(Reuters) - Fred’s Inc (FRED.O) said on Monday it has filed for Chapter 11 bankruptcy protection, months after the pharmacy and discount retailer began shuttering hundreds of unprofitable stores in the United States, sending its shares down 44% before the bell.
Since the start of 2017, over 20 U.S. retailers, including Sears Holdings Corp (SHLDQ.PK) and Toys ‘R’ Us, have filed for bankruptcy, succumbing to the onslaught of fierce e-commerce competition from Amazon Inc (AMZN.O).
Fred’s, which has been making losses since 2015, has been trying to turn around its business. In April, it said it would close at least 159 underperforming and unprofitable stores, or nearly 30% of its total outlets.
“Despite our team’s best efforts, we were not able to avoid this outcome,” Chief Executive Officer Joe Anto said.
The company has begun promotion and discounts at its retail locations which are expected to close over the next 60 days as it liquidates its business.
Fred’s said it would continue to fulfill prescriptions at most of its pharmacy locations and would continue to pursue the sale of the business as part of court supervised proceedings.
It has also filed a motion seeking approval of the U.S. Bankruptcy Court to enter into a proposed debtor-in-possession financing agreement with some of its existing lenders, which would provide for up to $35 million in new funding, the company said.
Shares of the Memphis, Tennessee-based company, which have lost nearly all their value since the company was forced to scrap its bid for 1,200 Rite Aid Corp (RAD.N) stores in June 2017, plunged to 15 cents in early trading.
Reporting by Nivedita Balu in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur