Dive Brief:

• Fred's filed for Chapter 11 bankruptcy protection Monday with plans to wind down its retail operations, the discount retailer said in a press release.
• The company has started liquidation sales at all of its remaining stores, which it expects to close over the next 60 days. It also plans to sell its remaining pharmacies.
• The retailer has an agreement from some existing lenders for $35 million debtor-in-possession financing to fund it through bankruptcy, pending court approval. In a securities filing, Fred's said it has hired Mark Renzi from Berkeley Research Group as chief restructuring officer for $135,000 a month. The retailer also said it would pay recently departed CFO Ritwik Chatterjee $30,000 a month to consult and provide transition services.

Dive Insight:

Fred's has been frenetically closing stores and cutting costs this year to try to bring expenses in line with shrinking sales. But those moves turned out to not be enough for the retailer. 

"Despite our team's best efforts, we were not able to avoid this outcome," Fred's CEO Joe Anto said in a statement that thanked employees. 

Fred's started the year with nearly 570 stores and, through successive announcements, has moved to close more than 430 since April. Had the retailer survived its financial turmoil, it would have been left with minimal footprint. 

Founded in 1947, Fred's operated mainly in the Southern U.S. serving low-, middle- and fixed-income families located in small and medium-sized markets. In the company's words, its primary strategy has been to sell "value-priced general merchandise offered in a convenient setting, along with access to safe and affordable health care solutions."

Sales in fiscal 2018 fell nearly 9% year over year, to about $1.3 billion, while Fred's lost nearly $130 million in its operations. That actually represented an improvement over the previous year, but Fred's hasn't posted a positive operating profit since fiscal 2013. 

By this summer Fred's had managed to reduce its cash burn, pay down some of its asset-backed loan and was working with lenders to refinance its debt. At the same time, a liquidity crunch was accelerating its sales declines as Fred's struggled to keep its shelves stocked. 

The company bore all the hallmarks of a retailer in trouble. It was shutting down stores at a breakneck pace, laying off staff, selling major business units, bringing in advisers and turning over executives. 

The company's turnaround strategy consisted of boosting margins by turning to private label merchandise, expanding into beer and wine, reducing SKUs, tightening its budget and a host of other initiatives. 

But it faced competition on every side, including the ever-strengthening drugstore giants CVS and Walgreens on the pharmacy front, and everybody else — including dollar stores, off-pricers, department stores, mass merchants, convenience stores and online players — in its front-of-store operations. Like Shopko, which liquidated this year, Fred's couldn't find solid ground as a regional general merchant.