Penny pinching
Dollar store downfall
Good morning, thrift theorists. This is your Stock Market Rundown for April 25th, 2024. Thanks for tuning in. Let’s get into it:
TODAY’S TOP STORY: DEEP-DISCOUNT DEMISE
In granddad’s day, the corner discount store was the “five and dime.” But it's been a long time since a dime bought anything. These days, even a dollar doesn’t get you too far.
Extreme-discount retailer 99 Cents Only has filed for bankruptcy and will close all 371 locations, and will liquidate their real estate portfolio to satisfy creditors.
What went wrong? For one thing, 99 Cents Only lacked the economies of scale of its competitors — Dollar General just opened its 20,000th store.
So it didn’t have the heft to deal with headwinds hitting retail. Inflation, minimum wage increases, and reduced government benefits are hammering margins in the extreme-discount category. (99 Cents Only isn’t the only chain in trouble: Family Dollar is closing 600 locations this year.)
Another problem? Theft. Management complained that “rising levels of shrink” were a big headache. Shoplifting is a constant threat in retail—don’t be surprised if you see more and more stores locking up everything from laundry detergent to shampoo, as a bulwark against the five-finger discount.
There’ll surely be some tears from employees at closing time as 99 Cents Only shuts off the fluorescent lights after 42 years in business. But for customers, well, there’s always Walmart.
SO WHAT ELSE IS GOING ON?
Before you trade on that hot stock tip you overheard on the elevator, remember: the SEC is watching. The US securities regulator is probing Wall Street firms’ compliance with insider-trading policies.
Snap-On may need a wrench to tighten up their numbers. The tool company missed estimates as their customer base of mechanics and repair technicians cut back on spending.
Dark clouds are hanging over the insurance industry, due to colossal losses from natural disasters in recent years. Turns out their underwriting predictions were a bit on the sunny side, and underestimated actual damages by billions. Never trust an optimistic actuary.
Elon Musk has gone from spaceman to secret agent. His rocket company, SpaceX, is working with a defense company to build classified spy satellites for the US government. Maybe they’ll be able to tweet from orbit.
That's today's scoop, friends; see you at our usual morning slot tomorrow for another round. Yours in capitalism, The Axe
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