Number Holdings, the parent company of discount retailer 99 Cents Only, filed for bankruptcy protection on Sunday as “significant and lasting challenges” in the retail environment have hindered the company’s ability to operate. The company cited the “unprecedented” impact from COVID, shrinkage, shifting consumer demand and persistent inflationary pressures for its decision to shut down.
The company’s 371 stores will remain open as it winds down operations and sells off fixtures, furnishings, and equipment, along with merchandise.
Like Dollar General (NYSE:DG) and Dollar Tree (DLTR), 99 Cents Only featured a mix of refrigerated and shelf-stable groceries and heavily discounted items. The store was also known for offering high-ticket items for 99 cents for the first nine customers. After going public in 1996, 99 Cents Only was acquired in 2012 by Ares Management for $1.6B.
The bankruptcy filing reverberated through the sector with shares of Dollar General (DG), Dollar Tree (DLTR), and Five Below (FIVE) trading lower, all of which are suffering similar headwinds to profitability. Recently,
Dollar General (DG) CEO Todd Vasos cautioned that customers “are continuing to feel the impact of the last two years of inflation which we believe is driving them to make trade-offs in the store,” while Dollar Tree (DLTR) reported disappointing Q4 results and set downbeat guidance for Q1 and 2024. The company also said it was closing 1000 Family Dollar stores this year. Five Below (FIVE) also claimed high levels of shrinkage for setting full-year guidance below expectations.
Shares of Dollar General (DG) are down 1.5%, Dollar Tree (DLTR) is lower by 1.7%, while Five Below (FIVE) shares are 0.9% in the red.
Press release