After yet another stock implosion at 99 Cents Only Stores Inc. last week, analysts and shareholders were placing the blame on company founder and Chairman David Gold, saying he has steadfastly refused to hire enough professional managers to steer the fast-growing company through a period of major change.

Several large Los Angeles-based money managers were livid last week that the company had refused to provide an explanation for the resignation of James Ritter, a former chief financial officer at Bristol Farms who had joined 99 Cents Only Stores in December.

Ritter was expected to get the company's internal financial controls in compliance with 2002 Sarbanes-Oxley regulations. His resignation came a day after the discount retailer announced it would miss the deadline to meet the requirements of Section 404 of the act certification of internal financial controls.

Analysts speculate that the problems were too big for Ritter to risk signing his name on certification documents that must be filed with the Securities and Exchange Commission.

The company also said it would delay filing its upcoming 10-K report and would have to restate past earnings because it failed to account for the cost of some leases and depreciation issues.

"It's disappointing but not surprising," said Joan Storms, an analyst at Wedbush Morgan Securities, who said executives now face penalties and the threat of jail for failing to comply with Sarbanes-Oxley. "These days, we don't really know what happens if you're not in compliance."

99 Cents Only also announced last week that the New York Stock Exchange had determined that one of its directors, Ben Schwartz, was not independent. Schwartz's son, an independent broker to discount retailers, was paid $576,000 in commissions and fees by 99 Cents Only Stores in 2003, $439,000 in 2002 and $368,000 in 2001, according to the company's latest proxy.

That resignation created an imbalance on the board, forcing Howard Gold, the founder's eldest son, to temporarily step down until a new independent director can be found.

Continuing troubles

The cascade of events marked the second blow-up in the past year for 99 Cents Only, which missed earnings forecasts in June because of inventory problems at a Los Angeles warehouse. The company's stock has cratered to $13.24 a share last week, after peaking above $36 in September 2003.

Several Los Angeles-based money managers, including Kayne Anderson Rudnick Investment Management LLC, which owns 8 percent of outstanding shares, and PrimeCap Management Co., the Pasadena-based mutual fund manager, have taken a bath on the stock. FMR Corp., parent of Fidelity Investments, dumped most of its shares last year, but after the stock had tanked in June.

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