Retailers, consumers and prices
99 Cents, which sells a variety of household, food and other items often priced at 99 cents, says it will now focus on its core markets of California, Arizona and Nevada, where it has 230 stores that make up 90 percent of its sales.
Those states are also some of the hardest-hit by the U.S. housing crisis and credit crunch, and consumers pressured by rising gas and food prices are trading down from higher-priced stores to discounters to save money, a positive for 99 Cents.
99 Cents said its 48-store Texas operation lost $15 million or 15 cents per share in operating income over the past fiscal year, which ended June 28, and the stores were only generating slightly more than half of the average sales in its non-Texas stores. That suggests Texans are still able to afford hitting a Wal-Mart or Target instead of trading down to 99 Cents.
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The latest example of U.S. inflation seems likely to come from 99 Cents Only Stores, the Western retailer that stocks everything from canned beans to cleaning supplies, party favors and fresh vegetables — all for 99 cents or under.
On Monday, the City of Commerce, California-based company, with 277 stores in California, Texas, Arizona and Nevada, will announce what it calls “its first change to its price policy since its founding over 25 years ago.” The Los Angeles Times said this was most likely a precursor to price hikes.
99 Cents Only Stores isn’t fessing up just yet, but chances are prices won’t be getting any lower, given the rising price of food staples like milk, eggs and bread that the company sells.
The company’s most recent ad announces deals like 99 cent cantaloupes, Hannah Montana notebooks, microwave popcorn and reading glasses.
99 Cents Only Stores posted a net loss of $1.51 million in its most recent quarter despite a 4 percent rise in sales from a year-ago net profit of $2.96 million. Profit was hurt by rising operating expenses and higher cost of sales.