The Memphis-based retailer filed for Chapter 11 bankruptcy on Monday and said liquidation sales will take place at its stores over the next 60 days.
"Despite our team's best efforts, we were not able to avoid this outcome," said CEO Joe Anto in a statement.
In bankruptcy court, the company will seek a financing agreement that would inject up to $35 million in fresh funding into the business to ensure an "orderly wind-down of its operations."
Fred's stores are scattered across several US states including Alabama, Georgia, Illinois, Florida and Texas.
Fred's has been reporting yearly losses since 2015. It struggled to find a turnaround plan and had to make multiple rounds of store closures.
Fred's opened its first store in 1947 in Coldwater, Mississippi. It later expanded its footprint across the United States with the idea of becoming a value-focused retailer and drug store. It sells both private labels and national brands.
Customers visiting the Olive Branch Fred's location off Highway 305, one of 300 locations still hanging on, were disappointed the once-booming corporation is calling it quits.
"I think it's a sad thing because you know I come here all the time, you know it's convenient. Get in and get out," customer Larry Martin said.
Just 30 minutes down the road in neighboring Tate County, the small town of Coldwater, population around 1,500 is dealing with their own Fred's closure.
Here, where the local Fred's was closed a few months ago, the former spot bears historical significance.
"It was the first Fred's. It opened in 1947 here and I was born in 1946," Cary Embrey said.
Embrey who runs an insurance business across the street in the town square. He said over the years people in the town were proud of see the store expand in other states.
"It was fun to see them go to big cities and everything, and we had the first one here in Coldwater," Embry said. "All the old timers who grew up here in Coldwater have good childhood memories of coming here to Fred's and buying little odds and ends and Cokes and candybars."
Now they're going to the Dollar General or Walmart in neighboring Senatobia.
"The traffic is down a lot since Fred's is not here."