99 Cents Only Stores shareholders recommend turnaround plan to board of directors

By Lisa Kerner

Charlotte, N.C., Jan. 4 - Investors led by Akre Capital Management, LLC recommended that the board of directors of 99 Cents Only Stores pursue a "conventional turnaround plan" rather than continue to grow sales volume over a stressed infrastructure and invest in stores and markets with unknown economics.

In a Jan. 3 letter to the board, the 13.4% stakeholders said a conventional turnaround plan "prescribes halting all growth, exiting unprofitable products and divisions, and focusing full attention on restoring profitability to the remaining business."

Akre Capital's letter was included in a schedule 13D filing with the Securities and Exchange Commission.

The reporting persons said after almost three years of tenure, 99 Cents Only Stores' management has a poor record when it comes to "restoring the company to a healthy level of profitability" and "making prudent capital investment decisions."

Specifically, Akre cited the decline in operating profits, lack of a plan to increase profit and the company's decision to accelerate store growth and retain excess cash as misguided actions.

Akre is requesting that:

• Management and the board formally re-evaluate their key decisions, including the decision to remain in Texas;

• 99 Cents Only Stores provide the investment community with adequate explanation and financial disclosure to legitimize its key strategic and capital investment decisions;

• The company provide the investment community with its turnaround plan with specific operational and financial objectives, clear benchmarks and a defined timetable; and

• Management be held accountable to the turnaround plan and clarify alternatives to creating value should the plan fail.

99 Cents Only Stores is a discount retailer based in City of Commerce, Calif.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.