, 2015 and on the other server until April 24, 2015. The malware was designed to search only for "track 2" datadata from the magnetic stripe of payment cards that contains only the card number, expiration date and verification code. During this time period, track 2 data was at risk of disclosure; however, the third-party cyber-security firm did not find evidence that track 2 data was removed from the Companys system. No other customer information was involved. The malware has been removed from the Companys system, and the Company has implemented and is continuing to implement enhanced security measures to prevent similar events from occurring in the future. On October 22, 2015, the Company received an assessment from MasterCard relating to this incident in the amount of approximately $2.9 million. The Company paid the assessment on February 26, 2016 after its appeal was denied. The Company has reached a settlement with Discover to make certain security improvements, which if made, will not require the Company to make any payment to Discover related to the incident. The Company is in the process of making these security improvements. American Express has also issued an assessment related to the incident of $52,525. The Company is in discussions with American Express concerning this assessment. The Company has not yet received an assessment from Visa. On October 15, 2015, a lawsuit entitled Southern Independent Bank v. Freds, Inc. was filed in the United States District Court, Middle District of Alabama related to the data security incident. The Complaint alleges on behalf of the plaintiff and financial institutions similarly situated (alleged class of financial institutions) that the Company was negligent in failing to use reasonable care in obtaining, retaining, securing and deleting the personal and financial information of customers who use debit cards issued by the plaintiff and alleged class of financial institutions to make purchases at Freds stores. The complaint also alleges that the Company made negligent misrepresentations that the Company possessed and maintained adequate data security measures and systems that were sufficient to protect the personal and financial information of shoppers using debit cards issued by the plaintiff and alleged class of financial institutions. The complaint seeks monetary damages and equitable relief to be proved at trial as well as attorneys fees and costs. The Company has denied the allegations and has filed a motion to dismiss all claims, which is currently pending before the Court. Future costs or liabilities related to the incident may have a material adverse effect on the Company. Costs may include liabilities to payment card networks for reimbursement of payment card fraud and reissuance costs, liabilities from current and future civil litigation, governmental investigations and enforcement proceedings, as well as legal and investigative costs. The Company has cyber-security risk insurance with a $10 million limit and a sub-limit of $250,000 for fines and liabilities to payment card networks, which will offset some of these costs. On January 21, 2016, a lawsuit styled as Stephanie Bryant, on behalf of herself and others similarly situated v. Freds Stores of Tennessee, Inc. was filed in the United States District Court, Southern District of Mississippi. The complaint alleges that plaintiff and other store managers were improperly classified as exempt employees under the Fair Labor Standards Act. The complaint seeks declaratory and monetary relief for overtime compensation that plaintiff alleges was not paid as well as costs and attorneys fees. The Company denies the allegations and believes that its managers are appropriately classified as exempt employees. I n 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 outcomes of these proceedings and claims against the Company 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 Companys 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 Companys financial statements as a whole. |
INDEBTEDNESS
INDEBTEDNESS | 3 Months Ended |
Apr. 30, 2016 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | NOTE 10: INDEBTEDNESS On April 9, 2015, the Company entered into a new agreement with Regions Bank and Bank of America (the New Agreement) to replace the January 25, 2013 Revolving Loan and Credit Agreement that the Company had previously entered into with Regions Bank and Bank of America (the Previous Agreement). The proceeds from the New Agreement were used in part to refinance the Previous Agreement and to support acquisitions and the Companys working capital needs. The New Agreement provides for a $150.0 million secured revolving line of credit, which includes a sublimit for letters of credit and swingline loans. The New Agreement matures on April 9, 2020 and bears interest at 1.25% or 1.50% plus either LIBOR or the LIBOR index rate, depending on our FIFO inventory balance. Commitment fees for the unused portion of the credit line are 20.0 basis points. The New Agreement also included an up-front credit facility fee which will be amortized over the agreement term. There were $43.1 million of borrowings outstanding and $97.9 million, net of borrowings and letters of credit, remaining available under the New Agreement at April 30, 2016. The weighted average interest rate on borrowings outstanding at April 30, 2016 was 1.69%. During the second and third quarter of fiscal 2007, the Company acquired the land and buildings occupied by seven Fred's stores which we had previously leased. In consideration for the seven properties, the Company assumed debt that has fixed interest rates from 6.31% to 7.40%. On March 30, 2011, Freds purchased 10 properties leased from Atlantic Retail Investors, LLC, one of which has an additional parcel that is leased to an unrelated party. Six of these locations carried mortgages with fixed interest rates from 6.65% to 7.40%. Mortgages remain on two locations with a combined balance of $1.7 million outstanding at April 30, 2016. The weighted average interest rate on mortgages outstanding at April 30, 2016 was 7.40%. The debt is collateralized by the land and buildings. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended |
Apr. 30, 2016 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 11: BUSINESS COMBINATIONS On April 10, 2015, we acquired 100% of the equity interests in Reeves-Sain Drug Store, Inc., a provider of retail and specialty pharmaceutical services. The acquisition expanded our presence in the specialty pharmacy arena the largest growth area of the pharmacy industry. The total consideration for the purchase was approximately $66.0 million, less working capital adjustments of $10.3 million, which yielded an adjusted purchase consideration of $55.8 million. The Company incurred $0.5 million of transaction costs in connection with the acquisition. The transaction expenses were expensed as incurred and were reflected in selling, general and administrative expenses in the consolidated statement of operations for the year ended January 30, 2016. 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 31 st A summary of the purchase price allocation for Reeves-Sain Drug Store, Inc. is as follows (dollars in thousands): Total purchase consideration: Cash $ 42,757 Notes payable 13,000 Total purchase consideration $ 55,757 Allocation of the purchase consideration: Accounts receivables $ 14,474 Inventory 2,005 Other assets 307 Goodwill 41,403 Identifiable intangible assets 20,236 Total assets acquired $ 78,425 Accounts payable $ 21,448 Other current liabilities 1,220 Total liabilities assumed $ 22,668 Net assets acquired $ 55,757 The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on valuations (dollars in thousands): Amount Estimated Customer prescription files $ 9,476 4 - 7 Trade name 7,300 - Non-compete agreements 1,800 8 Referral and relationships 1,400 2 Business licenses 260 1 $ 20,236 The following unaudited supplemental pro forma financial information includes the results of operations of the three Reeves-Sain Drug Store, Inc. locations in 2016 and 2015 and is presented as if the locations had been consolidated as of the beginning of the interim period of the earliest period presented. The unaudited supplemental pro forma financial information has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the combined companies for the periods presented or of the results that may be achieved by the combined companies in the future. The unaudited supplemental pro forma financial information presented below has been prepared by adjusting the historical results of the Company to include the historical results of the acquisition described above. The 2015 unaudited pro forma historical results were adjusted (i) to increase amortization expense by $0.6 million resulting from the incremental intangible assets acquired and (ii) to increase interest expense by $0.2 million as a result of assumed debt financing for the transaction. The 2016 unaudited results were not adjusted as the three locations results were already included in our consolidated statement of operations. The unaudited pro forma financial information does not include any adjustments to reflect the impact of cost savings or other synergies that may result from this acquisition. Thirteen Weeks Ended April 30, May 2, (in thousands, except per share data) 2016 2015 Revenue $ 549,548 $ 556,398 Earnings 1,256 (725 ) Basic and diluted earnings per share $ 0.03 $ (0.02 ) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of company's stock-based compensation | A summary of the Companys stock-based compensation (a component of selling, general and administrative expenses) and related income tax benefit is as follows (in thousands) Thirteen Weeks Ended April 30, 2016 May 2, 2015 Stock option expense $ (424 ) $ (369 ) Restricted stock expense 1,127 540 ESPP expense 51 48 Total stock-based compensation $ 754 $ 219 Income tax benefit on stock-based compensation $ 209 $ 21 |
Schedule of stock option granted using the Black-Scholes option-pricing model | The fair value of each option granted during the thirteen week period ended April 30, 2016 and May 2, 2015 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Thirteen Weeks Ended April 30, 2016 May 2, 2015 Stock Options Expected volatility 33.7 % 30.2 % Risk-free interest rate 1.5 % 1.6 % Expected option life (in years) 5.84 5.84 Expected dividend yield 1.78 % 1.58 % Weighted average fair value at grant date $ 4.08 $ 4.61 Employee Stock Purchase Plan Expected volatility 59.4 % 32.6 % Risk-free interest rate 0.9 % 0.3 % Expected option life (in years) 0.25 0.25 Expected dividend yield 0.40 % 0.38 % Weighted average fair value at grant date $ 3.88 $ 3.57 |
Schedule of stock option activity | The following table summarizes stock option activity during the thirteen weeks ended April 30, 2016: Options Weighted- Average Exercise Price Weighted-Average Contractual Life (years) Aggregate Intrinsic Value (000s) Outstanding at January 30, 2016 839,859 $ 15.38 3.5 $ 1,371 Granted 157,832 14.68 Forfeited / Cancelled (237,500 ) 14.09 Exercised (900 ) 12.84 Outstanding at April 30, 2016 759,291 $ 15.64 5.8 $ 350 Exercisable at April 30, 2016 112,679 $ 15.09 4.2 $ 59 |
Schedule of restricted stock activity | The following table summarizes restricted stock activity during the thirteen weeks ended April 30, 2016: Number of Shares Weighted-Average Non-vested Restricted Stock at January 30, 2016 517,143 $ 15.61 Granted 34,734 15.35 Forfeited / Cancelled (1,340 ) 16.91 Vested (25,982 ) 15.45 Non-vested Restricted Stock at April 30, 2016 524,555 $ 15.61 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value and carrying values for the revolving line of credit, notes payable and mortgage loans | The table below details the fair value and carrying values for the revolving line of credit, notes payable and mortgage loans as of the following dates: April 30, 2016 January 30, 2016 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Revolving line of credit $ 43,072 $ 43,072 $ 38,327 $ 38,327 Mortgage loans on land & buildings 1,681 1,881 2,259 2,451 Notes Payable 13,000 12,866 13,000 12,425 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment | The following illustrates the breakdown of the major categories within property and equipment (in thousands): April 30, 2016 January 30, 2016 Property and equipment, at cost: Buildings and building improvements $ 119,212 $ 118,907 Leasehold improvements 83,435 82,344 Automobiles and vehicles 5,357 5,433 Airplane 4,697 4,697 Furniture, fixtures and equipment 279,867 277,812 492,568 489,193 Less: Accumulated depreciation and amortization (367,783 ) (361,608 ) 124,785 127,585 Construction in progress 3,579 2,765 Land 8,643 8,643 Total Property and equipment, at depreciated cost $ 137,007 $ 138,993 |
ACCUMULATED OTHER COMPREHENSI21
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income | The following table illustrates the activity in accumulated other comprehensive income: Thirteen Weeks Ended Year Ended (in thousands) April 30, 2016 May 2, 2015 January 30, 2016 Accumulated other comprehensive income $ 475 $ 570 $ 780 Amortization of post-retirement benefit - - (305 ) Ending balance $ 475 $ 570 $ 475 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Apr. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of preliminary purchase price allocation | A summary of the purchase price allocation for Reeves-Sain Drug Store, Inc. is as follows (dollars in thousands): Total purchase consideration: Cash $ 42,757 Notes payable 13,000 Total purchase consideration $ 55,757 Allocation of the purchase consideration: Accounts receivables $ 14,474 Inventory 2,005 Other assets 307 Goodwill 41,403 Identifiable intangible assets 20,236 Total assets acquired $ 78,425 Accounts payable $ 21,448 Other current liabilities 1,220 Total liabilities assumed $ 22,668 Net assets acquired $ 55,757 |
Schedule of identifiable intangible assets acquired | The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on valuations (dollars in thousands): Amount Estimated Customer prescription files $ 9,476 4 - 7 Trade name 7,300 - Non-compete agreements 1,800 8 Referral and relationships 1,400 2 Business licenses 260 1 $ 20,236 |
Schedule of unaudited pro forma financial information | The unaudited pro forma financial information does not include any adjustments to reflect the impact of cost savings or other synergies that may result from this acquisition. Thirteen Weeks Ended April 30, May 2, (in thousands, except per share data) 2016 2015 Revenue $ 549,548 $ 556,398 Earnings 1,256 (725 ) Basic and diluted earnings per share $ 0.03 $ (0.02 ) |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) | Apr. 30, 2016Number |
Number of pharmacy facilities | 3 |
Number of states | 15 |
Franchised Fred's Stores [Member] | |
Number of franchisee | 18 |
General Merchandise [Member] | |
Number of retail store | 660 |
Number of pharmacy | 373 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 | May. 02, 2015 |
Inventory | $ 350,558 | $ 340,730 | |
Merchandise Inventory [Member] | |||
Procurement and storage costs and inbound freight cost | 21,200 | $ 20,400 | |
Pharmacy Department [Member] | |||
Inventory | 46,900 | 41,100 | |
LIFO inventory amount | $ 48,500 | $ 40,400 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - Selling, General and Administrative Expenses [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Total stock-based compensation | $ 754 | $ 219 |
Income tax benefit on stock-based compensation | 209 | 21 |
2004 Employee Stock Purchase Plan [Member] | ||
Total stock-based compensation | 51 | 48 |
Stock Option [Member] | ||
Total stock-based compensation | (424) | (369) |
Restricted Stock [Member] | ||
Total stock-based compensation | $ 1,127 | $ 540 |
STOCK-BASED COMPENSATION (Det26
STOCK-BASED COMPENSATION (Details 1) - $ / shares | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
2004 Employee Stock Purchase Plan [Member] | ||
Expected volatility | 59.40% | 32.60% |
Risk-free interest rate | 0.90% | 0.30% |
Expected option life (in years) | 3 months | 3 months |
Expected dividend yield | 0.40% | 0.38% |
Weighted average fair value at grant date | $ 3.88 | $ 3.57 |
Stock Option [Member] | ||
Expected volatility | 33.70% | 30.20% |
Risk-free interest rate | 1.50% | 1.60% |
Expected option life (in years) | 5 years 10 months 2 days | 5 years 10 months 2 days |
Expected dividend yield | 1.78% | 1.58% |
Weighted average fair value at grant date | $ 4.08 | $ 4.61 |
STOCK-BASED COMPENSATION (Det27
STOCK-BASED COMPENSATION (Details 2) - Stock Option [Member] $ / shares in Units, $ in Thousands | 3 Months Ended |
Apr. 30, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding, beginning | shares | 839,859 |
Granted | shares | 157,832 |
Forfeited / Cancelled | shares | (237,500) |
Exercised | shares | (900) |
Outstanding, ending | shares | 759,291 |
Exercisable, ending | shares | 112,679 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding, beginning | $ / shares | $ 15.38 |
Granted | $ / shares | 14.68 |
Forfeited / Cancelled | $ / shares | 14.09 |
Exercised | $ / shares | 12.84 |
Outstanding, ending | $ / shares | 15.64 |
Exercisable, ending | $ / shares | $ 15.09 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Life [Roll Forward] | |
Outstanding, beginning | 3 years 6 months |
Outstanding, ending | 5 years 9 months 18 days |
Exercisable, ending | 4 years 2 months 12 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Roll Forward] | |
Outstanding, beginning | $ | $ 1,371 |
Outstanding, ending | $ | 350 |
Exercisable, ending | $ | $ 59 |
STOCK-BASED COMPENSATION (Det28
STOCK-BASED COMPENSATION (Details 3) - Restricted Stock [Member] | 3 Months Ended |
Apr. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Non-vested Restricted Stock at Beginning | shares | 517,143 |
Granted | shares | 34,734 |
Forfeited / Cancelled | shares | (1,340) |
Vested | shares | (25,982) |
Non-vested Restricted Stock at Ending | shares | 524,555 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Non-vested Restricted Stock at Beginning | $ / shares | $ 15.61 |
Granted | $ / shares | 15.35 |
Forfeited / Cancelled | $ / shares | 16.91 |
Vested | $ / shares | 15.45 |
Non-vested Restricted Stock at Ending | $ / shares | $ 15.61 |
STOCK-BASED COMPENSATION (Det29
STOCK-BASED COMPENSATION (Details Narrative) | 3 Months Ended |
Apr. 30, 2016USD ($)shares | |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 5,300,000 |
Amount recognition period | 6 years 8 months 12 days |
Intrinsic value | $ 7,700,000 |
Contractual term | 6 years 8 months 12 days |
Fair value of awards vested | $ 402,900 |
Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares granted | shares | 157,832 |
Unrecognized compensation expense | $ 1,700,000 |
Amount recognition period | 4 years 1 month 6 days |
Fair value of awards vested | $ 74,300 |
2004 Employee Stock Purchase Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized | shares | 1,410,928 |
Number of shares available for grant | shares | 732,316 |
Description of plan | 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. |
Number of shares granted | shares | 13,285 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 |
Revolving Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Carrying Value | $ 43,072 | $ 38,327 |
Fair Value | 43,072 | 38,327 |
Mortgage Loans On Land And Buildings [Member] | ||
Short-term Debt [Line Items] | ||
Carrying Value | 1,681 | 2,259 |
Fair Value | 1,881 | 2,451 |
Notes Payable [Member] | ||
Short-term Debt [Line Items] | ||
Carrying Value | 13,000 | 13,000 |
Fair Value | $ 12,866 | $ 12,425 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 |
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | $ 137,007 | $ 138,993 |
Buildings and building improvements [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 119,212 | 118,907 |
Leasehold improvements [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 83,435 | 82,344 |
Automobiles and vehicles [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 5,357 | 5,433 |
Airplane [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 4,697 | 4,697 |
Furniture, fixtures and equipment [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 279,867 | 277,812 |
Construction In Progress [Member] | ||
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | 3,579 | 2,765 |
Land [Member] | ||
Property and equipment, at cost: | ||
Total Property and equipment, at depreciated cost | 8,643 | 8,643 |
Property, plant and equipment [Member] | ||
Property and equipment, at cost: | ||
Property and equipment, gross | 492,568 | 489,193 |
Less: Accumulated depreciation and amortization | (367,783) | (361,608) |
Total Property and equipment, at depreciated cost | $ 124,785 | $ 127,585 |
EXIT AND DISPOSAL ACTIVITIES (D
EXIT AND DISPOSAL ACTIVITIES (Details Narrative) $ in Thousands | 3 Months Ended |
Apr. 30, 2016USD ($) | |
Impairment Charge For The Disposal Of Fixed Assets For 2014 Planned Closures [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and related cost | $ 100 |
ACCUMULATED OTHER COMPREHENSI33
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | Jan. 30, 2016 | |
Equity [Abstract] | |||
Accumulated other comprehensive income | $ 475 | $ 570 | $ 570 |
Amortization of post-retirement benefit | (305) | ||
Ending balance | $ 475 | $ 570 | $ 475 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Apr. 10, 2015 | Apr. 30, 2016 | May. 02, 2015 |
Reeves-Sain Drug Store, Inc [Member] | |||
Adjusted purchase consideration in notes payable | $ 13,000,000 | ||
Description of notes payable | Three equal installments on January 31st of 2021, 2022 and 2023. | ||
Atlantic Retail Investors ( Partially owned by Michael J. Hayes) [Member] | |||
Total rental payments | $ 183,900 | $ 139,800 |
LEGAL CONTINGENCIES (Details Na
LEGAL CONTINGENCIES (Details Narrative) - USD ($) | Oct. 22, 2015 | Apr. 30, 2016 |
Defined Contribution Plan Disclosure [Line Items] | ||
PCI fines cyber-security risk insurance limit | $ 10,000,000 | |
PCI fines cyber-security risk insurance sublimit | 250,000 | |
MasterCard [Member] | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Litigation settlement | $ 2,900,000 | |
American Express [Member] | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Litigation settlement | $ 52,525 |
INDEBTEDNESS (Details Narrative
INDEBTEDNESS (Details Narrative) $ in Thousands | Apr. 30, 2016USD ($) | Apr. 09, 2015USD ($) | Mar. 30, 2011Number | Oct. 31, 2007 |
Minimum [Member] | ||||
Fixed interest rates | 6.31% | |||
Maximum [Member] | ||||
Fixed interest rates | 7.40% | |||
Atlantic Retail Investors, LLC [Member] | ||||
Weighted average interest rate | 7.40% | |||
Number of leased properties | Number | 10 | |||
Purchase of mortgage debt | $ 1,700 | |||
Description of collateral | Land and buildings. | |||
Atlantic Retail Investors, LLC [Member] | Minimum [Member] | Six Location [Member] | ||||
Fixed interest rates | 6.65% | |||
Atlantic Retail Investors, LLC [Member] | Maximum [Member] | Six Location [Member] | ||||
Fixed interest rates | 7.40% | |||
Secured Revolving Line of Credit [Member] | ||||
Maximum line of credit | $ 150,000 | |||
Maturity date of agreement | Apr. 9, 2020 | |||
Description of interest terms | Bears interest at 1.25% or 1.50% plus either LIBOR or the LIBOR index rate, depending on our FIFO inventory balance. | |||
Commitment fees for unsued portion | 0.20% | |||
Current borrowing line of credit | $ 43,100 | |||
Aggregate line of credit | $ 97,900 | |||
Weighted average interest rate | 1.69% |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Apr. 30, 2016 | Jan. 30, 2016 | Apr. 10, 2015 |
Allocation of the purchase consideration: | |||
Goodwill | $ 41,490 | $ 41,490 | |
Identifiable intangible assets | $ 20,236 | ||
Reeves-Sain Drug Store, Inc [Member] | |||
Total purchase consideration: | |||
Cash | 42,757 | ||
Notes payable | 13,000 | ||
Total purchase consideration | 55,757 | $ 55,800 | |
Allocation of the purchase consideration: | |||
Accounts receivables | 14,474 | ||
Inventory | 2,005 | ||
Other assets | 307 | ||
Goodwill | 41,403 | ||
Identifiable intangible assets | 20,236 | ||
Total assets acquired | 78,425 | ||
Accounts payable | 21,448 | ||
Other current liabilities | 1,220 | ||
Total liabilities assumed | 22,668 | ||
Net assets acquired | $ 55,757 | $ 55,800 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | Jan. 30, 2016 | |
Business Acquisition [Line Items] | ||
Business combination total | $ 20,236 | |
Trade Name [Member] | ||
Business Acquisition [Line Items] | ||
Indefinite-lived intangible assets acquired | $ 7,300 | |
Customer Prescription Files [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets acquired | $ 9,476 | |
Customer Prescription Files [Member] | Minimum [Member] | ||
Business Acquisition [Line Items] | ||
Estimated Useful Lives (years) | 4 years | |
Customer Prescription Files [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Estimated Useful Lives (years) | 7 years | |
Referral and Relationships [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets acquired | $ 1,400 | |
Estimated Useful Lives (years) | 2 years | |
Non-Compete Agreements [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets acquired | $ 1,800 | |
Estimated Useful Lives (years) | 8 years | |
Business Licenses [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets acquired | $ 260 | |
Estimated Useful Lives (years) | 1 year |
BUSINESS COMBINATIONS (Detail39
BUSINESS COMBINATIONS (Details 2) - Reeves-Sain Drug Store, Inc [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 30, 2016 | May. 02, 2015 | |
Revenue | $ 549,548 | $ 556,398 |
Earnings | $ 1,256 | $ (725) |
Basic and diluted earnings per share (in dollars per share) | $ 0.03 | $ (0.02) |
BUSINESS COMBINATIONS (Detail40
BUSINESS COMBINATIONS (Details Narrative) - Reeves-Sain Drug Store, Inc [Member] - USD ($) $ in Thousands | Apr. 10, 2015 | May. 02, 2015 | Apr. 30, 2016 |
Business Acquisition [Line Items] | |||
Percentage of interest acquired | 100.00% | ||
Description of acquired entity | Provider of retail and specialty pharmaceutical services. | ||
Total purchase consideration gross | $ 66,000 | ||
Working capital adjustments | 10,300 | ||
Total purchase consideration | 55,800 | $ 55,757 | |
Business acqusition cost | 500 | ||
Adjusted consideration in cash | 42,800 | ||
Adjusted consideration in notes payable | $ 13,000 | ||
Description about notes payable | Three equal installments on January 31st of 2021, 2022 and 2023. | ||
Increase in amortization cost | $ 600 | ||
Increase in interest expense | $ 200 |