99 Cent Only stores are closing, citing inflation and retail theft

The discount chain 99 Cents Only Stores has announced that it’ll stop operations. All 371 stores in Arizona, California, Nevada and Texas, the states where the corporate operates, will close. The liquidation sale begins Friday.

“This was an extremely difficult decision and is not the outcome we expected or hoped for,” said interim CEO Mike Simoncic, who will step down. in a press release. “Unfortunately, the last few years have presented retail with major and lasting challenges.”

The company cited the impact of the pandemic as a think about the choice to shut, but said “inflationary pressures and other macroeconomic headwinds” in addition to the increasing variety of “shrinks,” the code name for retail theft, were also vital aspects.

Bloomberg, last week, reported the chain was considering a possible bankruptcy filing on account of liquidity issues. And S&P said in early March that it expected the corporate to be cash-flow negative for a protracted time period, noting that turnaround efforts “failed to produce a meaningful improvement in performance.”

On Thursday, the corporate said it had been unable to search out a substitute for complete closure.

“The company ultimately concluded that an orderly liquidation was necessary and the best way to maximize the value of 99 Cents Only Stores’ assets,” it said.

The dollar store retail category has needed to make quite a few adjustments over the past yr to maintain up with rising costs. Dollar Tree announced last month that it might increase its top price on items from $5 to $7 as a part of its “surcharge expansion strategy.”

Theft is a significant problem in retail. Dollar General last month announced plans to completely eliminate self-checkout stations at 300 locations and has begun converting some or all checkouts at an extra 9,000 stores.

According to a November LendingTree survey of two,000 U.S. consumers, nearly a 3rd (31%) of Gen Z shoppers have admitted to stealing at self-checkouts. (Only 15% of shoppers overall admitted to this habit.) Nearly half of Gen Z participants (46%) said they plan to steal the costliest item of their shopping cart, while 37% said they’d Paying for basic items like food and water can be foregone.