The dollar doesn’t stretch like it used to.
The 99 Cents Only Stores discount chain has announced plans to wind down its business operations. All 371 stores will be closed in Arizona, California, Nevada, and Texas, the states where it operates. Liquidation sales will begin on Friday.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” said interim CEO Mike Simoncic, who will be stepping down, in a statement. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment.”
The company cited the impact of the pandemic as a factor in the decision to shut down, but said “inflationary pressures and other macroeconomic headwinds” and increasing levels of “shrink,” the retail code name for theft, were also major factors.
Bloomberg, last week, reported the chain was considering a potential bankruptcy filing due to liquidity problems. And S&P, earlier in March, said it expected the company to be cash-flow-negative for a long period, noting that turnaround efforts “have been unable to produce meaningful performance improvement.”
Thursday, the company said it had been unable to find an alternative to the complete shutdown.
“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,” it said.
The dollar store retail category has had to make many adjustments in the past year to keep up with rising costs. Dollar Tree last month announced it was increasing its top-level price on items from $5 to $7 as part of a “multi-price expansion strategy.”
Theft is a larger retail problem. Dollar General announced plans last month to completely remove self-checkout stations in 300 locations and has begun converting some or all of the registers in another 9,000 stores.
Almost one-third (31%) of Generation Z shoppers have admitted to shoplifting from self-checkout kiosks, according to a November LendingTree survey of 2,000 U.S. Consumers. (Just 15% of shoppers overall admitted to the habit.) Almost half of Gen Z participants (46%) said they plan to steal the most expensive item in their cart, while 37% said they will forgo paying for basic items, like food and water.