Discount retail chain shares Chapter 11 bankruptcy news
While it's already liquidating stores the company has sold its name and over half of its locations nationwide.
Nobody likes to see a store go out of business even if they don't shop at that particular retailer. Retail closures can have a ripple effect, especially when a store is a destination.
If a key retailer closes, then the nearby businesses suffer. Maybe you go to Five Below or Ulta Beauty because you like shopping at those chains, but when you're done you get a snack at a locally-owned business, or you make a haircut or manicure appointment because you know you will be in the area.
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One closed retailer can hurt an entire shopping plaza and in challenging economic times where labor, rent, and borrowing money have become more expensive, it does not take much to tip many businesses into failure.
That's why it's very bad news when destination chains like Christmas Tree Shops, Tuesday Morning, and Bed Bath and Beyond fail. People aren't just losing a place to shop, they're losing an anchor business that drives people to a shopping plaza.
It's not easy to fill those spots with another business that brings in foot traffic. That makes it a relief when a growing chain picks up leases once held by a failed company.
In this case, Dollar Tree will step in and take over the leases for a significant number of 99 Cents Only locations. Image source: TheStreet
Communities will still have a discount retailer
When 99 Cents Only shared that it would be closing and liquidating all of its nearly 400 locations in an April 4 web posting, it was shocking news to many of its longtime customers. The retailer was more than a traditional dollar store as it sold items like fresh produce that are not generally associated with that type of discount store.
The chain began liquidating nearly immediately although it was always possible that a buyer could step in to purchase the brand.
"The company has entered into an agreement with Hilco Global to, among other things, liquidate all merchandise owned by the company and dispose of certain fixtures, furnishings, and equipment at the company's stores," according to the posting. "Sales under this agreement are expected to begin April 5, 2024, and will be carried out at all 371 of the company's store locations."
It appears that many of the company's former locations will remain as discount retailers, albeit none of the current deals will keep the 99 Cents Only brand alive. Ollie's Bargain Outlet (OLLI) reached a deal on May 24 to acquire leases for 11 99 Cents Only Stores in Texas while about half the chain's leases have been purchased in bankruptcy by Dollar Tree.
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Dollar Tree takes over 170 99 Cents Only stores
While Dollar Tree (DLTR) may not be as beloved as 99 Cents Only, its move means that the chain's customers in many markets will still have a discount shopping option.
"Dollar Tree has acquired designation rights for 170 leases of 99 Cents Only Stores across Arizona, California, Nevada, and Texas. The deal was completed via two transactions in May that were approved by the United States Bankruptcy Court for the District of Delaware. As part of the transactions, Dollar Tree also acquired the North American Intellectual Property of 99 Cents Only Stores and select on-site furniture, fixtures, and equipment.
The new owner of the 99 Cents Only name does not appear to be keeping it, although it has not ruled that out.
"As we continue to execute on our accelerated growth strategy for the Dollar Tree brand, this was an attractive opportunity to secure leases in priority markets where we see strong profitable growth potential. The portfolio complements our existing footprint and will provide us access to high-quality real estate assets in premium retail centers, enabling us to rapidly grow the Dollar Tree brand across the western United States, reaching even more customers and communities.," Dollar Tree COO Michael Creedon said.
Dollar Tree expects to reopen its newly acquired locations by the fall.
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