99 Cents Only Stores LLC announced its financial results for the first quarter of fiscal 2016 ended May 1, 2015.

For the first quarter of fiscal 2016, the Company’s net sales increased $28.3 million, to $506.2 million, compared to $477.9 million in the first quarter of fiscal 2015. Same-store sales decreased 1.7%, from lower customer traffic partially offset by higher average ticket. Same store sales performance experienced continued strength in seasonal and general merchandise categories, offset by challenges in consumables.

Gross margin, as a percentage of net sales, was 30.9% in the first quarter of fiscal 2016, a decline of 200 basis points from the first quarter of fiscal 2015.  Gross margin was negatively impacted by greater levels of promotional activities, higher inventory shrinkage and scrap, and additional distribution expenses.  Selling, general and administrative expenses as a percentage of net sales was 29.7% in the first quarter of fiscal 2016, an increase of 340 basis points from the first quarter of fiscal 2015. Selling, general and administrative expenses as a percentage of net sales increase was primarily driven by store level payroll-related and occupancy expenses, depreciation and amortization and advertising costs.  Selling, general and administrative expenses as a percentage of net sales was negatively impacted by the recent opening of 40 net new stores since the same period of last year and an increase in minimum wage in California.

Net income was $1.2 million in the first quarter of fiscal 2016 compared to net income of $9.6 million for the first quarter of fiscal 2015.  Net income as a percentage of net sales was 0.2% for the first quarter of fiscal 2016, compared to net income of 2.0% for the first quarter of fiscal 2015.  Adjusted EBITDA was $25.0 million in the first quarter of fiscal 2016, compared to $45.7 million in the first quarter of fiscal 2015.  Adjusted EBITDA margin was 4.9% compared to 9.6% over the same period.

Commenting on the results, Andrew Giancamilli, Interim President and CEO stated, “While we are disappointed with the financial results of this past quarter, we remain confident that the core business strategy of 99 CentsOnly Stores remains strong.  We have clearly identified the challenges underpinning our first quarter results and are taking specific actions that we expect to drive near-term performance improvements.  Over the past 18 months, we have undertaken some aggressive growth initiatives – including expanding our store network, enhancing our overall product offering, upgrading back office functions of the business by investing in technology and human capital, and the opening of new distribution centers.  Now, the Company is focused on operational execution in order to capitalize on these initiatives and the continued efforts of our dedicated employees and senior management team to expand the potential of our unique brand.”

Store Openings

During the first quarter of fiscal 2016, the Company opened three net new stores.  As of the end of the first quarter of fiscal 2016, the Company operated 386 stores, an increase of 11.6% in store count over the same period last year.  Total net selling square footage was 6.2 million as of the end of first quarter of fiscal 2016, an increase of 9.7% over the same period last year.