In a surprising turn of events, discount retailer 99 Cents Only has filed for Chapter 11 bankruptcy, marking the end of an era for the company. Just days after announcing its plans to liquidate and close all of its 371 stores across California, Texas, Arizona, and Nevada, the retailer is now facing the challenges of navigating the bankruptcy process. This article delves into the reasons behind 99 Cents Only’s bankruptcy, the impact on its employees and customers, and what lies ahead for the company.
99 Cents Only bankruptcy
The decision to file for Chapter 11 bankruptcy did not come lightly for 99 Cents Only. The company has faced significant challenges in recent years, including the unprecedented impact of the COVID-19 pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures, and other macroeconomic headwinds. These factors have greatly hindered the company’s ability to operate effectively in the retail environment.
Interim CEO Mike Simoncic expressed the company’s disappointment, stating, “This was an extremely difficult decision and is not the outcome we expected or hoped to achieve.” Despite their efforts to navigate the changing landscape, 99 Cents Only ultimately found itself unable to identify solutions that would allow it to stay in business.
Why 99 Cents Only filed for Chapter 11 bankruptcy?
With the Chapter 11 bankruptcy filing, 99 Cents Only aims to implement the wind-down of its business operations. The company has listed its assets and liabilities, ranging from $1 billion to $10 billion, in court documents. Additionally, the company has secured $60.8 million in debtor-in-possession financing, subject to court approval, to facilitate the wind-down process.
Currently, the company’s stores are still open, conducting going-out-of-business sales with significantly reduced prices. These sales offer customers the opportunity to purchase items at steep discounts before the stores finally close their doors. Hilco Global has been enlisted to handle the liquidation of merchandise, including fixtures, furnishings, and equipment.
99 Cents Only shut down effect on employees
As of now, 99 Cents Only employs over 10,800 part-time and full-time employees across its locations. The bankruptcy filing raises concerns about the fate of these employees and the potential loss of their jobs. The company has filed customary motions with the court to support its operations, including the payment of employees, throughout the wind-down process.
Customers who hold gift cards and merchandise credits will be relieved to know that these will be honored until the close of business on April 19. However, with the imminent closures of all 371 stores, loyal customers will have to find alternative options for their discount shopping needs.
99 Cents Only future plans
In addition to the store closures, 99 Cents Only plans to sell its real estate and remaining inventory, including furnishings and equipment. Hilco Real Estate will handle the sale of both owned and leased properties. The company currently has 333 leases and 44 owned properties, some of which are located in highly desirable areas such as Los Angeles.
As the bankruptcy proceedings unfold, the future prospects for 99 Cents Only remain uncertain. The company’s management and stakeholders will need to carefully consider their options and formulate a strategy that allows them to navigate the challenging retail landscape.
Global retailers struggle
The struggles faced by 99 Cents Only are not unique to the company. Retailers across the globe have found themselves grappling with similar challenges. Offering deep discounts is no longer enough to entice cash-strapped shoppers, as consumers are becoming increasingly price-conscious.
Research by PYMNTS Intelligence indicates that consumers prioritize price when making purchasing decisions. More than 60% of consumers consider price a significant factor, with 29% stating it is the key factor. Sales, promotions, and discounts also play a role, influencing the choices of close to 43% of consumers.
99 Cents Only going forward
The bankruptcy of 99 Cents Only serves as a poignant reminder of the need for retailers to adapt and rethink their business operations. While the current economic environment poses challenges, it also presents opportunities for innovation and new approaches.
Retailers must employ new thinking to navigate the changing dynamics of the retail industry. This includes exploring technological advancements, embracing digital transformation, and finding creative ways to meet evolving consumer demands. By staying agile and proactive, retailers can position themselves for success in an increasingly competitive landscape.
The bankruptcy filing of 99 Cents Only marks the end of an era for the discount retailer. The company’s struggles with a changing retail environment, compounded by the impact of the COVID-19 pandemic, have led to this difficult decision. As the wind-down process begins, employees and loyal customers face uncertain futures.
The challenges faced by 99 Cents Only serve as a cautionary tale for retailers, highlighting the importance of innovation and adaptability in an ever-evolving industry. By understanding consumer behavior and embracing new approaches, retailers can navigate the changing landscape and position themselves for long-term success.
While the future of 99 Cents Only remains uncertain, the bankruptcy filing serves as a reminder of the dynamic nature of the retail industry and the need for constant adaptation in order to thrive.
