A Massive Discount Retailer Is Now Closing All 371 Stores

A massive discount retailer is now closing all 371 stores and wind down its business operations after more than four decades.

99 Cents Only Stores will close all of 371 stores according to the City of Commerce discount chain.

“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” interim Chief Executive Mike Simoncic said in a statement.

“Unfortunately, the last several years have presented significant and lasting challenges in the retail environment.”

He cited multiple factors, including the “unprecedented impact” of the COVID-19 pandemic, shifting consumer demand, persistent inflationary pressures and rising levels of shrink — an industry term that refers to loss of inventory attributed to reasons such as shoplifting, employee theft and administrative errors.

Combined, those issues “have greatly hindered the company’s ability to operate,” Simoncic said.

99 Cents Only has stores in California, Arizona, Nevada and Texas and has about 14,000 employees. The privately held company said it had reached an agreement with Hilco Global to liquidate all of its merchandise and dispose of fixtures, furnishings and equipment at its stores. Sales are expected to begin Friday.

Hilco Real Estate is managing the sale of the company’s real estate assets, which are owned or leased, reports The LA Times.

The announcement by 99 Cents Only reflects a larger weakness in the dollar-store category, said Brad Thomas, equity research analyst at KeyBanc Capital Markets.

Dollar Tree, a Chesapeake, Va.-based retailer, announced last month that it was closing 600 of its Family Dollar stores this year and an additional 370 in the next few years, he noted.

“It’s been trying times for many, many retailers,” he said.

“What’s interesting is that what started out as a boon to retailers in the pandemic, with all those stimulus checks, quickly turned into a very troublesome time.”

Rising wages, inflation and higher losses due to shrinkage have reduced profits for retailers in a deep-discount sector where margins are already extremely low.

99 Cents Only, with its large base of California stores, has been under particular wage pressure, he said.

And it’s at a disadvantage compared with larger chains such as market leader Dollar General, which has a store count close to 20,000 — “a sales base and a store base that is multiple times larger than 99 Cents,” Thomas said.

Last week, Bloomberg reported that 99 Cents Only was considering a bankruptcy filing as it contended with a liquidity shortfall.

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Market News Today - A Massive Discount Retailer Is Now Closing All 371 Stores.
Market News Today – A Massive Discount Retailer Is Now Closing All 371 Stores.

A tech giant now confirms it is laying off hundreds of employees in its physical stores technology and sales and marketing units.

Most of Amazon’s cuts are in training and certification, and sales operations, per Geek Wire.

“We’ve identified a few targeted areas of the organization we need to streamline in order to continue focusing our efforts on the key strategic areas that we believe will deliver maximum impact,” an Amazon Web Services spokesperson said in a statement.

“We didn’t make these decisions lightly, and we’re committed to supporting the employees throughout their transition to new roles in and outside of Amazon.”

Amazon’s AWS unit has seen its sales growth decelerate in recent quarters as companies trimmed their cloud spend amid rising interest rates, per CNBC.

Amazon executives expressed some optimism in February when they said the market is starting to show signs of a reacceleration.

The cuts to AWS’ store technology team come after Amazon said it would remove cashierless checkout systems in its U.S. Fresh stores.

The AWS unit includes teams overseeing the cashierless tech, called Just Walk Out, as well as its Dash smart carts and Amazon One palm-based payment technology.

In 2022, the store technology team was moved out of Amazon’s retail group and folded into its cloud computing division.

The AWS spokesperson said the company decided to make cuts to the store technology division “as a result of a broader strategic shift in the use of some applications in Amazon’s owned as well as in third-party stores.”

Amazon continues to trim its headcount after more than a year of mass layoffs.

Beginning at the end of 2022 and continuing through 2023, Amazon initiated the largest layoffs in its history, cutting more than 27,000 jobs across almost every area of the company.

So far this year, Amazon has laid off employees in its Twitch, Audible, Buy with Prime, and Prime Video and MGM Studios units.

Employees in the U.S. will continue to receive their pay and benefits for at least 60 days, and they will be eligible for a severance package.

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Market News Today - A Massive Discount Retailer Is Now Closing All 371 Stores.
Market News Today – A Massive Discount Retailer Is Now Closing All 371 Stores.

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