Going forward, executives predict that this month's same-store sales will fall 4%, and Q3 should result in a 1% to 3% drop. "Our back-to-school sales have been less than anticipated," added CFO Jerry Shore during a conference call report on the quarter, which ended July 30. Executives say they expect same-store sales to bounce back over the company's Q4, for which they are predicting a flat-to-2% jump.

During the quarter traffic fell 1.1%, though the average ticket sale increased 1.9%, to $17.66. Pharmacy products were the chain's top selling item, making up 32.8% of sales, followed by household goods, at 23.2%, and apparel at 13.4%.

Fred's currently has coolers for food items in 400 of its stores and executives plan to roll out the offering throughout the rest of the chain by Nov. 1. Units with coolers have 5% better sales than those without, Fred's officials say.