While I was up in Stockton chasing foreclosures, CNBC Los Angeles Producer Jeff Daniels covered a dark day in discounting: 99 Cents Only can no longer sell everything for 99 cents--in fact, as you'll see, they can no longer afford to sell motor oil, period.
Here's Jeff's guest blog post from the company's news conference, from the CEO, who is also slated to appear on "Street Signs" Tuesday:
99 Cents Only Stores CEO Eric Schiffer said they plan to increase the maximum price for merchandise by almost one full penny to 99.99 cents from 99 cents. The new pricing strategy will go into effect later this month at all of the discounter retailer's stores.
Citing higher commodity and fuel costs, Schiffer said the change will help offset some of the increased costs of doing business, including labor costs. The new price is almost a whole penny but still under $1. He said the company had no plans to change its "99 Cents Only" name following the price hike.
"Just as Motel 6 was eventually forced to raise its price above $6, after 26 years, we are forced to raise our price by just about one cent," Schiffer told reporters at a press conference inside the company's top-volume store, located a few blocks from Beverly Hills.
Schiffer said this is the first time the chain has implemented a pricing change since it was founded in 1982. The company has 277 stores in California, Texas, Arizona and Nevada.
"If inflation continues as it has and commodity prices keep going up, we may be forced to go higher," Schiffer told CNBC. "Right now we hopefully will see some stabilization on fuel prices. Gasoline has been down over the last couple of days. But we do believe this gives us plenty of breathing room. But if we were forced to go higher in the future we could could it."
Any item now marked at 99 cents will become 99.99 cents apiece after the price change. Roughly 60 percent of the items sold at the store are 99 cents apiece. (Note from Jane: the other 40 percent sell for less.)
When asked, Schiffer said he didn't know the impact on the company's Earnings Per Share but believes the pricing strategy change will be positive. Finally, Schiffer said the chain no longer carries motor oil because the price is too high for them to sell at 99 cents.
Below is a price comparison of 99 Cents Only Store items (before the price change). Figures furnished by 99 Cents Only Store.
- Butterfinger, Baby Ruth or Snickers candy bars - 39 cents apiece at 99 Cents Only vs. 75 cents in other supermarkets
- Hawaiian Punch (1 gallon size) - 99 cents vs. $2.99 elsewhere
- Head of lettuce - 59 cents vs. 99 cents elsewhere
- Breyers brand ice cream (quart size) -99 cents vs. $3.29 elsewhere
- Eggs (dozen) - 99 cents vs. $1.49 elsewhere
- Milk (quart) - 99 cents vs. $1.50 elsewhere
- Westsoy Soymilk (32 oz size) - 99 cents vs. $2.80 and up elsewhere
- BBQ sauce or ketchup (name brands) - 99 cents vs. $1.29 elsewhere
- Sparkling apple cranberry cider (25 fl oz.) - 99 cents vs. $2.50 elsewhere
- Lean Cuisine Frozen Dinner - 99 cents vs. $3.99 elsewhere
- Bertolli Pasta Dinner (frozen) - 99 cents vs. $5.99 elsewhere
- Tooth paste (Colgate, Ultrabrite, Pepsodent and Aquafresh brands) all 99 cents each vs. $1.99 elsewhere
- Bar of soap (2-package of Dial or Irish Spring brands) - 99 cents vs. $2.19 elsewhere
- AA batteries (4-pack of Everready, Panasonic or Sony brands) - 99 cents vs. $2.79 elsewhere
- Linden Estates Chardonnay Wine - 99 cents vs. $7 and up elsewhere
- Reading glasses - 99 cents vs. $15 elsewhere
- Frosted Flakes/Corn Flakes cereal box - 99 cents vs. $3 and up elsewhere
- Loaf of bread (white or wheat) - 99 cents vs. $2.20 elsewhere
- Slow August sales signal more weakness in retail
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