The discount store chain 99 Cents Only announced on Sunday that it has filed for bankruptcy in Delaware. This decision comes after considering shutting down operations.
The company plans to close all 371 stores across the United States. It will also sell its real estate and all remaining store items.
Challenging Times Ahead for Discount Retailer
"This was an extremely tough choice and not the result we wanted," said interim CEO Mike Simoncic in a statement last week. The decision marks a significant shift for the company, known for its low-cost shopping options under the "99¢ Only Stores" and "The 99 Store" brands, with locations in California, Arizona, Nevada, and Texas.
According to Reuters, a bankruptcy court has approved a loan to provide the struggling retailer with $35.5 million in new funds. This financial boost will help manage the company's affairs during its shutdown phase.
As detailed in recent court filings, the company plans to close 125 stores by the end of April and the remaining stores by the end of May. To clear out inventory, all items will be discounted by 30%, and the stores will continue to accept gift cards and merchandise credits until April 19.
Hilco Global has been brought on board to oversee the closing sales and the liquidation of the company's real estate assets.
Financial reports indicate that 99 Cents Only has over $1 billion in assets and liabilities, which has led to restructuring under Chapter 11 of the bankruptcy code.
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Decades-Old Discount Chain Faces Closure
For over forty years, the 99 Cents Only chain has offered shoppers low-priced items from its first location in Los Angeles. Despite its long history, the California-based retailer recently announced plans to close all its stores on Thursday, April 4, with clearance sales beginning the following day.
Mark J. Miller, CEO of Pic 'N' Save Bargain and former president of Big Lots, stepped in to save the company. As reported by The U.S. Sun, Miller proposed a new strategy to revitalize the stores. His plan included refreshing the store's offerings with new and branded products, hoping to attract more customers and breathe new life into the struggling chain.
In comments reported by ABC's KABC, Miller emphasized his commitment to maintaining the quality and affordability of products at 99 Cents Only stores. "We aim to continue providing great goods, great prices, and a treasure hunt shopping experience," he said.
Miller also mentioned his plans to partner with investors to buy and save the chain, expressing hope for a swift agreement.
However, the deal to save the stores never materialized. Like many others, the chain suffered severely from the economic impacts of the pandemic. "The past few years have brought significant, enduring challenges in the retail sector," said interim Simoncic.
He attributed these challenges to the devastating effects of COVID-19, changes in consumer behavior, increased losses, ongoing inflation, and other economic difficulties, all of which have compromised the company's operations.
As a result, when 99 Cents Only initially announced its intention to close, Simoncic explained that winding down was "necessary" to best utilize the company's assets under the circumstances.
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