Value retailer posts strong Q2 sales

99 Cents Only Stores reduced its loss in the second quarter amid increased operational efficiencies and surging sales.



The retailer reported a net loss of $33.6 million for the quarter ended July 28, compared to net loss of $35.1 million in the year-ago period. Net sales increased 8.9% to $540.5 million.



99 Cents Only Stores' reported second quarter gross margin of 28.8%, which was up 40 basis points year-over-year, driven primarily by a focus on reducing shrink and managing scrap, along with increased efficiency in its logistics network. On a year-to-date basis, the retailer's adjusted EBITDA of $26.4 million is up 42.3% compared to the same period a year ago.



"The second quarter offers further evidence of the progress we have continued to make in executing our turnaround plan," said Geoffrey Covert, president and CEO. "Our focused strategy of improving the company's operating performance is yielding encouraging results."



Same-store sales were up 9.0%, with a 4.7% increase in transaction count and a 4.1% increase in the average ticket. The increase in same-store sales was primarily driven by higher sales from seasonal, general merchandise and consumable categories, in part due to higher sales of above $1 products, better product assortment and improved store execution, according to the company.



"Sales from grocery and fresh offerings also increased, driven by better product availability, improved product assortment, as well as continued improvements in store in-stock levels," the company stated.



As of the end of the quarter, 99 Cents Only Stores operated 390 stores.