The dollar no longer stretches as much as it used to.
Discount chain 99 Cents Only Stores has announced plans to close its retail operations. All 371 stores will be closed in Arizona, California, Nevada and Texas, the states where it operates. Liquidation sales will begin Friday.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” interim CEO Mike Simoncic, who is leaving the role, said in a statement. “Unfortunately, the last few years have presented significant and enduring challenges in the retail environment.”
The company cited the impact of the pandemic as a factor in the decision to close, but said “inflationary pressures and other macroeconomic headwinds” and rising levels of “decreased shrink,” the code name for retail theft, also , were important factors.
Bloomberg last week reported that the chain was considering a potential bankruptcy filing due to liquidity problems. And S&P said in early March that it expected the company would have negative cash flow for an extended period, noting that turnaround efforts “have failed to produce a significant improvement in performance.”
The company said Thursday that it had been unable to find an alternative to closing completely.
“The company ultimately determined that an orderly liquidation was necessary and that it was the best way to maximize the value of 99 Cents Only Stores assets,” he said.
The dollar store retail category has had to make many adjustments over the past year to keep up with rising costs. Dollar Tree last month announced it would raise the top-tier price on $5 to $7 items as part of its “multi-price expansion strategy.”
Theft is a broader problem in retail. Dollar General announced plans last month to completely remove self-checkout stations in 300 locations and has begun converting some or all checkouts in an additional 9,000 stores.
According to a November LendingTree survey of 2,000 U.S. consumers, nearly a third (31%) of Gen Z shoppers admitted to stealing from self-checkout kiosks. (Only 15% of shoppers overall admitted to this habit.) Nearly half of Gen Zers (46%) said they plan to steal the most expensive item in their cart, while 37% said they will give up to pay for basic items, such as food. and water.