The following report is by The Los Angeles Times:
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” interim Chief Executive Mike Simoncic said in a statement. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment.”
He cited multiple factors, including the “unprecedented impact” of the COVID-19 pandemic, shifting consumer demand, persistent inflationary pressures and rising levels of shrink — an industry term that refers to loss of inventory attributed to reasons such as shoplifting, employee theft and administrative errors.
Combined, those issues “have greatly hindered the company’s ability to operate,” Simoncic said.
99 Cents Only has stores in California, Arizona, Nevada and Texas and has about 14,000 employees. The privately held company said it had reached an agreement with Hilco Global to liquidate all of its merchandise and dispose of fixtures, furnishings and equipment at its stores. Sales are expected to begin Friday.
Hilco Real Estate is managing the sale of the company’s real estate assets, which are owned or leased.
The announcement by 99 Cents Only reflects a larger weakness in the dollar-store category, said Brad Thomas, equity research analyst at KeyBanc Capital Markets.
Dollar Tree, a Chesapeake, Va.-based retailer, announced last month that it was closing 600 of its Family Dollar stores this year and an additional 370 in the next few years, he noted.
“It’s been trying times for many, many retailers,” he said. “What’s interesting is that what started out as a boon to retailers in the pandemic, with all those stimulus checks, quickly turned into a very troublesome time.”
Rising wages, inflation and higher losses due to shrinkage have reduced profits for retailers in a deep-discount sector where margins are already extremely low.
99 Cents Only, with its large base of California stores, has been under particular wage pressure, he said. And it’s at a disadvantage compared with larger chains such as market leader Dollar General, which has a store count close to 20,000 — “a sales base and a store base that is multiple times larger than 99 Cents,” Thomas said.
Last week, Bloomberg reported that 99 Cents Only was considering a bankruptcy filing as it contended with a liquidity shortfall.
Founded in Los Angeles in 1982 by David Gold, 99 Cents Only pioneered the single-price retail concept. At the time, dollar stores were seen as dumping grounds for undesirable products, but the Gold family made the stores bright and well-organized, with good-quality merchandise including groceries and household supplies.
For years, it remained one of the few true “dollar” stores, with items priced at 99 cents or less or grouped to sell for a total of 99 cents.
That changed in 2008 when, faced with fast-rising inflation, soaring food and fuel prices, and a higher minimum wage, 99 Cents Only announced that it was straying from its long-standing price strategy.
Three years later, the company announced that it had agreed to be sold in a deal valued at about $1.6 billion, as investors eyed dollar stores that had grown in popularity during the Great Recession.
Today, with stores scattered around Los Angeles County — among them in Hollywood, Silver Lake, Mid-Wilshire, Santa Monica, Thai Town, North Hollywood and Glendale — the closure of 99 Cents Only will leave a number of large vacant properties in prime locations.
Other major retailers have also announced store closures in the region lately, including REI in Santa Monica, Macy’s in Simi Valley and several Rite Aid locations.
99 Cents Only did not immediately return a request for comment Thursday afternoon.
AUTHOR COMMENTARY
Wait, I was told flooding the economy with more helicopter money wouldn’t create inflation and that it was transitory, and that it would not break the system at it’s core, forces businesses to foreclose and real wages being completely eroded by inflation – what could go wrong, right?
I’m of course being sarcastic. The last three administrations including this one now have done more to destroy this country and the world economies in more ways than one, though that blame is misguided as the real guilty foes are the central bankers and rich asset funds. The system is completely breaking down, as Sloppy Joe and his handlers want to keep telling us everything is A-OK, and that “Bidenomics” is a success, and we’re all richer.
The rich man’s wealth is his strong city: the destruction of the poor is their poverty.
Proverbs 10:15
It’s all fake, it’s all artificial. The U.S. economy is completely dead. It died in 2020, and everything you see now is only a formality; and from this more foreclosures and bankruptcies will surely increase, along with mergers and acquisitions exploding.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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The staff of bread is being taken away as part of God’s judgement on America.
Businesses merging and getting acquisitions is equivalent to people trying to escape a flood by climbing and running up a mountain while the water climbs up twice as fast.
Before you know it: Wendy’s, Days Inn, Best Western, Church’s Chicken, KFC, Burger King, Holiday Inn, and even airports and universities are going to tank!
Sometimes it feels like the Monopoly game. Pass Go, Collect $200 (pay), go around the board (your week), buy what you can afford (property, houses, hotels), pay your bills (landing on property of another), obtain an incentive or a penalty (Chance / Community Chest), etc. It’s all fun and games until . . . uh, oh . . . the bank is running out of money! Now what? Oh, oh! Borrow from each other, run a ‘tab’ of who owes what to who, until that is no longer viable. Eventually, everyone goes belly up – but, you can put all the pieces back in the box until another day.
Thing is, life wasn’t supposed to mirror the game – or was it?
The board game is more accurate then people realize: only difference is the box game does not account for “quantitative easing” and an infinite pool of funny money to pay debts and deficits, always robbing Peter to pay Paul, to eventually where it gets to the point where everything is insolvent and overvalued, so the only option is just hyperinflate until it collapses; while you keep adding new players every time you pass GO. I actually saw a video of these economist guys highlighting the generational wealth inequality with the Monopoly board, and it’s terrible. https://youtu.be/zoUN1ddMA9o
Thank you for the link!