Discounter 99 Cents Only Stores, a chain that operates in California and the Southwest, is closing all its 371 stores in what appears to be one of the biggest shutdowns of U.S. brick-and-mortar retail locations so far this year in a move spurred by inflation and theft.
The Commerce, California-based company said it will be winding down its operations. Founded in 1982, 99 Cents Only has stores in not only in the Golden State but also Texas, Arizona and Nevada. Liquidation sales were slated to start Friday and will be carried out at all 99 Cents Only locations.
The chain's announcement comes in the wake of plans by several retailers for major store closings. Last month, fellow deep-discounter Dollar Tree said it would shutter roughly 1,000 underperforming Family Dollar stores, with about 600 of them coming in the first half of fiscal 2024. That's ahead of pharmacy chain CVS Health's plans for 315 closings this year, according to a report by Coresight Research last month. Department store operator Macy's will close 150 of its namesake stores, with 50 of those closures slated for this year.
Dollar Tree, rival Dollar General and 99 Cents Only have acknowledged similar problems, namely their lower-income customers struggling to pay bills because of inflation and the plague of organized retail theft.
Hilco Real Estate will manage the sale of 99 Cents Only's real estate assets, both owned and leased. To help facilitate the wind-down, the company appointed Chris Wells, managing director at Alvarez & Marsal, as chief restructuring officer. Mike Simoncic, interim CEO of 99 Cents Only and managing director at Alvarez & Marsal, will step down.
The chain has retained Hilco Global to liquidate all its merchandise and dispose of the fixtures, furnishings and equipment at its stores.
"This was an extremely difficult decision and is not the outcome we expected or hoped to achieve," Simoncic said in a 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 [retail theft], persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company's ability to operate."
The retailer said that it and its financial and legal advisers conducted "an extensive analysis of all available and credible alternatives to identify a solution that would allow the business to continue."
After pursuing those alternatives for several months, 99 Cents Only "ultimately determined that an orderly wind-down was necessary and the best way to maximize the value" of its assets.
Several days ago, Bloomberg News reported that 99 Cents Only was considering filing for bankruptcy.
The stores date back to the 1960s when the company's founder, Dave Gold, inherited a small liquor store in downtown Los Angeles and decided to run a test by selling bottles of wine at a fixed price-point of 99 cents. The test was a success, and Gold decided to try selling everything in the store for 99 cents.