Fred's is closing nearly 30% of its stores

(CNN) Discount chain Fred's is looking for a new strategy. It's first step is closing a lot of stores.

The Memphis-based retailer will close 159 of its 557 stores, it said in a statement Thursday. The stores, which are spread across states including Texas, Arkansas, Alabama, Georgia, Louisiana, Mississippi, Kentucky, and Tennessee, were chosen because they were underperforming or unprofitable, Fred's (FRED) Chief Executive Officer Joseph Anto said. Many of them had leases that were expiring soon.

Fred's began liquidation sales at the closing stores on Thursday. They will be closed by the end of May.

The retailer "will make every effort" to find the stores' employees new jobs in at other locations, Anto said in a statement.

Fred's also said that it hired investment bank PJ Solomon to help it review its strategy going forward.

In addition to closing stores, Fred's is also trying to get out of the pharmacy business. Walgreens (WBA) bought Fred's pharmacy patient prescription files and inventory last year. The discount chain is still looking for a buyer for the rest.

Many of Fred's competitors are also struggling. Shares of Rite Aid (RAD), whose stores Fred's tried to acquire in 2017, hit a 10 year low on Thursday. Fred's planned to purchase Rite Aid's stores in 2017, but the deal fell apart after Walgreens and Rite Aid scrapped their merger.

Dollar Tree (DLTR) has faced pressure from an activist investor to raise prices and sell its struggling Family Dollar stores. Dollar General, however, is thriving due to its focus on rural areas. Dollar General (DG) will open 975 stores this year.

Shares of Fred's are up 1% after hours.