99 Cents Only Stores reaching for new heights

Despite the rollout of its new “Go Taller” initiative, 99 Cents Only Stores reported a decline in same store sales and profits in the third quarter.

Same store sales decreased 0.7% compared with the prior year quarter. The company reported a loss of $3.8 million in the third quarter, compared to posting an income of $1 million in the prior year quarter. Net loss as a percentage of total sales was -0.8% for the third quarter compared with net income as a percentage of sales of 0.2% for the third quarter of fiscal 2014.

"One of our top priorities is to further establish 99 Cents Only as the preferred destination for seasonal merchandise," said Stephane Gonthier, CEO of 99 Cents Only. "By completing the implementations of our ‘Go Taller’ program and replenishment system ahead of schedule in September, we were able to focus attention on our important seasonal programs. We have been pleased with the results, with Halloween sales growing more than 50 percent over last year, leading to an increase in same-store sales of 2.9 percent for the month of October."

The company’s "Go Taller" initiative consisted of raising the height of shelving across the chain to create a dramatic canvas for visual merchandising. The transformation was accelerated in August and September 2014 in order to complete the conversion of the entire chain before the busy holiday season. In addition, the company also deployed in the third quarter a new centralized forecasting and merchandise replenishment system, replacing its legacy system and longstanding decentralized methodology. The company said the operation disruption caused by these two initiatives negatively impacted same store sales during the first two months of the quarter.

During the third quarter, the company opened 12 new stores. The company now operates 362 stores, an increase of 8.7% in store count over the end of the same period last year.