Fred, the discount retail chain is closing all its stores, as it files for bankruptcy protection under Chapter 11. The retailer made the announcement on Monday.
Going out of business is a huge problem that retail stores like Fred are facing currently, due to competition from online shopping.
CEO Joe Anto has been working hard to keep the company afloat. Unprofitable stores have been closed by the hundreds. Clearance sales had been made but the store faced repeated losses from 2015.
Earlier in 2018, the pharmacy chain had been sold to Walgreens. The company had tried to repay its debts and was involved in the diversification of product selection to meet debts, but could not make ends meet.
In 2017, the retail chain had tried to enter into a merger with Rite Aid and Walgreen, which however did not work out. In May, there were 556 merchandise stores operating in about 15 states, according to the filing with the SEC. This included 169 fully serving pharmacies.
Fred, the discount retailer sells groceries and other day-to-day items and other household products. But with the entry of e-commerce business, retail stores are finding a slowdown of customers entering into brick and mortar buildings.
Anto thanks all his employees for their support and hard work which had kept the stores running all through the years. “Despite the best team effort, the current outcome could not be avoided”, he says.
It is also considering entering into a debtor-in-possession agreement with its current lenders, which would bring in new funds of around $35 million.
Many giant retailers have been going through store closures recently. This has hurt mall owners too, as traffic has been dwindling in department stores.
About 7,000 store closures have taken place in 2019. The retail sector faces severe competition from online shopping. Brick-and-mortar stores are unable to keep pace with prices and changing trends from e-commerce business.