UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



Date of Report (Date of earliest event reported):                   July 1, 2004



                                  Fred's, Inc.
             (Exact name of registrant as specified in its charter)


         Tennessee                  00-19288                    62-0634010
(State or other jurisdiction      (Commission                (IRS Employer
      of incorporation)           File Number)               Identification No.)



4300 New Getwell Road, Memphis, TN                                  38118
(Address of Principal Executive Offices)                          (Zip Code)



       Registrant's Telephone Number, including area code: (901) 365-8880

<PAGE>

Item 4.  Changes in Registrant's Certifying Accountants.

In its Proxy Statement dated May 21, 2004, the Company asked its stockholders to
approve the  appointment  of Ernst & Young,  LLP ("E&Y") as its auditors for the
fiscal year ending January 29, 2005 ("fiscal 2004"), but reserved discretion for
its Audit Committee to select a different  auditing firm "at any time during the
year if it determines  that such a change would be in the best  interests of the
Company  and its  stockholders,  including  economic  considerations"  (emphasis
added). Since April 30, 2004, Fred's has been disputing certain additional audit
fees for fiscal 2003 that E&Y  submitted to the Company  after the filing of our
Annual  Report on 10-K.  On June 11,  2004,  E&Y  submitted  to the  Company  an
engagement  letter proposing fiscal 2004 auditing fees which were  significantly
higher than anticipated by the Company. Therefore, the Company's Audit Committee
initiated the process of seeking 2004 quotes from other auditors, and instructed
management  to attempt  to resolve  the  unanticipated  year-end  2003 fee under
dispute  with E&Y before  making a decision  on which  auditing  firm to use for
fiscal 2004. On July 1, 2004,  E&Y notified the Company that it would review the
Company's  second  quarter  2004  results,  but would  not act as the  Company's
independent  auditor  after that review and the filing of the related  quarterly
report  on  Form  10-Q.  The  Company's   Audit  Committee  has  accepted  E&Y's
withdrawal,  effective  after E&Y's  completion of the second quarter review and
that quarterly filing.

The audit reports of E&Y on the consolidated financial statements of the Company
for the years in the two-year  period ended January 31, 2004 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles.

During the two year period ended January 31, 2004,  and the  subsequent  interim
period ended May 1, 2004, there were no disagreements  with E&Y on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
E&Y,  would have caused  them to make  reference  to the  subject  matter of the
disagreement in their reports on the consolidated  financial statements for such
years.

During the past two fiscal  years and through the date of this  Report,  E&Y has
not  advised  the  Company  of  any  reportable   events  (as  defined  in  Item
304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934), other
than E&Y  reported  to the Company  that,  in  conducting  its audit of the 2003
financial  statements,  it noted  weaknesses in certain internal  controls.  The
weaknesses related to (1) the number and qualifications of corporate  accounting
personnel,  (2) procedures related to accounting for consideration received from
vendors,  and (3) the financial  statement closing process.  At the direction of
its Audit  Committee,  the  Company  had taken  steps to  address  the  concerns
expressed by E&Y during its work for the Company.  Specifically, the Company has
enhanced  its  internal  controls by (i) hiring  additional  skilled  accounting
staff,  including a certified  public  accountant  (who reports  directly to the


<PAGE>

Audit Committee) to oversee internal controls and the Sarbanes-Oxley Act ("SOA")
compliance process and engaging a third-party accounting firm experienced in SOA
compliance to assist the Company in achieving timely and complete  compliance on
a timeline suggested by E&Y, (ii) focused additional  personnel and reviews upon
accounting for  consideration  received from vendors,  and (iii) instituted more
testing of results in the closing  process before public  reporting of quarterly
and fiscal year end results.

The Company provided E&Y with a copy of this Form 8-K. Attached, as Exhibit 16.1
is a copy of E&Y's letter to the Securities and Exchange Commission,  dated July
9, 2004.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(a)      Financial Statements.

         Not applicable.

(b)      Pro Forma Financial Information.

         Not applicable.

(c)      Exhibits.


Exhibit No      Description

16.1            Letter of E&Y LLP dated July 9, 2004


<PAGE>

                                   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 hereunto duly authorized.

                                               FRED'S INC.

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

Date: July 9, 2004



                                INDEX TO EXHIBITS

Exhibit
   No.       Description
-------      -----------

16.1         Letter of E&Y LLP dated July 9, 2004 regarding change in certifying
             accountant.
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{"company-data": {"conformed-name": "FREDS INC", "cik": "0000724571", "assigned-sic": "5331", "irs-number": "620634010", "state-of-incorporation": "TN", "fiscal-year-end": "0127"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-14565", "film-number": "04908564"}, "business-address": {"street1": "4300 NEW GETWELL RD", "city": "MEMPHIS", "state": "TN", "zip": "38118", "phone": "9013658880"}, "mail-address": {"street1": "4300 NEW GETWELL ROAD", "city": "MEMPHIS", "state": "TN", "zip": "38118"}, "former-company": {"former-conformed-name": "BADDOUR INC", "date-changed": "19910620"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):                   July 1, 2004

                                  Fred's, Inc.
             (Exact name of registrant as specified in its charter)

         Tennessee                  00-19288                    62-0634010
(State or other jurisdiction      (Commission                (IRS Employer
      of incorporation)           File Number)               Identification No.)

4300 New Getwell Road, Memphis, TN                                  38118
(Address of Principal Executive Offices)                          (Zip Code)

       Registrant's Telephone Number, including area code: (901) 365-8880
Item 4.  Changes in Registrant's Certifying Accountants.

In its Proxy Statement dated May 21, 2004, the Company asked its stockholders to
approve the  appointment  of Ernst & Young,  LLP ("E&Y") as its auditors for the
fiscal year ending January 29, 2005 ("fiscal 2004"), but reserved discretion for
its Audit Committee to select a different  auditing firm "at any time during the
year if it determines  that such a change would be in the best  interests of the
Company  and its  stockholders,  including  economic  considerations"  (emphasis
added). Since April 30, 2004, Fred's has been disputing certain additional audit
fees for fiscal 2003 that E&Y  submitted to the Company  after the filing of our
Annual  Report on 10-K.  On June 11,  2004,  E&Y  submitted  to the  Company  an
engagement  letter proposing fiscal 2004 auditing fees which were  significantly
higher than anticipated by the Company. Therefore, the Company's Audit Committee
initiated the process of seeking 2004 quotes from other auditors, and instructed
management  to attempt  to resolve  the  unanticipated  year-end  2003 fee under
dispute  with E&Y before  making a decision  on which  auditing  firm to use for
fiscal 2004. On July 1, 2004,  E&Y notified the Company that it would review the
Company's  second  quarter  2004  results,  but would  not act as the  Company's
independent  auditor  after that review and the filing of the related  quarterly
report  on  Form  10-Q.  The  Company's   Audit  Committee  has  accepted  E&Y's
withdrawal,  effective  after E&Y's  completion of the second quarter review and
that quarterly filing.

The audit reports of E&Y on the consolidated financial statements of the Company
for the years in the two-year  period ended January 31, 2004 did not contain any
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles.

During the two year period ended January 31, 2004,  and the  subsequent  interim
period ended May 1, 2004, there were no disagreements  with E&Y on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
E&Y,  would have caused  them to make  reference  to the  subject  matter of the
disagreement in their reports on the consolidated  financial statements for such
years.

During the past two fiscal  years and through the date of this  Report,  E&Y has
not  advised  the  Company  of  any  reportable   events  (as  defined  in  Item
304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934), other
than E&Y  reported  to the Company  that,  in  conducting  its audit of the 2003
financial  statements,  it noted  weaknesses in certain internal  controls.  The
weaknesses related to (1) the number and qualifications of corporate  accounting
personnel,  (2) procedures related to accounting for consideration received from
vendors,  and (3) the financial  statement closing process.  At the direction of
its Audit  Committee,  the  Company  had taken  steps to  address  the  concerns
expressed by E&Y during its work for the Company.  Specifically, the Company has
enhanced  its  internal  controls by (i) hiring  additional  skilled  accounting
staff,  including a certified  public  accountant  (who reports  directly to the
Audit Committee) to oversee internal controls and the Sarbanes-Oxley Act ("SOA")
compliance process and engaging a third-party accounting firm experienced in SOA
compliance to assist the Company in achieving timely and complete  compliance on
a timeline suggested by E&Y, (ii) focused additional  personnel and reviews upon
accounting for  consideration  received from vendors,  and (iii) instituted more
testing of results in the closing  process before public  reporting of quarterly
and fiscal year end results.

The Company provided E&Y with a copy of this Form 8-K. Attached, as Exhibit 16.1
is a copy of E&Y's letter to the Securities and Exchange Commission,  dated July
9, 2004.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(a)      Financial Statements.

         Not applicable.

(b)      Pro Forma Financial Information.

         Not applicable.

(c)      Exhibits.

Exhibit No      Description

16.1            Letter of E&Y LLP dated July 9, 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 hereunto duly authorized.

                                               FRED'S INC.

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

Date: July 9, 2004

                                INDEX TO EXHIBITS

Exhibit
   No.       Description
-------      -----------

16.1         Letter of E&Y LLP dated July 9, 2004 regarding change in certifying
             accountant.