Fred's Reports Higher August Comparable and Total Sales

PRESS RELEASE

MEMPHIS, Tenn. (September 4, 2014) — Fred's Inc. (NASDAQ: FRED) today reported sales for the four-week fiscal month and seven-month year-to-date period ended August 30, 2014.

Fred's total sales for the month increased 6% to $147.6 million from $139.4 million in August 2013. Comparable store sales for the month increased 2.3% compared with flat store sales in the same period last year.

Fred's total sales for the year-to-date period increased 1% to $1.137 billion from $1.123 billion for the same period last year. On a comparable store basis, year-to-date sales decreased 0.6% versus an increase of 0.5% for the year-earlier period.

Commenting on the announcement, Bruce A. Efird, Chief Executive Officer, said, "We are pleased to report improved sales and traffic for August. Our results reflected the positive impact of recently implemented initiatives, which were fully in place for the first time in August. As a result, we saw ongoing improvements in virtually all general merchandise departments during August, and our pharmacy department continued to post strong growth in comparable scripts and sales. Going forward in the third quarter, we will continue to transform Fred's based on the convenience/pharmacy-centric model we recently outlined, a strategy that brings clear advantages to our store operations and customers."

During the month, Fred's opened three Xpress pharmacy locations.

Fred's operates 707 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States. For more information about the Company, visit Fred's website at www.fredsinc.com.

Comments in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. A reader can identify forward-looking statements because they are not limited to historical facts or they use such words as "outlook," guidance," "may," "should," "could," "believe," "anticipate," "plan," "expect," "estimate," "forecast," "goal," "intend," "committed," "continue," or "will likely result" and similar expressions that concern the Company's strategy, plans, intentions or beliefs about future occurrences or results. These risks and uncertainties include, but are not limited to, those associated with the Company's announced strategic plan, the ultimate terms of the reworked pharmacy distribution agreement, lease buyouts and the underlying assumptions and projections upon which they are based, as well as risks that intended results may not be achieved or may not occur as quickly as expected; general economic trends; changes in consumer demand or purchase patterns; delays or interruptions in the flow of merchandise between the Company's distribution centers and its stores or between the Company's suppliers and same; a disruption in the Company's data processing services; costs and delays in acquiring or developing new store sites; and the factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and any subsequent quarterly filings on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made. Fred's undertakes no obligation to release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

Contact:

Jerry A. Shore

Executive Vice President,

COO and CFO

(901) 362-3733, Ext. 2217