What happened?

Shares of pharmacy chain Fred's (NASDAQ:FRED) fell as much as 12.9% on Thursday following the company's June sales report. The stock was down about 11.3% at 11:23 a.m.

So what

Fred's total sales last month were lower than expected, the company said in a press release on Thursday, decreasing 5.3% year over year from $208.5 million to $197.5 million. That decline can be chalked up to the  closures of 39 underperforming stores during the company's fiscal first quarter, which ended April 29, management explained.

Chalkboard sketch of a stock price falling

Image source: Getty Images.

Comparable-store sales were also down 1.6%. The decline in this key metric was primarily driven by a 0.9% negative impact from "the sale of low productive discontinued inventory," management noted.

Now what

Considering its weaker-than-expected June sales, as well as expected headwinds in consumable categories that will likely impact its second quarter, management said it no longer expects a sequential uptick in sales in its fiscal Q2.

However, management said it does still expect to achieve operational profitability by fiscal Q4. And CEO Michael Bloom says he remains confident about the overall plan for improving Fred's business:

We remain committed to enhancing long-term shareholder value and will continue to execute on our strategy, including growing scripts and optimizing our supply chain and store fleet, to drive revenue growth, enhance gross margins, reduce operating expense and increase free cash flow.

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