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99 Cents Only Declares Bankruptcy as It Shuts Down Stores

99 Cents Only store

Discount retailer 99 Cents Only has declared bankruptcy as it prepares to shutter its stores.

The company announced its Chapter 11 filing Monday (April 8), days after it said it was closing all of its 371 locations in the southwestern part of the country.

“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” interim CEO Mike Simoncic said in a news release last week.

“Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the COVID-19 pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company’s ability to operate.”

For now, the stores are still open, with 99 Cents Only conducting going out of business sales at each location with “significantly reduced” prices. The retailer said it has also begun working with Hilco Global to liquidate the fixtures, furnishing and equipment at the stores, as well as the real estate itself.

The news comes less than a month after Dollar Tree said it was closing nearly 1,000 of its Family Dollar locations: 600 that will shut down in the first half of this fiscal year, and another 370 that will close when their leases are up. The retailer will shut another 30 of its flagship stores when those leases expire.

As covered here last month, retailers on both sides of the Atlantic are finding that offering deep discounts isn’t enough to entice cash-strapped shoppers.

“Even the strongest and highest profile brands up and down the country are struggling,” said Julie Palmer, a partner at British consulting firm Begbies Traynor Group, told Bloomberg News

Meanwhile, research by PYMNTS Intelligence found that consumers are growing more cautious with their spending habits. More than 60% reported that price is a factor in determining what to buy, while 29% said it was the key factor.

“Similarly, when deciding where to shop, more than 48% say price shapes their decision, with 25% saying it is the most significant consideration,” PYMNTS wrote this month.

In addition, close to 43% of consumers said sales, promotions and discounts help them choose what to buy, while 42% said this is a factor in deciding where they shop.