99 Cents Only Stores will wind down its business and shutter its 371 locations across California, Texas, Arizona and Nevada after more than 40 years in operation.
The decision follows a months-long attempt to find an alternative solution, but ultimately the company decided a wind-down was the best way to “maximize the value of 99 Cents Only Stores’ assets,” the company said in a statement.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” said Mike Simoncic, Interim CEO of 99 Cents Only Stores in the statement. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the COVID-19 pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company’s ability to operate.”
Simoncic, who is also a Managing Director at consulting firm Alvarez & Marsal (A&M), will step down; fellow A&M Managing Director Chris Wells will take over as Chief Restructuring Officer to help facilitate the wind-down. Hilco Global will handle the liquidation of the company’s merchandise, as well as certain store fixtures, furnishings and equipment, with sales beginning at all locations on April 5, 2024. Hilco Real Estate will manage the sale of the company’s real estate assets, both owned and leased.
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The demise of 99 Cents Only points to a larger weakness in the dollar-store category, Brad Thomas, Equity Research Analyst at KeyBanc Capital Markets told Yahoo Finance, pointing to Dollar Tree’s plans to close nearly 1,000 locations over the next several years.
Rising wages, inflation and higher losses due to shrinkage are among the culprits, said Thomas, particularly in the case of 99 Cents Only, which has a large base of stores in California, a state that has been leading the way in minimum wage increases. Thomas said 99 Cents Only was also at a disadvantage among its dollar-store counterparts given its comparatively small store count — Dollar General, for example, has almost 20,000 locations across the U.S.
