Tranche Update on Fred's, Inc.'s Equity Buyback Plan announced on August 29, 2007.

Fred's, Inc. (Fred's) is engaged in the sale of general merchandise through its retail discount stores and full-service pharmacies. The Company sells general merchandise to its over 11 franchisees. The Company has approximately 556 retail stores in over 15 states mainly in the Southeastern United States. The Company is licensed to dispense pharmaceuticals in approximately 14 states. Fred's general merchandise selection includes an array of staple and discretionary products from brand names and its private label. The Company's prescription drugs are ordered by its pharmacies individually and shipped directly from the Company's primary pharmaceutical wholesaler, Cardinal Health, Inc., to the pharmacies approximately five days a week. Fred's Brand products include health, beauty and personal care products, household cleaning supplies, disposable diapers, pet foods, paper products and a variety of general merchandise, food and beverage products.