99 Cents Only Stores Reports EPS In-Line And Misses Revenue Estimates (NDN)

99 Cents Only Stores today reported Q3 earnings of $0.38/share for December, in-line with Street consensus estimates of $0.38/share. Revenues for the chain rose 1.5% year-over-year to $354.1M versus the Street's $367.9M consensus. 99¢ Only Stores® NDN announces its financial results for the third quarter ended December 25, 2010. Highlights for the third quarter of fiscal 2011 versus the third quarter of fiscal 2010: Retail sales for the Company's consolidated operations increased by 1.5% to $354.1 million and same-store sales decreased 0.7% while the same-store transaction count increased by 0.7% Consolidated gross margin decreased by 100 basis points to 42.1% of sales Shrinkage increased by 40 basis points to 2.3% Product cost increased by 20 basis points to 55.1% Other items in cost of sales increased by 30 basis points to 0.4% Consolidated operating expenses decreased by 170 basis points to 28.7% of sales Retail operating costs decreased 50 basis points to 21.4% Distribution and transportation costs decreased 20 basis points to 4.5% Corporate G&A costs decreased 30 basis points to 2.9% Other operating expenses decreased 70 basis points to negative 0.2% Consolidated net income increased by $2.1 million to $26.6 million, or $0.38 per diluted share, versus $24.5 million in the prior year, or $0.35 per diluted share Eric Schiffer, CEO of 99¢ Only Stores®, stated, “We are pleased with our earnings for the third quarter of fiscal 2011. We have far exceeded all of the goals in our four-year Profit Improvement Plan announced in February 2008. We achieved earnings per share of $0.38 for the quarter, a 9% increase in EPS despite slightly negative same-store sales in the quarter. Our ability to manage our costs has enabled us to achieve Income Before Taxes of 11.6% as a percentage of sales for the quarter versus 10.8% for the same quarter last year. We currently believe that we will achieve Income Before Taxes of at least 8.2% as a percentage of sales for fiscal 2011. “We plan to open a total of four stores during our fourth quarter which will result in a total of 9 net new stores and a store growth rate of approximately 3% for fiscal 2011. For fiscal 2012, we plan to open 16 net new stores which equates to a store growth rate of approximately 6%. The vast majority of the planned new stores in fiscal 2012 will be in California. “Overall, we are excited about the opportunities to continue improving our earnings through the profit improvement initiatives we have implemented and to continue strengthening our systems, which should position 99¢ Only Stores to accelerate its store expansion rate above 6% in fiscal 2013. We are confident in the ability of our management team, which has successfully implemented a range of buying and supply chain enhancements over the past two years, including multiple strategic changes in our purchasing, pricing, distribution, and merchandising functions. We look forward to further discussing our results on today's earnings conference call.”