California discount chain 99 Cents Only announces permanent closure, begins liquidation
04/08/2024 / By Ramon Tomey
The California discount chain 99 Cents Only (99CO) has called it quits after more than four decades in the business, announcing that it will close for good.
The company headquartered in Commerce, California announced its permanent shutdown in an April 4 press release. According to the statement, 99CO partnered with financial services firm Hilco Global to “liquidate all merchandise owned by the Company and dispose of certain fixtures, furnishings, and equipment” at the discount retailer’s 371 stores across California, Nevada, Texas and Arizona. “Sales under this agreement are expected to begin April 5,” it added.
99CO was founded by Dave Gold in 1982 and “pioneered the single-price retail concept” that year by offering a price-capped shopping experience that still fulfilled most people’s basic needs, said the Los Angeles Times. Despite this, the discount chain also had its share of ups and downs.
“The company also faced stiff competition from emerging competitors in the do-it-all low-cost retail space, not only from giants like Walmart but also from downmarket names like Dollar Tree, Family Dollar and Dollar General,” SFGATE said. “In recent years, the company has struggled to maintain its namesake price cap, announcing in 2008 that it would need to sell items above 99 cents in order to stay in business.”
Things eventually came to a head 16 years after the 2008 announcement, culminating in the April 4 press release. It continued: “99CO, together with its financial and legal advisors, engaged in an extensive analysis of all available and credible alternatives to identify a solution that would allow the business to continue. Following months of actively pursuing these alternatives, the company ultimately determined that an orderly wind-down was necessary and the best way to maximize the value of 99CO’s assets.”
Even discount stores are not immune to the impacts of inflation
Mike Simoncic, interim 99CO CEO, said in the statement: “This was an extremely difficult decision and is not the outcome we expected or hoped to achieve. Unfortunately, the last several years have presented significant and lasting challenges in the retail environment – including the unprecedented impact of the [Wuhan coronavirus] COVID-19 pandemic; shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds – all of which have greatly hindered [99CO’s] ability to operate.”
A March 29 report by Bloomberg News disclosed that 99CO is mulling a Chapter 11 bankruptcy filing, citing people familiar with the situation. The sources who spoke on condition of anonymity said the retailer is also weighing potential liquidation as a sales process for some of its assets has come to a standstill.
The news of 99CO’s permanent departure from the market came a month after rival Dollar Tree announced the closure of 1,000 stores. These include 630 main Dollar Tree locations over two batches, alongside 370 Family Dollar stores. Dollar Tree acquired Family Dollar in 2015 for almost $9 billion. (Related: Dollar Tree announces plans to close down 1,000 stores due to INFLATION and RETAIL THEFT.)
Incumbent Dollar Tree CEO Rick Dreiling confirmed the closures on March 13, adding that the rival-turned-subsidiary Family Dollar “is a victim of the macro environment out there.” The former CEO of Dollar General who joined Dollar Tree last year blamed still-rising levels of inventory loss and theft as additional reasons for the closures.
Dreiling moreover continued that the stores to be permanently shuttered are underperforming and consume the bulk of district managers’ time. According to him, the company will miss out on about $730 million in revenue annually as a result of the closures.
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