Go Tall Executive Summary

99 Cents Only Stores’ fourth quarter comps rose 2.8%, driven by growth in both customer traffic and average ticket. Management noted the growth was attributable to a wider selection of seasonal and holiday merchandise and to completion of the “Go Taller” initiative (see below for details). Further, contributions from the 40 net new stores opened during the year were accretive. As previously announced, the Company changed its fiscal year from the Saturday closest to the end of March to the Friday closest to the end of January in order to be in line with its retail industry peers, resulting in 14 weeks during the restated prior year period, which limited top-line growth to just 1.8%. On a comp 13-week basis, fiscal 2015 fourth quarter sales rose 8.1%. In addition to offering a greater variety of

Accounts payable nearly doubled and the Company has been experiencing rising inventory levels as a dockworkers’ labor dispute prevented a considerable amount of inventory that was already on the Company’s books from being delivered to the stores. In-store inventory has also been increasing as the taller shelving provides additional space. In order to bring AP back down to more usual levels, the Company would have to spend approximately $70.0 million, which casts some doubt on management’s expectation that the Company will carry a smaller balance on its revolver by the end of fiscal 2016. Even so, the Company’s cash position may begin to strengthen if its “Go Taller” initiative, the modernizing of its inventory management and its ongoing efforts to optimize its distribution and transportation networks actually give rise to improvements in operating