Things looking up at 99 Cents Only Stores
The turnaround at extreme-value retailer 99 Cents Only Stores appears to be taking hold.
The retailer reported that net sales for its first quarter, ended April 28, increased 6.7% to $547.5 million, from $512.9 million in the year-ago period. Same-store sales increased 6.9%, with higher customer traffic of 4.2%, and a higher average ticket of 2.5%.
The increase in same-store sales was primarily driven by higher sales from general and seasonal merchandise, in part due to better product assortment and improved store execution, according to the company. Also contributing were improved sales from fresh offerings driven by better product availability, and improved in-stock levels.
Net loss in the quarter was $8.8 million, compared to net loss of $25.2 million in the first quarter of fiscal 2017. Net loss as a percentage of net sales was (1.6%), compared to net loss as a percentage of net sales of (4.9%) for the first quarter of fiscal 2017.
"The ongoing execution of our turnaround plan that began to produce operating momentum last year has continued in the first quarter of fiscal 2018 and helped generate solid first quarter results," said Geoffrey Covert, president and CEO.
In addition to improved sales execution, the chain is also benefitting from improved operational results.
"First quarter gross margin improved 70 basis points year-over-year, driven primarily by our success in reducing shrink and scrap and improved execution in our logistics network," Covert said. "In addition, inventory levels are more than 30% lower than they were when the current management team arrived and we have significantly reduced our warehouse footprint."
The company is reiterating the following previously issued outlook for fiscal 2018:
• Positive same-store sales growth
• Year-over-year decrease in net loss and an increase in adjusted EBITDA over the same period
• Three new store openings, all in the second half of the year
• Capital expenditures of approximately $53 million-$58 million