99 CENT ONLY closing

[Bagels]

Let's face it, this is a "hail Mary" desperate attempt to put together a partial buyout when there is no bankruptcy involved. These private equity folks obviously have the plan to cash out everything they can and write off all the rest as a massive loss against their taxes. They notably did not file bankruptcy which is why this took us all by surprise, and that means that any buyer would have to play entirely by the sellers rules here. They stand to make more money by completely killing the business. Every day these stores have a store closing sale going on the brand is degraded and chances of any successful resurrection reduce. I agree the perishables had to be a loss leader, and then the stores mismanaged them by failing to rotate and keep the coolers stocked properly so much of it probably became more shrink than sales. I also suspect they had triple net leases which are not desirable for a startup, and many California locations were very old and had deferred maintenance issues.

They’ve been planning this for months. The app hasn’t worked since last year (sans some push ads), they’ve been winding down Momentum Brands, they’ve been moving forward with using existing staff to update the floor plan but cancelled renovation plans which was basically painting the walls and putting up cheap printed “The 99” signs, etc.

I’m certain they’ve been shopping the chain… but there are no takers. I doubt anything will ever become of the PNS plan — probably just talk. That they’re avoiding bankruptcy leads me to believe they’re confident they can get rid of most all store leases and come ahead (vs paying tons of bankruptcy costs and terminating leases). Although most all locations are in nasty, dingy buildings, I’ll bet many are leased at attractive rates.

What is interesting is they decided a wind down was the most efficient way to proceed. What a mess.

They are liquidating a ton of inventory at very low percentages off. I have to think this inventory liquidation is throwing them massive short term cash. Also do we know if they already closed/laid off the corporate office? They supposedly just moved into a brand new corporate office in Tustin... in some new development. What a waste of money that was.

The other thing the PNS plan doesn't mention is what are they wanting to save - "The 99 Store" or "99 Cents Only Stores."

Do we know for sure that they aren't going to file bankruptcy...?

I missed it, but they did file for bankruptcy. I haven’t been following the news, but they’ve been mulling bankruptcy for two months due to cash shortages. One report (paywall) suggests their foot traffic declined sharply last year after it began raising prices (out of necessity).

[Bagels]

Sad to see them go. I’ve spent by far more time in their stores through the years than any other retailer. 99 was a life saver for me in my 20s (into my 30s). It allowed me to have nice things and eat healthy in an era when the Great Recession derailed my professional career and saw me take on a job as a cashier.

But obviously the economic climate had changed and their business model was no longer sustainable. I made what will probably be my last visit to the 99 today and noticed that of the four products I still routinely buy there, theee had been hiked to $1.99+ - equivalent products are cheaper elsewhere. I’ll miss it, but even if it stuck around, I wouldn’t be visiting anymore.

[storewanderer]

I missed it, but they did file for bankruptcy. I haven’t been following the news, but they’ve been mulling bankruptcy for two months due to cash shortages. One report (paywall) suggests their foot traffic declined sharply last year after it began raising prices (out of necessity).

I can see how foot traffic declined sharply. Their products were lousy, the mix seemed to be getting worse and worse. The stores in my area and what I saw in TX and AZ were so dirty. The Reno one and Sparks ones both for months have stunk so bad inside like either filth or sewage I'd never have wanted to buy anything that could absorb that odor so that pretty much eliminated a lot of potential items. I still went into these stores but in the past year I walked out empty handed a lot more than ever before. I did leave Sparks a few times due to long checkout lines and not wanting to wait. That store has stayed very busy this whole time. The Reno and Carson City ones have had noticeably less traffic the past year.

Also their unclear price labeling didn't help. I notice in the liquidation sale in Reno they have 1 L Polar Seltzer marked 1.499. Too much. In Sparks it is marked .999 and it scans .95 now so evidently .999 was indeed the price. I'd pay that price. I passed the product many times in Reno in recent months at 1.499 as that is not competitive. Now it turns out .999 was the price... which I would have bought many times. Also noticed a lot of hardware items are still .999 again due to sloppy price labeling I thought those were 1.299 and 1.499... So, I find out during liquidation sale what the prices really are.

This is Dollar Tree's future trying to move to multiple prices too.

[storewanderer]

Sad to see them go. I’ve spent by far more time in their stores through the years than any other retailer. 99 was a life saver for me in my 20s (into my 30s). It allowed me to have nice things and eat healthy in an era when the Great Recession derailed my professional career and saw me take on a job as a cashier.

But obviously the economic climate had changed and their business model was no longer sustainable. I made what will probably be my last visit to the 99 today and noticed that of the four products I still routinely buy there, theee had been hiked to $1.99+ - equivalent products are cheaper elsewhere. I’ll miss it, but even if it stuck around, I wouldn’t be visiting anymore.

This is the other point. This was the retailer in this "format" who sold actual produce (and a full line of it), and a pretty extensive (for the format) line of dairy products. Those who like to be critical of Dollar Tree/Dollar General for selling a bunch of junk food and that is it on grocery have a valid point to bring up but 99 Only you could not say that about...

You may want to check some items you wouldn't routinely buy. I am surprised how many items in the hardware, office, crafts are still .999 and those categories are 20-30% off. Of course this is junk but some of it is useful. Can probably find the same stuff at AliExpress or something for under $1 anyway. I am surprised they did not hike these categories more to 1.299 or 1.499 but instead they opted to price hike all of the more visible categories. Maybe they were sitting on a ton of old inventory or something.

[ClownLoach]

They’ve been planning this for months. The app hasn’t worked since last year (sans some push ads), they’ve been winding down Momentum Brands, they’ve been moving forward with using existing staff to update the floor plan but cancelled renovation plans which was basically painting the walls and putting up cheap printed “The 99” signs, etc.

I’m certain they’ve been shopping the chain… but there are no takers. I doubt anything will ever become of the PNS plan — probably just talk. That they’re avoiding bankruptcy leads me to believe they’re confident they can get rid of most all store leases and come ahead (vs paying tons of bankruptcy costs and terminating leases). Although most all locations are in nasty, dingy buildings, I’ll bet many are leased at attractive rates.

What is interesting is they decided a wind down was the most efficient way to proceed. What a mess.

They are liquidating a ton of inventory at very low percentages off. I have to think this inventory liquidation is throwing them massive short term cash. Also do we know if they already closed/laid off the corporate office? They supposedly just moved into a brand new corporate office in Tustin... in some new development. What a waste of money that was.

The other thing the PNS plan doesn't mention is what are they wanting to save - "The 99 Store" or "99 Cents Only Stores."

Do we know for sure that they aren't going to file bankruptcy...?

I missed it, but they did file for bankruptcy. I haven’t been following the news, but they’ve been mulling bankruptcy for two months due to cash shortages. One report (paywall) suggests their foot traffic declined sharply last year after it began raising prices (out of necessity).

If they did then I assume it's a straight Chapter 7 and not a Chapter 11 restructuring. Same issue though, in a Chapter 11 it may be easier to acquire the parts of the company needed to continue operations. A Chapter 7 is just a straight wind down in most cases and the timing of steps is different. The judge may just sever all of the leases that aren't resold by the company itself for example. There is less of a sense of urgency in the process so Chapter 11 cases take priority on the calendar over Chapter 7. In Chapter 11 the court is taking consideration that they are trying to save the company while ensuring a fair outcome for the creditors, and they then have to decide their fate. In Chapter 7 the fate has already been decided and there is usually no DIP financing which also messes up the usual schedule of events as they have to work with their current limited finances to wind down.

Basically what I'm saying is that the circumstances are still the same even if a filing occurred, not ideal for this team that wants to try to buy the SoCal operations. A tainted brand, liquidated empty stores with severe maintenance and repair needs based on anecdotal observations, and a long liquidation process are not likely to be resurrected. When the site has been in liquidation or closed for any length of time the customer moves on, their traffic pattern changes and someplace else will take the spot of their 99 store visits. I've been in the situation where one of my former companies competitor went out of business and we reopened in their spot only to bring in a fraction of the volume they did, and it took a long period of losses for those stores to eventually turn around. A startup firm resurrecting 99 will not be able to afford that luxury, and even though I'm sure a mass reopening would be heavily covered there will be many customers who figure out somewhere else to go during what will likely be a much longer closure than 90 days (surprised he didn't propose being closed for 99 days in line with their old marketing). Worst of all, the expectation will be perfection on day one, massive deals (loss leaders) and packed shelves. Seeing their PNS stores they are sparsely stocked and have many items that are hardly bargain priced. I just don't see how they can resurrect this chain without starting with billions of dollars in new debt, and since dollar stores are really struggling industry wide I cannot imagine any banks are going to be interested in giving loans to grow what they hear and feel is a dying category with Dollar General struggling and Dollar Tree closing hundreds of stores.

[storewanderer]

The question will be where will the 99 Only sales go. I don't think Dollar Tree is going to be a very big beneficiary.

Will these sales go mostly to the ethnic grocers?

I think there are a lot of sales up for grabs, in California...

TX/NV/AZ probably less so.

[ClownLoach]

What is interesting is they decided a wind down was the most efficient way to proceed. What a mess.

They are liquidating a ton of inventory at very low percentages off. I have to think this inventory liquidation is throwing them massive short term cash. Also do we know if they already closed/laid off the corporate office? They supposedly just moved into a brand new corporate office in Tustin... in some new development. What a waste of money that was.

The other thing the PNS plan doesn't mention is what are they wanting to save - "The 99 Store" or "99 Cents Only Stores."

Do we know for sure that they aren't going to file bankruptcy...?

I missed it, but they did file for bankruptcy. I haven’t been following the news, but they’ve been mulling bankruptcy for two months due to cash shortages. One report (paywall) suggests their foot traffic declined sharply last year after it began raising prices (out of necessity).

If they did then I assume it's a straight Chapter 7 and not a Chapter 11 restructuring. Same issue though, in a Chapter 11 it may be easier to acquire the parts of the company needed to continue operations. A Chapter 7 is just a straight wind down in most cases and the timing of steps is different. The judge may just sever all of the leases that aren't resold by the company itself for example. There is less of a sense of urgency in the process so Chapter 11 cases take priority on the calendar over Chapter 7. In Chapter 11 the court is taking consideration that they are trying to save the company while ensuring a fair outcome for the creditors, and they then have to decide their fate. In Chapter 7 the fate has already been decided and there is usually no DIP financing which also messes up the usual schedule of events as they have to work with their current limited finances to wind down.

Basically what I'm saying is that the circumstances are still the same even if a filing occurred, not ideal for this team that wants to try to buy the SoCal operations. A tainted brand, liquidated empty stores with severe maintenance and repair needs based on anecdotal observations, and a long liquidation process are not likely to be resurrected. When the site has been in liquidation or closed for any length of time the customer moves on, their traffic pattern changes and someplace else will take the spot of their 99 store visits. I've been in the situation where one of my former companies competitor went out of business and we reopened in their spot only to bring in a fraction of the volume they did, and it took a long period of losses for those stores to eventually turn around. A startup firm resurrecting 99 will not be able to afford that luxury, and even though I'm sure a mass reopening would be heavily covered there will be many customers who figure out somewhere else to go during what will likely be a much longer closure than 90 days (surprised he didn't propose being closed for 99 days in line with their old marketing). Worst of all, the expectation will be perfection on day one, massive deals (loss leaders) and packed shelves. Seeing their PNS stores they are sparsely stocked and have many items that are hardly bargain priced. I just don't see how they can resurrect this chain without starting with billions of dollars in new debt, and since dollar stores are really struggling industry wide I cannot imagine any banks are going to be interested in giving loans to grow what they hear and feel is a dying category with Dollar General struggling and Dollar Tree closing hundreds of stores.

To make it official, the company filed bankruptcy only yesterday as a "Chapter 11 Liquidation" which makes little sense until you read more into it.

Furthermore, the ten largest creditors combined were only owed $35M. They were not broke at all.

This is a private equity pillaging, not a failed business. They own 44 properties primarily in LA. The owners are going to wind up walking away with billions from the sale of those properties. And when the leases are canceled there won't really be any debt, so all the proceeds will go directly to the owners as the few creditors will likely be paid off quickly if they haven't been already.

This is exactly what the private equity people would like to do to Macy's. Neglect the operation, feign a crisis, close and cash out. Chapter 11 allows them to emerge as a real estate holding company under same ownership to continue the cash out process of the owned property.

These owned property stores were most likely the profit center and most productive stores as they are concentrated in the LA area. Without them, the chain would probably collapse, and no possibility the folks attempting to buy the brand would get their hands on any of those properties. By cashing them out they in effect had to kill the company. That is why they did this wind down. No better moment than now to cash in and sell to build high rise apartments and condos before the people of California realize the alleged housing shortage is a massive scam and conspiracy created by the developers, landlords and paid off politicians to artificially increase prices and rents (by 2021 the state already had a SURPLUS of 3 million homes per the Census, and has built millions more since). It's a robbery. I hate private equity. This will likely be the most profitable killing of a viable retailer since the banks destroyed Circuit City.

[Bagels]

Sad to see them go. I’ve spent by far more time in their stores through the years than any other retailer. 99 was a life saver for me in my 20s (into my 30s). It allowed me to have nice things and eat healthy in an era when the Great Recession derailed my professional career and saw me take on a job as a cashier.

But obviously the economic climate had changed and their business model was no longer sustainable. I made what will probably be my last visit to the 99 today and noticed that of the four products I still routinely buy there, theee had been hiked to $1.99+ - equivalent products are cheaper elsewhere. I’ll miss it, but even if it stuck around, I wouldn’t be visiting anymore.

This is the other point. This was the retailer in this "format" who sold actual produce (and a full line of it), and a pretty extensive (for the format) line of dairy products. Those who like to be critical of Dollar Tree/Dollar General for selling a bunch of junk food and that is it on grocery have a valid point to bring up but 99 Only you could not say that about...

You may want to check some items you wouldn't routinely buy. I am surprised how many items in the hardware, office, crafts are still .999 and those categories are 20-30% off. Of course this is junk but some of it is useful. Can probably find the same stuff at AliExpress or something for under $1 anyway. I am surprised they did not hike these categories more to 1.299 or 1.499 but instead they opted to price hike all of the more visible categories. Maybe they were sitting on a ton of old inventory or something.

They reduced pricing on a lot of general merchandise down to .999. I suspect they have an inventory glut. Even a lot of their pricier general merchandise see deep price cuts… again I suspect an inventory glut.

[Bagels]

I missed it, but they did file for bankruptcy. I haven’t been following the news, but they’ve been mulling bankruptcy for two months due to cash shortages. One report (paywall) suggests their foot traffic declined sharply last year after it began raising prices (out of necessity).

If they did then I assume it's a straight Chapter 7 and not a Chapter 11 restructuring. Same issue though, in a Chapter 11 it may be easier to acquire the parts of the company needed to continue operations. A Chapter 7 is just a straight wind down in most cases and the timing of steps is different. The judge may just sever all of the leases that aren't resold by the company itself for example. There is less of a sense of urgency in the process so Chapter 11 cases take priority on the calendar over Chapter 7. In Chapter 11 the court is taking consideration that they are trying to save the company while ensuring a fair outcome for the creditors, and they then have to decide their fate. In Chapter 7 the fate has already been decided and there is usually no DIP financing which also messes up the usual schedule of events as they have to work with their current limited finances to wind down.

Basically what I'm saying is that the circumstances are still the same even if a filing occurred, not ideal for this team that wants to try to buy the SoCal operations. A tainted brand, liquidated empty stores with severe maintenance and repair needs based on anecdotal observations, and a long liquidation process are not likely to be resurrected. When the site has been in liquidation or closed for any length of time the customer moves on, their traffic pattern changes and someplace else will take the spot of their 99 store visits. I've been in the situation where one of my former companies competitor went out of business and we reopened in their spot only to bring in a fraction of the volume they did, and it took a long period of losses for those stores to eventually turn around. A startup firm resurrecting 99 will not be able to afford that luxury, and even though I'm sure a mass reopening would be heavily covered there will be many customers who figure out somewhere else to go during what will likely be a much longer closure than 90 days (surprised he didn't propose being closed for 99 days in line with their old marketing). Worst of all, the expectation will be perfection on day one, massive deals (loss leaders) and packed shelves. Seeing their PNS stores they are sparsely stocked and have many items that are hardly bargain priced. I just don't see how they can resurrect this chain without starting with billions of dollars in new debt, and since dollar stores are really struggling industry wide I cannot imagine any banks are going to be interested in giving loans to grow what they hear and feel is a dying category with Dollar General struggling and Dollar Tree closing hundreds of stores.

To make it official, the company filed bankruptcy only yesterday as a "Chapter 11 Liquidation" which makes little sense until you read more into it.

Furthermore, the ten largest creditors combined were only owed $35M. They were not broke at all.

This is a private equity pillaging, not a failed business. They own 44 properties primarily in LA. The owners are going to wind up walking away with billions from the sale of those properties. And when the leases are canceled there won't really be any debt, so all the proceeds will go directly to the owners as the few creditors will likely be paid off quickly if they haven't been already.

This is exactly what the private equity people would like to do to Macy's. Neglect the operation, feign a crisis, close and cash out. Chapter 11 allows them to emerge as a real estate holding company under same ownership to continue the cash out process of the owned property.

These owned property stores were most likely the profit center and most productive stores as they are concentrated in the LA area. Without them, the chain would probably collapse, and no possibility the folks attempting to buy the brand would get their hands on any of those properties. By cashing them out they in effect had to kill the company. That is why they did this wind down. No better moment than now to cash in and sell to build high rise apartments and condos before the people of California realize the alleged housing shortage is a massive scam and conspiracy created by the developers, landlords and paid off politicians to artificially increase prices and rents (by 2021 the state already had a SURPLUS of 3 million homes per the Census, and has built millions more since). It's a robbery. I hate private equity. This will likely be the most profitable killing of a viable retailer since the banks destroyed Circuit City.

They’ve been struggling with liquidity for awhile. An article published last fall notes that they’ve sold-lease backed all company-owned assets. They’ve defaulted on selective debts, deferred payment of dividends, etc. The company was truly struggling. Moody’s warned a few weeks ago, saying the company would likely have negative cash flow for awhile. One article states that they had looming large debt and leases payments coming due.

Multiple articles quote inside sources as saying foot traffic has been decreasing pretty steadily. I believe it — there’s far more competition for the core product of 99. Grocery Outlet, for example, seems to be pursuing all the Kraft Heinz products that were widely available at 99 for $1 for many years. Ethic grocers are competing hard for the subpar produce 99 has long sold. The end result… is that they have to pay more for product and raise prices to consumers.

Keep in mind… the 99, Dollar Tree, etc. didn’t pay for the name brand products that lined its shelves for years. Instead, manufactures paid THEM to dispose of the product. That’s no longer the case. Which is why Dollar Tree is desperately trying to evolve. It’s very rare these days that you can find name brand products that are being liquidated at Dollar Tree.

99 is still the price leader on many grocery and perishable items. Problem is, it’s not by much. And for what you save, you sacrifice in quality. Red delicious apples 3 lb for $3 is a great deal -a but those small apples yield little edible flesh, making them an inferior deal to the dozens of businesses selling larger apples in same 3 lb bags for $3.50-4.

People like me have abandoned them. And that’s the problem. I’ve spend thousands of hours in those stores. I loved the treasure hunt - you never knew what you were going to find for $1. But those days are long gone and they’re not coming back.

[storewanderer]

Yeah, the treasure hunt ended a few years ago. Or the items just were not good. I did buy a number of higher priced above $1 items there that I was very happy with but I was quite selective and maybe I could have done better elsewhere; these were home/travel items.

I feel like with inflation they just couldn't get on the right side of the curve. They were selling their products but then when it was time to replenish the inflation pushed the supplier prices up and due to their cash situation their solution was to not buy the same product they ran out of but something "close" and less cost. So the quality of the mix just kept getting worse, and worse, and worse. And all the while they were pushing through price hikes on this decreasing quality mix of items on consumables especially. It was clearly not a good cycle.

I still have hope for a smaller revived chain but it is a long shot IF it will even happen and then a long shot IF it will be able to get the mix right to be successful. And I'm sure that smaller revived chain won't make it as far as my area. It will remain in SoCal only.