When a retail chain goes into liquidation, it creates problems locally. Many US markets have more retail space available than they need.
Malls have lost anchor stores with nothing to replace them. And mall tenants have been hurt by the loss of national brands like Tuesday Morning and Christmas Tree Shops, which drive traffic to locally owned businesses.
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Think about it this way: most mall tenants are not a draw. Few people, for example, leave home, park, and walk through a shopping center to buy an Aunt Annie's pretzel or a Mrs. Fields or Great American Cookie cookie. But if they are there, those are purchases they could make.
That's why mall owners are fighting over stores like Marshalls, Ross Dress for Less and other treasure-hunting chains that drive repeat business. When a larger shopping center or mall loses a store like that, it can drag down other businesses and cause other closures.
99 Cents Only, was one of those stores. It wasn't exactly a dollar store, but rather a value chain, but its abrupt Chapter 7 bankruptcy and ongoing liquidation sales will leave a void in many shopping centers.
Image source: The street
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99 Cents Only saw its stores as a shopping destination.
“We are an exciting shopping destination, often the first stop, for price-sensitive consumers, and a fun treasure-hunting shopping experience for other value-conscious consumers,” the company said on its website.
“The stores date back to the 1960s, when company founder Dave Gold inherited a small liquor store in downtown Los Angeles and decided to test selling bottles of wine at a fixed price of 99 cents.”
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The popular concept had a loyal following and was driven into bankruptcy and liquidation by the financial problems of the Covid pandemic. At the time of filing for Chapter 7 bankruptcy, the chain had more than 370 stores in four states and two distribution centers in California and Texas.
Ollie's Bargain Outlet (OLLI) , a discount chain that also has a devoted following, won a bankruptcy option for 11 99 Cents Only locations in Texas. That's good news for those communities because Ollie's Army, the chain's loyal fan base, flocks to new store openings and helps spread the word about new locations.
Ollie's has big expansion plans
Ollie's operates 560 stores in 30 states. The company's chief executive, John Swygert, has said the retailer could more than double that figure. He gained all 11 Texas locations as part of 99 Cents Only's bankruptcy filing.
“The locations were acquired through the auction process conducted in connection with Only Stores' bankruptcy proceedings,” Ollie's said in a news release. “The bankruptcy court approved the sale of the 11 stores to the company… with the corresponding court orders to follow.
“Of the 11 store locations, three of them are owned properties and eight are leased properties with attractive rents and leasing structures, located in key markets…The acquisition is expected to close in early June.”
Swygert called Texas a market with great growth potential.
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“We are focused on getting these stores up and running as quickly as possible, given the occupancy costs we will begin to incur upon closing,” he added.
“We maintain our goal of 50 new stores, minus two planned closures, for fiscal 2024 and are in the early stages of evaluating the impact on our cadence of new store openings this year.”
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The fate of the remaining 99 Cents Only stores, which are currently in the process of liquidation, remains uncertain. Additionally, the company's name and intellectual property will likely be sold in a future auction and the buyer could attempt to reopen some locations.
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