Following the announcement last week that Dollar Tree is shutting 600 of its stores, another popular bargain business is set to close down all of its stores. Here’s the full story.
Bargain Bonanza
Everyone loves a bargain. That’s why one of America’s most popular chain stores is the 99 Cent Store – it’s a national institution.
99 Cent Only Stores
It’s famous for selling everything under the sun, including fresh groceries, gardening items, office supplies, holiday specialty items, and all manner of bathroom supplies.
Stores Full of Interesting Finds
You could always count on the 99 Cent Store to stock some unique items that you’d notice once and never see again.
A National Treasure
It wasn’t uncommon for lower-income families to rely on it for food and other products, although many moved on after they began slowly raising prices a few years ago.
From Bargains to Bankruptcy
Sadly, though, that time has come to an end, as the 99 Cent Store has just announced that it’s going out of business.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” the company said in a Thursday press release.
Pandemic Pressure
“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.”
Decades of Deals
99 Cent Stores have been a staple of American culture since 1982 – over 40 years in business. It was the first single-price store, a model that has been emulated by countless other stores in the years since.
Liquidation Looms
The company closed all 371 of its stores over the next few months and will begin stock liquidation sales across all 99 Cent Only stores on Friday, April 5th.
Hilco Global Steps In
The company is working with financial services company Hilco Global to “liquidate all merchandise owned by the Company and dispose of certain fixtures, furnishings, and equipment at the Company’s stores.”
Hilco will also help the company sell its real estate assets, both owned and leased.
14,000 Jobs at Risk
Unfortunately, according to the Bureau of Labor Statistics, this closure will result in the loss of 14,000 jobs in California, Texas, Arizona, and Nevada, states that have reported high unemployment rates.
What’s Next for Employees?
The company has yet to announce whether it will offer severance packages for its sizable roster of employees, so expect more details soon.
The Struggle Against Inflation and Rising Costs
The company had been struggling for months with added inflationary pressures, including manufacturing and labor costs as well as energy bills, lease expenses, and maintenance on its store properties.
A Failed Fight for Financial Stability
Despite working closely with financial advisors for months to reach a solution, “the company ultimately determined that an orderly wind-down was necessary and the best way to maximize the value of 99 Cents Only Stores’ assets,” the press release said.
Final Days of Discounts
Last week, Bloomberg News reported that the company was mulling over a potential bankruptcy filing due to a shortfall in cash.
A Lack of Liquidity
They had planned to sell some assets to remain liquid, but sales stalled, and all of their initiatives to save the businesses failed to generate meaningful cash.
Bargain Hunters Alert
As of April 5th, bargain hunters might want to check out their local 99 Cent Only store, as they’re bound to find a few items that are even cheaper than usual.
It’s unknown whether the stores will close gradually or en masse, but as with any liquidation sale, it’s first come, first served.
Leadership at a Crossroads
“We deeply appreciate the dedicated employees, customers, partners, and communities who have collectively supported 99 Cents Only Stores for decades,” acting CEO Mike Simoncic stated in the press release.
CEO Changes
Simoncic will step down as CEO and be replaced by Chris Wells, Managing Director at Alvarez & Marsal, who will help the company wind down its operations.
The Retail Apocalypse
It seems as though the era of bargain dollar stores is coming to a close, following this and the recent news about Dollar Tree.
Economic Headwinds
One financial analyst explained, “It’s been trying times for many, many retailers. 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.”
The post 99 Cent Store Announces Nationwide Shutdown first appeared on Wealthy Living.
Featured Image Credit: Pexels / Eric Glenn.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
