Dive Brief:

• Fred's has tapped restructuring and liquidation advisory firm Malfitano Partners, the Wall Street Journal reports. Fred's didn't immediately return Retail Dive's request for comment and more information.

• The Southern discount retailer has its eye on underperforming stores, but no plans to close all or even most, according to the report, which cites unnamed sources. A bankruptcy filing is not currently being discussed, according to the report.

• The company, which also runs pharmacies in many of its 600 or so stores, sold 185 drugstores, pharmacy patient prescription files and pharmacy inventory to Walgreens last year.

Dive Insight:

In just a couple of years Fred's has gone from prepping for major expansion to bracing for a contraction in its footprint.

In 2016, Walgreens and Rite Aid saw Fred's as a conduit for their proposed merger, which ultimately fell through on antitrust concerns. Fred's agreed to take on 865 Rite Aid stores across the eastern and western U.S. for $950 million in cash, a deal that would have positioned it as the third-largest drugstore chain in the U.S., after Walgreens and CVS. Taking that on would have been a stretch for Fred's, and some analysts were skeptical from the get-go, though in the end it was all moot.

Now the company's focus is on cost cuts. Net sales in its most recent quarter fell 5.5% to $306.4 million as comparable store sales fell, but the retailer narrowed its loss to about $30.8 million from $50.4 million in the previous year's quarter.

Fred's continues to run pharmacies in some stores, under the Walgreens banner. That move has a precedent: Target in 2016 sold off its pharmacy operations to CVS Health, which now runs those operations within Target stores.