Iconic Discount Retail Chain With 370 Stores to File Bankruptcy or Liquidate as Soon as This Week

99 Cents Only Stores LLC, a prominent discount retailer in the western United States, is considering filing for Chapter 11 bankruptcy protection or potentially liquidating its assets as it faces a severe liquidity shortfall, according to people familiar with the matter.

The company, which operates more than 370 stores across four states, has been exploring various options to address its financial woes, including the possibility of reaching an out-of-court agreement with creditors.

However, sources who asked not to be identified due to the private nature of the discussions revealed that a bankruptcy filing could occur as early as April, as attempts to sell some of the company’s assets have stalled.

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The potential bankruptcy or liquidation of 99 Cents Only Stores underscores the challenges faced by traditional brick-and-mortar retailers in an increasingly competitive and evolving market.

The company’s financial troubles have been exacerbated by declining gross margins and significant inventory shrinkage, as reported by Bloomberg Distressed Debt Reporter Erin Hudson.

In a bid to improve liquidity, 99 Cents Only Stores recently sold its Commerce, California distribution facility for $188 million and secured a $21 million promissory note with a three-month term.

Despite these measures, the company’s future remains uncertain as it grapples with mounting losses and a challenging retail landscape.

Founded in the 1960s by entrepreneur Dave Gold, 99 Cents Only Stores began as a small liquor store in Los Angeles, where Gold experimented with selling bottles of wine at a fixed price of 99 cents.

The concept proved to be an instant success, leading to the company’s rapid expansion across the western United States.

Over the years, 99 Cents Only Stores has become known for offering a wide array of products, including household items, fresh produce, and seasonal merchandise, at competitive prices.

While the company has expanded its pricing strategy to include items above $0.99, it has maintained its signature practice of ending all prices with $.99.

As the fate of 99 Cents Only Stores hangs in the balance, industry experts and stakeholders are closely monitoring the situation, with many hoping that the iconic retailer can successfully navigate its current financial challenges and emerge as a leaner, more resilient company.

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The potential loss of the chain would mark a significant blow to the communities it serves and the discount retail sector as a whole.

Image source: Wikimedia