99 Cents sales jump as discount rebound continues

Discounter 99 Cents Only Stores said Thursday that its comparable-store sales jumped by 9% in the fiscal second quarter and its losses fell as the discounter benefitted from initiatives to expand assortment and reduce waste while deflationary and SNAP-related pressures receded.

The results provided further indication of a recent rebound among formats targeting low-income shoppers are now lapping the effect of changes in federal food assistance programs, which reduced monthly benefits and the number of recipients a year ago. In recent weeks, both Dollar Tree and Dollar General posted stronger quarterly sales, and Canada’s Dollarama on Thursday said its quarterly comps improved by 6.1%.

99 Cents, which operates 391 discount stores in the Western U.S., said sales for the period ending July 28 improved by 8.9% to $540.5 million, while comps increased on a combination of a 4.7% increase in transaction counts and a 4.1% increase in average basket size.

Geoffrey Covert, president and CEO, in a conference call said the sales increase was driven by expansions of fresh foods and items at price points above $1.

Covert also said a test of lower, five-foot shelving initiated earlier this year has been effective at reducing shoplifting and would be expanded chainwide. Around 140 stores feature the lower profile shelving currently. That helped gross margin rates improve by 40 basis points in the quarter to 28.8% of sales.

Dollarama, based in Montreal, operates 1,125 small discount stores in Canada. Sales during its fiscal quarter ending July 31 increased by 11.5% to $812.5 million (Cdn.), while comps grew on almost entirely on larger basket sizes.