Akre demands specific answers from board of 99 Cents Only Stores

By Lisa Kerner

Charlotte, N.C., Feb. 4 - 99 Cents Only Stores, Inc. investor Akre Capital Management, LLC reiterated that the company's board should address the topics of new store growth, the Texas market and excess cash.

Akre's suggestions were made in a Feb. 1 letter to chief executive officer Eric Schiffer. The letter was included in a schedule 13D filing with the Securities and Exchange Commission.

According to Akre:

• Opening new stores over the last five years has destroyed tremendous value;

• Texas is currently a money-losing market and is likely years away from profitability; and

• The company continues to hold excess cash earning returns in the low single digits instead of putting it to use reducing the share count.

Akre said the board's current positions on these issues "appear poorly considered" and the board fails to explain its reasoning "in quantifiable terms."

"This business is troubled, and there is no room for pet projects, wishful thinking, or fuzzy math," Akre's letter stated

Specifically, Akre is asking the board to explain its positions to shareholders "using concrete data and sound financial logic."

"Until you provide credible answers on these matters, your capabilities and the board's oversight will be questioned," Akre said in his letter.

On Jan. 3, Akre recommended that 99 Cents' board 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.

Akre beneficially owns 9,408,689 shares, or 3.4%, of 99 Cents' outstanding stock, according to the SEC filing.

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

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