Annual sales in Texas grow more than 99 Cents Only

CITY OF COMMERCE, CALIF. —After hitting a tough stretch when it branched into Texas in 2003, the 99 Cents Only chain continued to rebound this fall as it celebrated its 25th anniversary.

The chain officially commemorated the opening of its first store in Westchester, Calif. on Aug. 9, 1982, with an in-store event that included invitees like Tyra Banks and featured a promotion that sold Apple iPhones for 99 cents to the first nine customers.

As it celebrates 25 years in business, the 255-store chain also continues to report strong earnings as its store base in Texas stabilizes. For its most recent quarter ended June 30, it reported earnings of $3 million and continued a streak of positive quarters that started in 2006.

“Although we’re reporting a slight increase in our quarter-over-quarter earnings for the third quarter in a row, we’re not satisfied with these slight improvements,” said 99 Cents Only president Eric Schiffer. “We’re working toward a significant reduction in our operating costs as we continue to grow.”

It’s also reporting better results in Texas, which is home to 43 outlets and a new smaller-format store. The five stores it opened in Texas during fiscal 2007 averaged 17,800 square feet, compared to 26,400 square feet for its older stores. And the new store it opened in San Antonio in late March produced the best first-day sales results of any store opened so far in the state.

Texas has been a problem for 99 Cents Only, with stores not performing to expectations because of tougher competition and none of the name recognition it enjoys in its home state of California. And though sales there are improving, they still have a long way to go to achieve sales similar to those in older markets. Annual sales per square foot in Texas stores increased from $110 to $120 for the year, but were well below the $284 per square foot for non-Texas stores.

After opening just 19 stores in fiscal 2007, 99 Cents Only is planning to expand its store base by about 15% per year through 2010 as it ramps up expansion in its core markets and looks for opportunities in other states.