Although we knew discount store chain Fred's (NASDAQ:FRED) was going to fall shy of analyst expectations, we were unsure how the profit picture would develop. Since the hurricanes of two years ago, Fred's itself hasn't had much success in forecasting its own operations.

Basically, operations were in line with expectations, which is probably a plus considering that what had started off as a banner quarter for the deep discounter hit a snag in April as a severe cold snap caused same-store sales to drop. Add in that its selling season was thrown off by a shift in the calendar, and what could have been a very bad quarter turned out to be mildly good.

Comps were up 1.9% despite April, in line with what Family Dollar (NYSE:FDO) and 99 Cents Only (NYSE:NDN) posted, but below last year's 2.3% increase and the particularly strong showings at Big Lots (NYSE:BIG), Dollar General (NYSE:DG), and Dollar Tree (NASDAQ:DLTR).

Fred's is in the middle of a revamping campaign that has affected 20% of its stores so far. While that's going on, sales have been hurt. But management says that once the stores have been refreshed, they've seen "positive results." That description's a little amorphous for me. I would have liked to have seen it couched in more concrete dollars-and-cents terms, but CEO Michael Hayes says the company is committed to rolling out the program to the rest of the stores, too. In conjunction with that, it plans to open new stores at a net square footage increase of 1% to 3% per year.

Despite the just-OK performance, Fred's valuation still seems at the high end of the industry to me. With an enterprise value of 13 times operating earnings, it's well ahead of Family Dollar and Dollar Tree, both of which have been performing better than Fred's. While Big Lots is trading at a premium, its performance can perhaps justify it. Not so with Fred's.

With debt higher, inventory increasing faster than sales going into the summer, and management none too good at estimating how its business will perform, I'd file Fred's for the future until it can put a good quarter or two back-to-back.

Family Dollar used to be a recommendation of Motley Fool Stock Advisor. Find out why buying at a discount makes good sense in the store and on the stock market with a 30-day free trial subscription.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. Dollar Tree is a Motley Fool Inside Value pick. The Motley Fool has a disclosure policy.