Fred's has tapped restructuring and liquidation advisory firm Malfitano Partners, the Wall Street Journal reports. Fred's didn't immediately return Retail Dive's request for comment and more information.
The Southern discount retailer has its eye on underperforming stores, but no plans to close all or even most, according to the report, which cites unnamed sources. A bankruptcy filing is not currently being discussed, according to the report.
The company, which also runs pharmacies in many of its 600 or so stores, sold 185 drugstores, pharmacy patient prescription files and pharmacy inventory to Walgreens last year.
In just a couple of years Fred's has gone from prepping for major expansion to bracing for a contraction in its footprint.
In 2016, Walgreens and Rite Aid saw Fred's as a conduit for their proposed merger, which ultimately fell through on antitrust concerns. Fred's agreed to take on 865 Rite Aid stores across the eastern and western U.S. for $950 million in cash, a deal that would have positioned it as the third-largest drugstore chain in the U.S., after Walgreens and CVS. Taking that on would have been a stretch for Fred's, and some analysts were skeptical from the get-go, though in the end it was all moot.
Now the company's focus is on cost cuts. Net sales in its most recent quarter fell 5.5% to $306.4 million as comparable store sales fell, but the retailer narrowed its loss to about $30.8 million from $50.4 million in the previous year's quarter.
Fred's continues to run pharmacies in some stores, under the Walgreens banner. That move has a precedent: Target in 2016 sold off its pharmacy operations to CVS Health, which now runs those operations within Target stores.