A court order is paving the way for Ollie’s Bargain Outlet Holdings Inc. to purchase 11 stores in Texas from discount retailer 99 Cents Only Stores, which filed for bankruptcy in April.
A Delaware bankruptcy judge this week approved Ollie’s as a stalking-horse bidder for the properties as part of a court-supervised sale, meaning the company is the primary bidder in an auction scheduled for next week, said Ollie’s spokesperson Tom Kuypers.
“There are a number of steps that we still have to go through here,” Kuypers told biznewsPA. Even if there are no higher bids, for example, the court would still have to approve the sale, he said.
What’s the bid: Ollie’s is offering $14.6 million for the stores, eight of which are leased locations and three of which are owned, according to court filings.
Seven are in the Houston area, two in the Dallas area, one in McAllen and one in San Antonio.
Ollie’s was not expecting the stores to hit the market, Kuypers said. But the opportunity meshes with the company’s expansion plans in Texas, where Ollie’s has 38 stores and a distribution center.
The deal is not the first of its kind for Ollie’s. In 2018, the company paid $42 million for a dozen former Toys R Us stores.
Why is this happening: 99 Cents and its California-based parent, Number Holdings Inc., announced last month they were winding down operations and filing for bankruptcy.
In a statement at the time, then-interim CEO Mike Simoncic cited “significant and lasting challenges in the retail environment.”
They included the Covid-19 pandemic, shifting consumer demand, inflationary pressures and “rising levels of shrink,” which is retail-speak for shoplifting, product damage and other forms of lost inventory.
At the time of its bankruptcy filing, the company operated 371 stores in Arizona, California, Nevada and Texas.
The background: Ollie’s operates about 515 stores around the U.S.
The company had sales of $2.1 billion for the fiscal year ending Feb. 3, up from $1.8 billion for the previous year.
Its profit last fiscal year was $181.4 million, up from $102.8 million.
The company expects slower sales growth this year, with its forecast calling for revenue between $2.248 billion and $2.273 billion.
The company expects to open 48 new stores this year.
