99 Cents Only Stores Earnings Cheat Sheet: Profit Increases Again

The Cheat Sheet

99 Cents Only Stores ( NYSE:NDN ) reported its results for the fourth quarter. The Company’s main business is the sale of various consumer products through its retail stores at price points of mainly 99.99cent or less.

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99 Cents Only Stores Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for 99 Cents Only Stores rose to $17.9 million (25 cents/share) vs. $16.9 million (24 cents/share) in the same quarter a year earlier. A rise of 6.2% from the year earlier quarter.

Revenue: Rose 11.6% to $378.5 million YoY.

Actual vs. Wall St. Expectations: NDN fell short of the mean analyst estimate of 26 cents/share. Estimates ranged from 23 cents per share to 30 cents per share. Analysts were expecting revenue of $373.4 million.

Quoting Management: Eric Schiffer, CEO of 99¢ Only Stores, stated, “We are pleased with the continued progress of our long-term operational improvement programs. Continuous improvement in all areas of our cost structure has enabled us to achieve a pre-tax profit margin of 7.4% for the fourth quarter of fiscal 2011 versus 7.3% for the same quarter in the prior year, and 8.3% for the full fiscal year versus 6.9% for the prior year. Despite continued improvement in our pre-tax profit margin, our net income as a percentage of sales declined for the fourth quarter to 4.7% versus 5.0% last year. This percentage decline was primarily due to an increase in the effective tax rate from 31.9% of pre-tax income to 36.3% of pre-tax income, primarily due to one-time tax benefits in the fourth quarter of fiscal 2010.”

Key Stats:

The company has now seen net income rise in three-straight quarters. In the third quarter, net income rose 8.8% and in the second quarter, the figure rose 34.8%.

Gross margin shrunk 1.2 percentage points to 39.9%. The contraction appeared to be driven by rising costs as the figure rose 13.9% from the year earlier quarter while revenue rose 11.6%.

Revenue has risen the past four quarters. Revenue increased 1.7% to $365.4 million in third quarter. The figure rose 2.7% in second quarter from the year earlier and climbed 4.3% in first quarter from the year-ago quarter.

The company fell short of estimates last quarter after being in line with expecations the quarter before with net income of 38 cents per share.

Competitors to Watch: Dollar General Corp. ( NYSE:DG ), Family Dollar Stores, Inc. ( NYSE:FDO ), Dollar Tree, Inc. ( NASDAQ:DLTR ), Big Lots, Inc. ( NYSE:BIG ), Target Corporation ( NYSE:TGT ), Fred’s, Inc. ( NASDAQ:FRED ), Costco Wholesale Corp. ( NASDAQ:COST ), Wal-Mart Stores, Inc. ( NYSE:WMT ), Gordmans Stores, Inc. ( NASDAQ:GMAN ), and Amazing Savings, Inc (ODDJ).

Stock Performance: Shares of NDN are up 0.84% from the previous close.

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(Sources: YahooFinance, Xignite Financials)

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