99 Cents Only Stores, Los Angeles, said its net loss increased while sales declined for the fiscal year that ended Jan. 31 — a 10-month, 44-week year compared with a full 52-week year.
The company said it changed its fiscal year-end date from the Saturday closest to the end of March to the Friday closest to the end of January to be in line with its retail peers.
The loss for the 10-month fiscal year was $12.5 million, compared with a loss of $8.9 million in the prior 12-month year, and adjusted EBITDA dropped 26% to $120.5 million.
Sales fell 8.4% to $1.5 billion, while same-store sales for the year rose 3.7%, with three-quarters of the increase resulting from increased transactions, the company noted; average net sales per square foot rose 2.8% to $330.
Stephane Gonthier, president and CEO, said the company is encouraged by the favorable consumer response to its “Go-Taller” program, in which it raised shelving to 78 inches from 54 inches at 64 stores over the past two months “to better display our product assortment and increase the average basket size.”
He said the company expects to complete the retrofits by September.
Frank Schools, SVP, CFO and treasurer, said it was “a little bit premature” to discuss the sales impact of the higher profile, “but we are pleased with the results,” he added.
99 Cents Only operates 343 stores, encompassing 245 in California, 46 in Texas, 34 in Arizona and 18 in Nevada. It opened 27 net new stores last year, with plans to open between 30 and 35 stores in fiscal 2015 within its existing markets, Gonthier said.
He also said 99 Cents Only is continuing to execute on its three-part strategic plan: investing in people and processes; accelerating store growth in existing markets; and improving sales and margin by enhancing the consumer experience, improving the product mix and leveraging global sourcing.
Gonthier said increased global sourcing will help supplement the chain’s private-label consumable offerings, which will boost category margins; expand seasonal offerings to make the chain a go-to seasonal destination; and increase closeout opportunities and category margins by going direct to overseas factories.
“With our new sourcing initiative, we will expand our merchandising offerings, and we expect to start to capture the benefits of this global sourcing initiative by September,” Gonthier said.
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