Rain dampens discounter's holiday performance

CITY OF COMMERCE, Calif. — Third-quarter sales growth was hard to come by at 99 Cents Only as the extreme value retailer's heavy concentration of stores in Southern California were negatively affected by unseasonably strong rains that hit the region prior to Christmas.

Total company sales for the period ended Dec. 25 increased 1.7% to $365 million while same store sales declined 0.7%. Company CEO Eric Schiffer said the comp decline in same-store sales was due to a reduction in the average number of transactions throughout the quarter that was exacerbated by heavy rains in the company's major Southern California markets the final week before Christmas and an early freeze and adverse weather conditions led to reduced availability of product from produce suppliers.

Aside from the weak sales performance, Schiffer indicated the company made progress on several operational initiatives.

"We are pleased with our holiday assortment as well as the sales gains in our re-merchandised party section. Although we are still in the early stages of implementation of our new store systems, which will continue for the next two years, we are satisfied with our progress to date, and our system support and reliability showed material improvement," Schiffer said. "Of paramount importance is our ability to manage our costs against the fluctuations in our same-store sales, as demonstrated by our management team in the third quarter."

The company is scheduled to report third-quarter earnings on Feb. 2 and indicated it expects earnings per share to be between 37 cents and 38 cents, compared with 35 cents the prior year. At the end of the third quarter, 99 Cents Only operated 280 stores, consisting of 208 stores in California, 34 in Texas, 26 in Arizona and 12 in Nevada.