NEW YORK, July 8, 2004 – LAWFUEL – Notice is hereby given that a securities class action lawsuit was filed in the United States District Court for the Central District of California on behalf of purchasers of the securities of 99 Cents Only Stores (“99 Cents” or the “Company”) (NYSE:NDN), between March 11, 2004 and June 10, 2004, inclusive (the “Class Period”).
If you purchased 99 Cents securities during the Class Period, you may, no later than August 16, 2004, move the court to serve as a lead plaintiff, provided you meet certain legal requirements. To participate in this class action as a Lead Plaintiff, you will be required to sign the Certification, as provided on our website at www.nyclasslaw.com/join.html. You may return it to us via facsimile to (212) 213-9405.
The Complaint alleges that defendant violated sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5, by issuing a series of material misrepresentations to the market, thereby artificially inflating the price of 99 Cents securities. Throughout the Class Period, 99 Cents reported increased sales and overall growth and profitability in publicly disseminated press releases and SEC filings, and forecasted positive earnings and revenue targets. Morever, defendants represented that the Company was increasing its “footprint” in the United States by opening as many as 25 new stores. However this purported success was the result of defendants’ fraudulent scheme to artificially inflate the price of 99 Cents securities during the Class Period.
Specifically, defendants failed to disclose that: 1) expenses were improperly accounted for with respect to advertising and product distribution; 2) profit margins were negatively impacted by the rising cost of supplies, litigation, and workers compensation; 3) inventory was materially overstated by at least $10 million worth of perishable food products; 4) the Company’s Los Angeles distribution center was in such a state of disrepair that it was unable to efficiently deliver and restock local 99 Cents store shelves, which had a negative impact on sales; 5) the Company lacked adequate internal controls; and 6) defendants’ earning projections lacked any reasonable basis in fact.
On June 11, 2004, when markets were closed in observance of a national holiday, 99 Cents issued a press release announcing that the Company was significantly revising downwards its guidance for the second quarter 2004. The Company stated that it was lowering its retail sales estimates to $235 – $238 million from $242 – $247 million, and the Company’s earnings per share guidance to $0.04 – $0.07 per share from $0.19 – $0.20 as a result of a cut back in new store openings, and lower than expected comparable sales and gross margins resulting from rising dairy, fuel, litigation, and workers compensation costs. The Company also stated in the release that its Los Angeles distribution center was “operating at over-capacity which negatively impacted labor productivity, store deliveries, store level in-stock positions, and consequently comp sales.” In addition, the Company conceded that it lacked adequate internal controls and that it had to implement further measures to “ensure that proper management and systems infrastructure is in place to re-establish desirable earnings growth.” The future of the Company was so uncertain that defendants refused to provide any guidance for the remainder of the year. In reaction to this news, the price of 99 Cents stock dropped $6.38 per share, or 31.1%, from its closing price on June 10, 2004 to a closing price of $14.10 on the next trading day, June 14, 2004
Plaintiff seeks to recover damages on behalf of all purchasers or acquirers of 99 Cents securities during the Class Period. Plaintiff is represented in this class action by the law firm of Bull & Lifshitz, LLP. Bull & Lifshitz, LLP has extensive experience in litigating investor class actions. For more information regarding Bull & Lifshitz, LLP, please view our website at www.nyclasslaw.com
For an information package (www.nyclasslaw.com/infopackage.html) or if you wish to discuss this action, or have any questions concerning this notice of your rights or interests with respect to this matter, please contact Joshua M. Lifshitz, Esq. or Christine A. Giovannelli, Esq., Bull & Lifshitz, LLP via telephone at (212) 213-6222, via fax at (212) 213-9405 or by email at [email protected]