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.
However, the majority of his days are spent talking.
“I spend a lot of time communicating on what the company is doing,” Schiffer said. “I’m a big believer in collaboration and making people work together.”
When Schiffer joined 99 Cents Only in 1991 from venture capital firm Oxford Partners, he had little retail experience when he married founder Gold’s daughter. (Gold remains chairman of the company.)
“I learned a lot from all of them,” said Schiffer of the Gold family. “They had a lot of patience with me, and I learned about the business.”
It’s seen as a positive that he brought an outsider’s vantage point to the $900 million company that had once been a modest family business.
“He brings a longer-term perspective on the future success of the company as well as a willingness to adopt more state-of-the-art retail processes into the company’s culture,” Storms said. “It’s been a family-run company and had a culture that was ‘this is the way we do it, and that’s the only way to do it.’ ”
SMALL PUBLIC COMPANY
ERIC SCHIFFER, 48
99 Cents Only stores
YEARS ON THE JOB: 4
QUOTE: “I’m a big believer in collaboration and making people work together.”
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