When Eric Schiffer took over 99 Cents Only Stores in 2005 from his father-in-law and founder, David Gold, the discount chain was experiencing severe growing pains.
Before stepping down as chief executive of the City of Commerce company, Gold was criticized by analysts for running 99 Cents Only more like the mom-and-pop business it once was than the publicly traded company it had become.
As a result, Schiffer inherited an organization that was struggling to get its internal financial controls in compliance with Sarbanes-Oxley regulations, was facing costly inventory problems at its too-small L.A. distribution center and was straining under an unsuccessful expansion into Texas.
Since Schiffer's come on, 99 Cents Only has undergone quite a turnaround.
"Eric sponsored a lot of investments in systems and people, in the company's corporate infrastructure, that hadn't been a priority and that's been very critical to their success," said Joan Storms, an analyst with Wedbush Morgan Securities in Los Angeles. "Historically, the company had been very frugal, as dollar-store companies have to be, but frugal to the point where they had underinvested in future growth."
Among the changes: 99 Cents Only outfitted its warehouse with a multimillion-dollar automatic raking system that bar-codes and computerizes its merchandise. The company devised a plan to close all of its Texas stores, but in August opted to only close 15 out of 48 due to improvements.
Sales at 99 Cents Only have received a boost from the economic downturn. The company's net income for the fiscal quarter ended Sept. 30 increased to $9.5 million, compared with a net loss of $1.5 million for the same quarter the previous year.
But Schiffer isn't content with the company's most recent success. Looking for ideas to improve the chain, he often walks the aisles of 99 Cents Only's 271 stores and asks customers what products they would like to see on shelves and chats with employees about how operations could be improved.
"I'm in the stores every week," said Schiffer, who lives in West Los Angeles with his wife, Karen, and four children. "Half of our stores are in the greater Los Angeles area, so I can just get in the car and drive to them. On the weekends, when I'm out and about, I pop into stores."
Before he makes it to one of 99 Cents Only's locations, Schiffer begins his workday by checking e-mail, then making a to-do list.
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