Despite a net loss in the first quarter, 99 Cents Only Stores asserted that a rise in sales and flat comps reflected the retailer’s progress in improving performance.
In the first quarter ended April 29, 99 Cents Only Stores recorded a net loss of $25.2 million versus net income of $1.17 million in the year-prior period. Comparable store sales were flat, the company noted.
Customer traffic slipped by 1.5% but that was offset by higher average ticket of 1.5%, 99 Cents Only stated. Higher sales in produce and consumables boosted comps, the company added, but seasonal sales lagged, partially as a result of better in-stock levels due to improvements in the allocation and replenishment system, and lower cannibalization.
Net sales were $501.8 million versus $494.8 million in the year-earlier quarter, according to the company.
“The first quarter results reflect our significant progress in stabilizing the business,” said Geoffrey Covert, 99 Cents Only president and CEO. “We are seeing tangible results on a number of fronts and this progress is most clearly evident in our improved sales performance. Since commencing our turnaround plan, same-store sales growth has increased significantly from negative 3.9% in the third quarter of fiscal 2016 to flat in this past quarter. During the quarter, we also reduced inventory by an additional $30 million beyond the $100 million reduction we made in the latter part of fiscal 2016. Much of the inventory was converted to cash that was used to reduce the amount of cash borrowings under our ABL facility, reducing it to the lowest level in the past year and a half. We also made progress on our other top three initiatives, which are aimed at improving the customer experience, reducing shrink and scrap, and building a culture of safety across our company. We still have significant work ahead but remain confident in the power of our differentiated business model and the opportunity to return 99 Cents Only Stores to sustained profitable growth.”
The company operates 392 stores.