Discount retailer Fred's announced Monday it is filing for Chapter 11 bankruptcy protection and closing all of its stores.
The company said liquidation sales at retail locations will be completed over the next 60 days.
The bankruptcy is a sign that cost-cutting measures such as the shuttering of hundreds of unprofitable stores and inventory clearance sales didn't work. Fred's has been reporting yearly losses since 2015, and it sold its pharmacy files to Walgreens in 2018. Merger talks with Walgreens and Rite Aid had also fallen through in June 2017 amid federal antitrust concerns, leaving the fate of the company uncertain.
"Despite our team's best efforts, we were not able to avoid this outcome," said CEO Joe Anto. "I want to thank all of our employees for their hard work and continued support of the Company as we wind-down our operations."
The news is another step down in the retail sector's long fall. Since 2017, once-giants such as Barneys, Sears, Toys R Us and Mattress Firm have also filed for bankruptcy. Some have been unable to emerge from the process, resulting in hundreds of store closures.
As of May 4, the company operated 556 discount merchandise stores in 15 states across the Southeast, according to a recent filing with the Securities and Exchange Commission. That included 169 full-service pharmacies.
The company said it expects to continue filling pharmacy prescriptions at most of its pharmacy locations. Fred's has also filed a motion to enter into a proposed debtor-in-possession financing agreement with the company's existing lenders, which would provide up to $35 million in new funding.