99 Cents Only chain appears set to break dollar barrier
So much for the slogan, “Still nothing over 99 cents, ever!”
After 26 years, the 99 Cents Only Stores chain is expected to announce Monday that it will raise some of its prices above 99 cents for the first time.
The City of Commerce retailer, faced with fast-rising inflation, soaring food and fuel prices and a higher minimum wage, said last month that it was reevaluating its long-standing price strategy after two consecutive quarterly losses.
The chain declined to release details of the change Thursday, saying it would hold a news conference at one of its Los Angeles stores Monday to discuss specifics.
But customers shouldn’t worry that prices on all items will rocket past 99 cents, said Joan Storms, an analyst who follows the chain for Wedbush Morgan Securities in Los Angeles.
“I think it will be limited to a select number of commodity-type items that have been facing some pretty significant inflation -- milk, eggs, bananas,” she said. “That’s my guess.”
But to Marie Grigsby, who was shopping for groceries at a 99 Cents Only in Silver Lake on Thursday, the news was just another unwelcome sign of higher living expenses to come.
“It’s ridiculous -- prices are already high everywhere,” said Grigsby, a manager for the Los Angeles Unified School District. “People will just go back to regular stores and look for sales. If they go past 99 cents, they’re going to have problems.”
Founded in 1982 by Chairman David Gold, 99 Cents Only pioneered the single-price retail concept. The chain opened its first store in Los Angeles and has since expanded to 277 locations, mostly in California but also in Nevada, Arizona and Texas.
The deep-discount retailer sells groceries, household supplies and health and beauty products, and, until now, remained one of the few true “dollar” stores. Items are priced at 99 cents or less, with some products grouped to sell for a total of 99 cents.
But capping prices at 99 cents plus tax has become a burden for the retailer, which has had to adjust the quantity and size of many of its offerings to keep them on store shelves.
For example, when a dozen eggs became too expensive, 99 Cents Only temporarily began offering six-packs instead to keep prices under a dollar. The company also reduced the size of its milk cartons and stopped selling items such as butter, peanut butter and cooking oil on a regular basis.
“It’s just at a point now where their mix has to be more predictable for their customers,” analyst Storms said. She predicted the new prices would be implemented within the next few months.
Last month, President Jeff Gold said the company hadn’t decided whether to change its name if prices were raised. But already, the chain has replaced its former slogan, “Still nothing over 99 cents, ever!” on its website with a new message: “The right store . . . now more than ever!”
Shares of 99 Cents Only rose 25 cents, or 2.9%, to $8.75 in after-hours trading after closing down 40 cents, or 4.5%, to $8.50.
At the Silver Lake store, Jennifer Choi, 27, said she would still shop at the chain despite higher prices.
“We’ve all seen that the economy is not as good, so if it’s just a small raise, I’d understand,” she said. “Especially since the deals are so good and everyone else is so pricey.”
Times staff writer Tiffany Hsu contributed to this report.
