Discount retailer 99 Cents Only Stores reported a 43 percent drop in its fiscal fourth-quarter profit because of lackluster sales in Texas and a large payment for its workers' compensation reserves.
The City of Commerce-based retailer, which operates 224 stores in California, Texas, Arizona and Nevada, reported net income of $8.7 million (12 cents per diluted share) for the fourth-quarter of 2004, compared with $15.3 million (21 cents) for the like period a year earlier. Revenue rose 7.5 percent to $265.9 million, from $247.5 million in the restated fourth quarter of the prior year .
The company had delayed reporting its fourth quarter earnings to correct the way it accounted for operating lease rent holidays. It still plans to restate financial results for 2002, 2003 and the first three quarters of 2004.
The company said adjustments to its financial statements will boost previously reported net income for the nine months ended Sept. 30, 2004 by $2.6 million (4 cents per share).
Eric Schiffer, the company's chief executive, said fourth-quarter results were hurt by a $10.1 million payment to its workers' compensation reserve, which was caused by an actuarial adjustment. To keep down workers' compensation costs in California, the company recently switched its third-party claims administrator and hired a director of risk management.
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