Friday, September 5, 2008

No More 99 Cents Store

I love the 99 Cents Only Store (symbol NDN). I buy most of my produce and all of my canned tomatoes there where the big 28 oz. size is still only 99 cents. But apparently not for long, according to recent rumblings in the media made official by today's press release. According to the company who operates out of 277 western retail stores located mostly in California, a buck just ain't what it used to be. In fact, it takes over $2 today to purchase what 99 cents did back when the company was formed over 25 years ago. No wonder they've had to downsize a lot of their products. I've watched as the 25 square foot roll of aluminum foil was trimmed by 5 square feet and eggs that used to be sold by the dozen are now being sold by the half-dozen. Not only has quantity been reduced but quality has suffered along with it. They just can't afford to stock the nicer items any longer, like the occasional Lu cookie hidden among the other so-called baked goods made of sealing wax and cardboard. It used to be that one could find some great bargains but not any more which makes me and many other veteran 99 Cent Store shoppers yearning for the good ol' days.

And the company knows this. They have to raise prices; it's the how that's been the problem. They fear that a complete price restructuring might be too much of a shock for their core customers; it's how to ease into it that poses the problem. Apparently, they've come up with a solution that will be unveiled at their highest volume store near Beverly Hills this coming Monday (1pm PDT).

So, is there some money to be made from this event? I think there might be. From the daily chart shown below, the company has been moving steadily upward rising 50% since putting in a ten year low on July 15th at $6. Just last week the founder and chairman purchased over $900,000 shares of company stock. Guess he must have some faith in the new price restructuring model.

More importantly, will this restructuring plan excite the public or turn them off? We won't know until we hear the details. For me, I'm keeping my fingers crossed that this will be the boost the company is looking for in order to increase their margins which they need to do if they have plans on expanding into the rest of the country. Hopefully, we'll have more than 99 reasons to shop at the 99 Cents stores along with another good reason to buy the stock. The question that really interests me is will they change the company's name and if so, what are they going to call it? The Not-Only 99 Cents Stores?

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