FOR IMMEDIATE RELEASE                 Contact:          Richard B. Witaszak
                                                        Chief Financial Officer
                                                        (901)362-3733, Ext. 2217

             FRED'S AGREES TO ACQUIRE 17 STORES FROM CVS CORPORATION

MEMPHIS,  Tennessee  (October 14, 1997) - Fred's,  Inc.  (Nasdaq/NM:FRED)  today
announced that it has agreed to acquire 17 stores from CVS Corporation in a cash
transaction.  Terms of the definitive  agreement,  which remains  subject to the
completion of due diligence and approval by the Federal Trade  Commission,  were
not disclosed.

         Commenting on the announcement,  Michael J. Hayes,  President and Chief
Executive  Officer,  said, "This acquisition makes an excellent  addition to our
store and  pharmacy  expansion  program,  since all of the stores  involved  are
located in our current  geographic  markets.  We expect to close the transaction
and  assume  operations  during  our  fourth  quarter."  Hayes  noted  that this
acquisition  will be incremental  to the Company's  previously  announced  store
opening targets for fiscal 1997.

         The 17  stores  involved  in this  transaction  currently  generate  on
average $3 to $4 million each in annual store and pharmacy  related  sales.  The
Company believes the acquired stores will have a positive impact on its earnings
by the first quarter of 1998.

     Fred's,  Inc.  operates  239  discount  general  merchandise  stores in the
southeastern  United  States.  The Company also markets goods and services to 31
franchised Fred's stores.