99 Cents Only StoresNDN

A diverse assortment of closeout name-brand merchandise priced well below retail helps to create urgency among shoppers. Large, well-kept, brightly lit stores attract repeat customers.

The ability to buy merchandise in large volumes and pay in cash gives the firm a decisive sourcing advantage, as suppliers are more apt to deal with 99 Cents.

The chainwide price point increase from 99 cents to 99.99 cents and other variable pricing strategies should help counter rising food prices, minimum wage increases, and high fuel costs.

An updated inventory management system at its primary Commerce, CA facility should enable more efficient distribution capabilities and may facilitate more rapid expansion into contiguous markets.

On a preliminary basis, management believes that it can generate $40 million from the sale of its Texas operations, net of all real estate losses, fixed asset write-offs, inventory liquidations, and severance costs. Chairman David Gold's bid price to purchase the Texas assets has not been disclosed. Read more 

Increasing competition in core markets, including Wal-Mart's WMT more aggressive expansion in California, could adversely affect sales and diminish the perception of 99 Cents' value proposition.

Larger retailers, with more sophisticated distribution systems, purchasing power, and a wider customer reach through expansive store networks, could adopt strategies similar to 99 Cents'.

The company could face increasing obstacles in procuring a sufficient amount of closeout merchandise as it expands its store base nationwide.

99 Cents' thrifty corporate culture and low executive compensation make it difficult for the company to attract the experienced managers it desperately needs to properly manage growth.

Negative opinions from auditors raise concern over the effectiveness of the company's internal reporting controls. Read more