Company Overview
99 Cents Only Stores LLC, was a renowned discount retailer headquartered in Commerce, California. Established in 1982 by Dave Gold, the company initially captivated consumers by pricing all items at 99 cents. Over the years, to accommodate inflation and evolving market conditions, this fixed pricing strategy was adapted. The company primarily operated in California, Arizona, Nevada, and Texas. Additionally, they managed Bargain Wholesale, which provided goods for export and sale to other retailers.
Key Developments
The retailer ceased operations on June 5, 2024, following a Chapter 11 bankruptcy filing on April 8, 2024. This decision emerged amidst financial distress influenced by the COVID-19 pandemic, inflationary pressures, and shifting consumer behavior. Previously acquired for $1.6 billion in 2012 by private equity firm Ares Management and the CPP Investment Board, the company experienced increasing challenges leading up to its closure. Key developments included the sale of their Los Angeles County warehouse in September 2023 as financial strains deepened, culminating in liquidation sales across all 371 locations by April 2024.
Leadership
Leadership transitions marked the company's final years. Barry J. Feld held the CEO position from March 2020 until March 2023 and played a pivotal role throughout the company's difficult period. Even after stepping down, he remained as a strategic advisor. In March 2023, Mike Simoncic from Alvarez & Marsal assumed the role of interim CEO. Jesse Allen, Chief Operating Officer and Chief Real Estate Officer, was integral to infrastructure management. From November 15, 2021, Periclis "Perry" Pericleous served as Chief Financial Officer, overseeing financial operations amid significant fiscal challenges.
Financial Performance and Asset Management
The company reported revenues of approximately $2.06 billion in 2017, with an operating income of $53 million and net income of $118 million. Despite this, escalating financial difficulties led to a liquidation strategy that encompassed substantial asset sales. Notably, on May 29, 2024, Dollar Tree acquired leases for 170 former locations with plans to rebrand them.
Strategic Importance
99 Cents Only Stores' strategic and operational decisions in their final years underscore the critical role of adaptability in retail management. Faced with economic adversities, the company’s adjustment from its foundational pricing strategy reflects necessary strategic pivots. This history offers profound insights into retail operational resilience and effective leadership realignment.
Competitor Profiling
In the highly competitive discount retail landscape, dominated by expansive networks of large players like Dollar Tree and Dollar General, strategic positioning was critical for 99 Cents Only Stores.
Dollar Tree
- Corporate Overview: A dominant force in the industry with over 15,500 stores across the U.S. and Canada, Dollar Tree ranks 137 on the Fortune 500 list. The company operates under the brands Dollar Tree, Family Dollar, and Dollar Tree Canada.
- Headquarters: Chesapeake, Virginia.
- Employee Base: Over 193,000 associates.
- Leadership: Led by interim CEO Michael C. Creedon Jr. and CFO Jeff Davis.
- Social Initiatives: Strong emphasis on diversity, equity, inclusion, and sustainability, aiming to mitigate environmental impact and boost community engagement.
Dollar General
- Corporate Overview: Established in 1939, Dollar General manages over 20,000 stores across 47 U.S. states, offering a blend of national and premium private brands at competitive prices.
- Headquarters: Goodlettsville, Tennessee.
- Employee Base: Approximately 185,000 employees.
- 2024 Financial Performance: Reported revenue was $38.69 billion with a net income of $1.66 billion.
- Leadership: Led by CEO Todd Vasos and Executive VP and CFO Kelly Dilts.
- Credit Rating: Holds an S&P investment grade of BBB for long-term and A-2 for short-term credits.
Key Insights
99 Cents Only Stores' competitive strategy must address the dominance of expansive networks like Dollar Tree and Dollar General. The company could explore strategic partnerships to offer exclusive products, leverage focused marketing campaigns that emphasize their unique value propositions, and enhance logistics and supply chain efficiencies to potentially expand geographically. Insights into the operations of these market leaders can guide strategic decisions to overcome market challenges and target growth opportunities.
