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Table of Contents

PART I.

- --------------------------------------------------------------------------------

FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures

PART II.

- --------------------------------------------------------------------------------

OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K

SIGNATURES
EXHIBIT INDEX

EX-31.1

EX-31.2

EX-32







FORM 10-Q


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended May 1, 2004.

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from to .
--------------- ---------------

Commission file number 001-14565


FRED'S, INC.
(Exact name of registrant as specified in its charter)


Tennessee 62-0634010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4300 New Getwell Rd., Memphis, Tennessee 38118
(Address of principal executive offices) (zip code)

(901) 365-8880
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
----------- -----------

Indicate by check mark whether the registrant is an accelerated filer.
Yes X No
----------- -----------

The registrant had 39,207,444 shares of Class A voting, no par value common
stock outstanding as of June 4, 2004.




FRED'S, INC.
------------

INDEX
-----

Page No.
- --------------------------------------------------------------------------------

Part I - Financial Information
- ------------------------------

Item 1 - Financial Statements (unaudited):

Consolidated Balance Sheets as of
May 1, 2004 and January 31, 2004 3

Consolidated Statements of Income
for the Thirteen Weeks Ended May 1, 2004
and May 3, 2003 4

Consolidated Statements of Cash Flows
for the Thirteen Weeks Ended May 1, 2004
and May 3, 2003 5

Notes to Consolidated Financial Statements 6 - 8

Item 2 - Management's Discussion and
Analysis of Financial Condition and
Results of Operations 9 - 11

Item 3 - Quantitative and Qualitative Disclosure
about Market Risk 11

Item 4 - Controls and Procedures 11

Part II - Other Information 12
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K

Signatures 13
- ----------





FRED'S, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands, except for number of shares)


May 1, January 31,
2004 2004
---- ----
ASSETS:
- -------
Current assets:
Cash and cash equivalents $4,573 $8,209
Receivables, less allowance for doubtful
accounts of $703 ($1,437 at January 31, 2004) 21,086 23,931
Inventories 263,689 239,748
Other current assets 5,284 4,094
-------- --------
Total current assets 294,632 272,514
Property and equipment, at depreciated cost 137,614 135,433
Equipment under capital leases, less accumulated
amortization of $3,312 ($3,169 at January 31,2004) 1,655 1,798
Other noncurrent assets 4,078 4,005
-------- ------
Total assets $437,979 $413,750
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $75,962 $74,799
Current portion of indebtedness 18 18
Current portion of capital lease obligations 689 725
Accrued liabilities 16,595 19,113
Current deferred tax liability 11,855 11,487
Income taxes payable 2,836 930
------- -------
Total current liabilities 107,955 107,072
======= =======

Long term portion of indebtedness 21,660 5,603
Deferred tax liability 6,539 6,335
Capital lease obligations 1,543 1,686
Other noncurrent liabilities 2,507 2,441
------- -----
Total liabilities 140,204 123,137
------- -------

Shareholders' equity:
- ---------------------
Preferred stock, nonvoting, no par value,
10,000,000 shares authorized, none outstanding --- ---
Preferred stock, Series A junior participating
nonvoting, no par value, 224,594 shares
authorized, none outstanding --- ---
Common stock, Class A voting, no par value,
60,000,000 shares authorized 39,167,627
shares issued and outstanding
(39,105,639 shares at January 31, 2004) 126,950 126,430
Common stock, Class B nonvoting, no par value,
11,500,000 shares authorized, none outstanding --- ---
Retained earnings 170,825 164,183
------- -------
Total shareholders' equity 297,775 290,613
------- -------
Total liabilities and shareholders' equity $437,979 $413,750
======== ========


See accompanying notes to consolidated financial statements.




FRED'S, INC.
CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)


Thirteen Weeks Ended
--------------------

May 1, May 3,
2004 2003
-------- --------

Net Sales $341,486 $310,689

Cost of goods sold 244,692 222,741
------- -------

Gross Profit 96,794 87,948

Selling, general and administrative
Expenses 85,311 75,971
------ ------

Operating income 11,483 11,977

Interest expense 62 97
---- ----

Income before income taxes 11,421 11,880

Provision for income taxes 3,997 4,023
----- -----

Net income $7,424 $7,857
====== ======

Net income per share:

Basic $ .19 $ .20
===== =====

Diluted $ .19 $ .20
===== =====

Weighed average shares outstanding:

Basic 39,060 38,456

Effect of diluted stock options 646 982
--- ---

Diluted 39,706 39,438
====== ======

Dividends paid per common share $.02 $.02
==== ====



See accompanying notes to consolidated financial statements.




FRED'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
(in thousands)


Thirteen Weeks Ended
--------------------
May 1, May 3,
2004 2003
---- ----

Cash flows from operating activities:
Net income $7,424 $7,857
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 6,529 5,698
Lifo reserve 367 370
Deferred income taxes 572 594
Amortization of deferred compensation on
restricted stock incentive plan -- 15
Tax benefit upon exercise of stock options 121 384
Issuance of restricted shares -- 8
(Increase)decrease in assets:
Receivables 2,845 698
Inventories (24,308) (19,344)
Other assets (1,190) (79)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (1,355) 8,153
Income taxes payable 1,906 8,215
Other noncurrent liabilities 66 100
-------- -------
Net cash (used in) provided by operating activities (7,023) 12,669
-------- -------

Cash flows from investing activities:
Capital expenditures (8,165) (12,692)
Asset acquisition, net of cash acquired
(primarily intangibles) (475) (457)
----- -----
Net cash used in investing activities (8,640) (13,149)
------- --------

Cash flows from financing activities:
Reduction of indebtedness and capital lease obligations (183) (360)
Proceeds from revolving line of credit, net of payments 16,061 ---
Proceeds from exercise of options 399 678
Cash dividends paid (782) (770)
----- -----
Net cash provided by (used in) financing activities 15,495 (452)
------- ------
Decrease in cash and cash equivalents (168) (932)
Beginning of period cash and cash equivalents 4,741 8,209
------- ------
End of period cash and cash equivalents $4,573 $7,277
======== =======
Supplemental disclosures of cash flow information:
Interest paid $ 62 $92
===== ====
Income taxes paid $1,400 $---
======= =====


See accompanying notes to consolidated financial statements.




FRED'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

- --------------------------------------------------------------------------------
NOTE 1: BASIS OF PRESENTATION
- --------------------------------------------------------------------------------
Fred's, Inc. ("We", "Our" or "Us") operates 534 discount general
merchandise stores, including 26 franchised Fred's stores, in fourteen states in
the southeastern United States. Two hundred and forty-three of the stores have
full service pharmacies.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and notes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. The statements do reflect all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of financial position in
conformity with generally accepted accounting principles. The statements should
be read in conjunction with the Notes to the Consolidated Financial Statements
for the fiscal year ended January 31, 2004 incorporated into Our Annual Report
on Form 10-K.

The results of operations for the thirteen-week period ended May 1, 2004
are not necessarily indicative of the results to be expected for the full fiscal
year.

Certain prior quarter amounts have been reclassified to conform to the 2004
presentation.

- --------------------------------------------------------------------------------
NOTE 2: INVENTORIES
- --------------------------------------------------------------------------------

Warehouse inventories are stated at the lower of cost or market using the
FIFO (first-in, first-out) method. Retail inventories are stated at the lower of
cost or market as determined by the retail inventory method. Under the retail
inventory method ("RIM"), the valuation of inventories at cost and the resulting
gross margin are calculated by applying a calculated cost-to-retail ratio to the
retail value of inventories. RIM is an averaging method that has been widely
used in the retail industry due to its practicality. Also, it is recognized that
the use of the RIM will result in valuing inventories at lower of cost or market
if markdowns are currently taken as a reduction of the retail value of
inventories. Inherent in the RIM calculation are certain significant management
judgments and estimates including, among others, initial markups, markdowns, and
shrinkage, which significantly impact the ending inventory valuation at cost as
well as resulting gross margin. These significant estimates, coupled with the
fact that the RIM is an averaging process, can, under certain circumstances,
produce distorted or inaccurate cost figures. Management believes that our RIM
provides an inventory valuation which reasonably approximates cost and results
in carrying inventory at the lower of cost or market. For pharmacy inventories,
which are $40.7 million and $29.4 million at May 1, 2004 and May 3, 2003,
respectively, cost was determined using the LIFO (last-in, first-out) method.
The current cost of inventories exceeded the LIFO cost by $8.1 million at May 1,
2004 and $6.5 million at May 3, 2003.

LIFO pharmacy inventory costs can only be determined annually when inflation
rates and inventory levels are finalized; therefore, LIFO pharmacy inventory
costs for interim financial statements are estimated.




- --------------------------------------------------------------------------------
NOTE 3: INCENTIVE STOCK OPTIONS
- --------------------------------------------------------------------------------

We account for our stock-based compensation plans using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations. No stock-based employee
compensation expense is reflected in net income because the exercise price of
our incentive employee stock options equals the market price of the underlying
stock on the date of grant. The following table illustrates the effect on net
income and earnings per share if we had applied the fair value recognition
provisions of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS No. 123), to stock-based employee
compensation.




For the Quarter Ended
May 1, 2004 May 3, 2003
----------- -----------
(In thousands, except per share data)

Net income $ 7,424 $ 7,857
SFAS No. 123 pro forma compensation
expense, net of income taxes (164) (81)
----- -------
SFAS No. 123 pro forma
net income $ 7,260 $ 7,776
============ ============
Pro forma earnings per share:
Basic $ 0.19 $ 0.20
Diluted $ 0.18 $ 0.20

Earnings per share, as reported:
Basic $ 0.19 $ 0.20
Diluted $ 0.19 $ 0.20







- --------------------------------------------------------------------------------
NOTE 4: CHANGE IN ESTIMATE - INVENTORY SHRINKAGE
- --------------------------------------------------------------------------------

During the quarter we adopted a change in methodology for estimating shrinkage,
as recommended by our external auditors to attain a more accurate estimate of
the shrink accrual. This change increased net income by approximately $.9
million and increased basic earnings per share by $.02 and diluted earnings per
share by $.03.




Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------

Our business is subject to seasonal influences, but has tended to experience
less seasonal fluctuation than many other retailers due to the mix of everyday
basic merchandise and pharmacy business. The fourth quarter is typically the
most profitable quarter because it includes the Christmas selling season. The
overall strength of the fourth quarter is partially mitigated, however, by the
inclusion of the month of January, which is generally the least profitable month
of the year.

The impact of inflation on labor and occupancy costs can significantly affect
our operations. Many of our employees are paid hourly rates related to the
federal minimum wage and, accordingly, any increase affects us. In addition,
payroll taxes, employee benefits and other employee-related costs continue to
increase. Occupancy costs, including rent, maintenance, taxes and insurance,
also continue to rise. We believe that maintaining adequate operating margins
through a combination of price adjustments and cost controls, careful evaluation
of occupancy needs, and efficient purchasing practices are the most effective
tools for coping with increasing costs and expenses.

- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

Thirteen Weeks Ended May 1, 2004 and May 3, 2003
- ------------------------------------------------
Net sales increased to $341.5 million in 2004 from $310.7 million in 2003, an
increase of $30.8 million or 9.9%. The increase was attributable to comparable
store sales increases of 2.7% ($8.0 million) and sales by stores not yet
included as comparable stores ($22.8 million). Sales to franchisees remained the
same as last year. The sales mix for the period was 49.1% Hardlines, 33.7%
Pharmacy, 14.6% Softlines, and 2.6% Franchise. This compares with 49.2%
Hardlines, 33.3% Pharmacy, 14.8% Softlines, and 2.7% Franchise for the same
period last year.

Gross profit for the first quarter remained at 28.3% of sales, the same as in
the prior-year period. Gross profit margins during the quarter were affected by
a change in methodology for estimating shrinkage, as recommended by our external
auditors to attain a more accurate estimate of the shrink accrual. This change
increased gross margin during the quarter by approximately $1.4 million. The
pharmacy margin decreased in the quarter due to changes in third party
reimbursement amounts.

Selling, general and administrative expenses increased to $85.3 million in 2004
from $76.0 million in 2003. As a percentage of sales, expenses increased to
25.0% of sales compared to 24.5% of sales last year. Selling, general and
administrative expenses increased primarily due to the de-leverage of store
labor cost as a percent of sales. In the quarter, distribution cost as a
percentage of general merchandise sales improved 40 basis over the same quarter
last year.

For the first quarter of 2004 interest expense was less than $.1 million, the
same as in the first quarter of last year.

For the first quarter, the effective income tax rate was 35.0%, as compared to
33.9% in the first quarter of last year. The income tax rate is higher than last
year due to state tax credits that were earned last year that resulted in the
rate reduction. We anticipate the tax rate for the remainder of the year to be
in the 35% range.




- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
Due to the seasonality of our business and the continued increase in the number
of stores and pharmacies, inventories are generally lower at year-end than at
each quarter-end of the following year.

Cash flows used by operating activities totaled $7.0 million during the
thirteen-week period ended May 1, 2004. Cash was primarily used to increase
inventories by approximately $24.3 million in the first quarter of 2004. This
increase was primarily attributable to 21 new stores and 14 remodeled stores in
the first quarter of 2004.

Cash flows used in investing activities totaled $8.6 million, and consisted
primarily of capital expenditures associated with the store and pharmacy
expansion program ($6.3 million) and for technology and other corporate
expenditures ($1.8 million). During the first quarter, we opened 21 stores,
closed 1 store, opened 7 pharmacies, closed 1 pharmacy and remodeled 14 stores.
We expect to open 20 to 25 stores in the second quarter and approximately 80 to
100 stores for the year. In 2004, the Company is planning capital expenditures
totaling approximately $41.6 million. Expenditures are planned totaling
approximately $31.1 million for upgrades, remodels, or new stores and
pharmacies; $6.9 million for technology upgrades, distribution center equipment
and capital maintenance; and $3.6 million for the acquisition of customer lists
and other pharmacy related items. Depreciation expense for the year will be
approximately $28 million.

Cash flows provided by financing activities totaled $15.5 million and included
$16.1 million of borrowings under the Company's revolver for inventory needs.

On July 31, 2003, we entered into the third loan modification agreement (the
"Agreement") to modify the April 3, 2000 Revolving Loan and Credit Agreement, as
amended. The Agreement provides us with an unsecured revolving line of credit
commitment of up to $40 million and bears interest at a 1.5% below prime rate or
a LIBOR-based rate. Under the most restrictive covenants of the Agreement, we
are required to maintain specified shareholders' equity (which was $251,389,000
at May 1, 2004) and net income levels. We are required to pay a commitment fee
to the bank at a rate per annum equal to .15% on the unutilized portion of the
revolving line commitment over the term of the Agreement. The term of the
Agreement extends to July 31, 2006. There were $21.6 million in borrowings
outstanding at May 1, 2004.

We believe that sufficient capital resources are available in both the
short-term and long-term through currently available cash and cash generated
from future operations and, if necessary, the ability to obtain additional
financing.

- --------------------------------------------------------------------------------
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
- --------------------------------------------------------------------------------

Other than statements based on historical facts, many of the matters discussed
in this Form 10-Q relate to events which we expect or anticipate may occur in
the future. Such statements are defined as "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), 15
U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996). The Reform Act created a safe
harbor to protect companies from securities law liability in connection with
forward-looking statements. Fred's Inc. ("Fred's" or the "Company") intends to
qualify both its written and oral forward-looking statements for protection
under the Reform Act and any other similar safe harbor provisions.

The words "believe", "anticipate", "project", "plan", "expect", "estimate",
"objective", "forecast", "goal", "intend", "will likely result", or "will
continue" and similar expressions generally identify forward-looking statements.



All forward-looking statements are inherently uncertain, and concern matters
that involve risks and other factors which may cause the actual performance of
the Company to differ materially from the performance expressed or implied by
these statements. Therefore, forward-looking statements should be evaluated in
the context of these uncertainties and risks, including but not limited to:

- Economic and weather conditions which affect buying patterns of our
customers and supply chain efficiency;

- Changes in consumer spending and our ability to anticipate buying
patterns and implement appropriate inventory strategies;

- Continued availability of capital and financing;

- Competitive factors;

- Changes in reimbursement practices for pharmaceuticals;

- Governmental regulation;

- Increases in fuel and utility rates;

- Other factors affecting business beyond our control.

Consequently, all forward-looking statements are qualified by this cautionary
statement. We undertake no obligation to update any forward-looking statement to
reflect events or circumstances arising after the date on which it was made.

Item 3.
- --------------------------------------------------------------------------------
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- --------------------------------------------------------------------------------

We have no holdings of derivative financial or commodity instruments as of May
1, 2004. We are exposed to financial market risks, including changes in interest
rates. All borrowings under our Revolving Credit Agreement bear interest at 1.5%
below prime rate or a LIBOR-based rate. An increase in interest rates of 100
basis points would not significantly affect our income. All of our business is
transacted in U.S. dollars and, accordingly, foreign exchange rate fluctuations
have never had a significant impact on us, and they are not expected to in the
foreseeable future.

Item 4.
- --------------------------------------------------------------------------------
CONTROLS AND PROCEDURES
- --------------------------------------------------------------------------------

Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-14((c) and
15d-1(c) under the Securities Exchange Act of 1934). Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer, concluded that, as
of the date of their evaluation, the Company's disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in the Company's periodic SEC reports. There have been
no significant changes (including corrective actions with regard to significant
deficiencies and material weaknesses) in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their most recent evaluation.




PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable.

Item 2. Changes in Securities

Not Applicable.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Submission of Matters to a Vote of Securities Holders

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits and Reports on Form 8-K

Exhibits:
31.1 Certification of Chief Executive Officer.
31.2 Certification of Chief Financial Officer.
32.0 Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350.


Reports on Form 8-K:

1) Form 8-K dated February 5, 2004 with press
release dated February 5, 2004, reporting its
sales for the four-week month of January, the
fiscal fourth quarter, and the full fiscal year
ended January 31, 2004.

2) Form 8-K dated March 11, 2004 with press release
dated March 11, 2004, reporting its quarterly
earnings results for its fourth quarter and full
fiscal year ended January 31, 2004.

3) Form 8-K dated April 26, 2004 with press release
dated April 26, 2004, reporting that it is
revising its earnings outlook for 2004.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


FRED'S, INC.

Date: June 10, 2004 /s/ Michael J. Hayes
- -------------------- ---------------------------------
Michael J. Hayes
Chief Executive Officer




Date: June 10, 2004 /s/ Jerry A. Shore
- -------------------- ---------------------------------
Jerry A. Shore
Chief Financial Officer







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



FRED'S, INC.

/s/ Michael J. Hayes
------------------------
Michael J. Hayes
Date: June 10, 2004 Chief Executive Officer
- --------------------




/s/ Jerry A. Shore
------------------------
Jerry A. Shore
Date: June 10, 2004 Chief Financial Officer
- -------------------





Exhibit 31.1

Certification of Chief Executive Officer

I, Michael J. Hayes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fred's, Inc.;

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designated under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;

b) Designated such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors:

a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and

b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.



Date: June 10, 2004 /s/ Michael J. Hayes
-------------------------------
Michael J. Hayes
Chief Executive Officer



Exhibit 31.2

Certification of Chief Financial Officer

I, Jerry A. Shore, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Fred's, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designated under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;

b) Designated such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and

d) Disclosed in this report any changes in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors:

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.



Date: June 10, 2004 /s/ Jerry A. Shore
------------------------------------
Jerry A. Shore
Executive Vice President and
Chief Financial Officer



Exhibit 32

Certification of Chief Executive Officer AND CHIEF FINANCIAL OFFICER
Pursuant to Section 18 U.S.C. Section 1350

In connection with this quarterly report on Form 10-Q of Fred's, Inc. each of
the undersigned, Michael J. Hayes and Jerry A. Shore, certifies, pursuant to
Section 18 U.S.C. Section 1350, that:
1. The report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in this report fairly presents, in all
material respects, the financial condition and results of operations
of Fred's, Inc.



Date: June 10, 2004 /s/ Michael J. Hayes
-----------------------------------
Michael J. Hayes
Chief Executive Officer

/s/ Jerry A. Shore
-----------------------------------
Jerry A. Shore
Executive Vice President and
Chief Financial Officer