Highlights for Fourth Quarter Fiscal 2009 versus Fourth Quarter Fiscal 2008:

Retail sales for the Company's consolidated operations (including Texas) increased by 13.6% to $319.0 million and same-store sales increased 6.2%

Consolidated gross margin increased by 210 basis points to 39.3% of sales

Product cost decreased by 70 basis points to 56.8% overall

Shrinkage and scrap decreased 150 basis points to 3.4% overall and 3.0% in non-Texas operations

Consolidated operating expenses decreased by 360 basis points to 33.9% of sales

Retail operating costs decreased 240 basis points to 23.7% overall and 23.1% in non-Texas operations

Distribution and transportation costs decreased 80 basis points to 5.3% overall and 90 basis points to 5.0% in non-Texas operations

Corporate G&A costs decreased 70 basis points to 4.2%

Consolidated Net Income (including Texas) increased by $11.4 million to $7.0 million, or $0.10 per diluted share versus a net loss of $4.4 million, or ($0.06) per diluted share

Eric Schiffer, CEO of 99¢ Only Stores®, stated, "We are pleased with our fourth quarter performance. We improved both our top and bottom line results through the continued success of our long-term profit improvement plan initiatives. In the fourth quarter, our consolidated results improved substantially over the prior fiscal year with our non-Texas operations exceeding our planned profit improvement goals announced in February 2008 across the board. We experienced meaningful increases in sales concurrent with improvements in operating efficiencies including a year-over-year reduction in retail operating costs of 240 basis points, well ahead of our original fiscal 2009 goal. It is gratifying to report that we successfully implemented labor saving changes in our stores without compromising our high housekeeping and visual appeal standards. We also achieved a 150 basis points decline in overall shrinkage and scrap despite an increase in sales of perishable grocery items which are more susceptible to spoilage. In logistics, the benefits from our racking, new operational systems, transportation efficiencies and labor management have reduced distribution and transportation costs to 5.3% of sales, also well ahead of our original fiscal 2009 goal. In addition, in keeping with the current economic environment, we reduced G&A expenses to 4.2% of sales. We are pleased that our profit improvement programs are bearing fruit and we believe we are well on track to achieve our short term and long term profit improvement plan."

Mr. Schiffer continued, "We continue to experience solid traffic trends and remain well-positioned to capitalize on the current economic situation by offering consumers remarkable savings on everyday household items. Although we are unsure how much of a positive impact the challenging economy will have on our sales, we do believe 99¢ Only Stores, similar to other consumable-oriented, value-focused retailers such as Wal-Mart, is well positioned to benefit from the recessionary economy."

Mr. Schiffer concluded, "Our decision in February 2009 to suspend our exit from the Texas market for up to six months does not diminish our commitment to evaluate our use of capital and our long-term focus on improving our return on investment across all our operations. In Texas, with the closing of 14 underperforming stores, many of the remaining stores have picked up significant sales. Although we only have several weeks of data following Easter to evaluate, we believe the current group of 34 Texas stores is achieving a run-rate today exceeding $3.0 million in annual sales per store, compared to approximately $2.6 million for the 48 stores operating last summer. We will continue to closely monitor both sales and other financial results in Texas to enable us to make the right strategic decisions regarding this market. We currently plan to update our shareholders during our earnings call in early August when we discuss our earnings for the first quarter of fiscal 2010."

Consolidated Results (including Non-Texas and Texas operations)

Net consolidated sales for the fourth quarter of fiscal 2009 were $329.2 million, a 13.3% increase compared to net sales of $290.5 million for the fourth quarter of fiscal 2008. Same-store sales for the fourth quarter of fiscal 2009 increased 6.2% versus the fourth quarter of fiscal 2008. The fourth quarter of fiscal 2009 contained 91 selling days compared to 89 selling days in the fourth quarter of fiscal 2008 due to the Company's change to a retail calendar at the beginning of fiscal 2009. Beginning in fiscal 2010, comparisons will be for the same number of weeks per period with each quarter starting on a Sunday and ending on a Saturday.

Consolidated gross profit for the fiscal 2009 fourth quarter was $129.4 million, compared to $108.1 million in the fourth quarter of the prior fiscal year. The Company's consolidated gross profit margin was 39.3% in the fiscal 2009 fourth quarter versus 37.2% in the fourth quarter of the prior fiscal year.

Selling, general, and administrative expenses were $111.6 million, or 33.9% of consolidated sales, in the fiscal 2009 fourth quarter versus $108.9 million, or 37.5% of sales, in the fourth quarter of the prior year.

Consolidated operating income for the fourth quarter of fiscal 2009 was $9.8 million, compared to an operating loss of $9.4 million in the fourth quarter of fiscal 2008. Operating income as a percentage of sales increased 620 basis points to 3.0% in the fourth quarter of fiscal 2009 versus negative 3.2% in the comparable period last year.

Net income for the fourth quarter of fiscal 2009 increased to $7.0 million, or $0.10 per diluted share, compared to a net loss of $4.4 million, or ($0.06) per diluted share, for the fourth quarter of fiscal 2008.

For the full fiscal year ended March 28, 2009, net sales were $1,302.9 million, compared to net sales of $1,199.4 million for fiscal 2008. Retail sales for fiscal 2009 were $1,262.1 million compared to $1,158.9 million for fiscal 2008. Same-store sales increased 3.7% in fiscal 2009. Net income for fiscal 2009 was $8.5 million, or $0.12 per diluted share, compared to net income of $2.9 million, or $0.04 per diluted share, in fiscal 2008. The fiscal 2009 net income results include a Texas leasehold asset impairment charge of $10.1 million, severance payments of $1.4 million and lease termination costs of $1.3 million relating to the Company's previously announced plan to exit its Texas operations and store closures in Texas as further explained below.

During fiscal 2009, the Company opened 19 stores, 13 in California, three in Arizona, two in Texas, and one in Nevada. The Company closed five stores in Texas during fiscal 2009 including one store due to a hurricane which was re-opened in May 2009. The Company also closed 10 underperforming stores in Texas between March 29 and April 13, 2009.

During the first quarter of fiscal 2010, the Company opened one California store in April, reopened the aforementioned Texas store and will open one California store on June 25. The Company also closed 10 Texas stores in the first quarter of fiscal 2010. The Company currently operates 271 stores, with 200 stores in California, 34 in Texas, 25 in Arizona, and 12 in Nevada. During fiscal 2010, the Company plans to open a total of approximately 15 stores, with the majority of these stores expected to be opened in California in the second half of fiscal 2010.

Management Analysis of Texas and Non-Texas Operations

In today's release, in addition to its consolidated results, the Company provides a report and analysis of both its non-Texas operations (which comprise all of its operations in California, Arizona, and Nevada and generate approximately 90% of its retail sales revenue) and its Texas operations as further explained herein.

The Company will report tomorrow, June 10, 2009, the results of its Texas operations on a consolidated basis with its non-Texas operations in accordance with GAAP in its Annual Report on Form 10-K for fiscal 2009. The Company is also providing a management analysis of its quarterly operating results for non-Texas and Texas operations and reconciliation to its GAAP consolidated results in Table 1 and Table 2 at the end of this release. In light of the Company's previously announced plan to exit the Texas market and the subsequent suspension of this plan for up to six months, the Company believes it is more meaningful for investors to review an analysis of its results of operations separately for non-Texas and Texas operations in addition to its consolidated results. The analysis for Texas operations provided in Table 1 for the fourth quarter of both fiscal 2009 and fiscal 2008, and also in Table 2 for fiscal year 2009, includes only revenues and expenses incurred directly in our Texas operations, with no allocation of costs incurred in the California distribution centers or corporate offices, which are not material to non-Texas results but may be material to Texas results. During the fourth quarter of fiscal 2009, Texas stores were operated under unusual conditions, with 14 stores planned for closure or closed, and thus these quarterly results are not indicative of the cost structure that would be incurred for an ongoing operation of the 34 stores that remain open. When stores (and potentially other facilities) in Texas are sold or cease operations, including the Texas stores closed through mid-April 2009, the operating results for those locations are and will be reported utilizing the accounting treatment for store closings and fixed asset sales as appropriate. One-time Texas market costs including store closing costs are reported in the Table 1 and 2 analyses in Other under SG&A Expenses. These non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the Company's consolidated financial statements prepared in accordance with GAAP.

Fourth Quarter Analysis of Non-Texas Operations

Highlights for Fourth Quarter Fiscal 2009 versus Fourth Quarter Fiscal 2008:

Retail sales in the Company's non-Texas retail operations increased by 14.3% to $289.6 million and same-store sales increased 6.0%

Non-Texas gross margin increased by 210 basis points to 39.9% of sales

Product cost decreased by 70 basis points to 56.7%

Shrinkage and scrap decreased 150 basis points to 3.0%

Non-Texas operating expenses decreased by 420 basis points to 33.0% of sales

Retail operating costs decreased 240 basis points

Distribution and transportation costs decreased 90 basis points

Corporate G&A costs decreased 80 basis points

Non-Texas operating income increased to $14.1 million, or 4.7% of sales, from an operating loss of $4.6 million, an increase in operating income of $18.7 million.

Gross profit for the Company's non-Texas operations was $119.1 million in the fourth quarter of fiscal 2009, compared to $98.9 million the fourth quarter of fiscal 2008. This equates to a gross profit margin of 39.9% for the fourth quarter of fiscal 2009, a 210 basis point improvement from a gross profit margin of 37.8% in the comparable period last year. This improvement reflects a 150 basis point improvement in shrinkage and scrap and a 70 basis point improvement in purchase cost margin. The Company believes that this improvement in gross margin is due to its focus on reducing spoilage and containing other shrinkage versus an abnormally high shrinkage reported in fiscal 2008 and new buying and merchandising initiatives. The improvement in purchase cost margin is also as a result of the full year effect of new pricing strategies including variable pricing that were implemented in the second half of fiscal 2008, and an increase in all of its price points by adding 99/100 of one cent to every price point (e.g. 99¢ increased to 99.99¢) implemented in September 2008. The pricing strategies increased gross profit, but were partially offset by a shift in the sales mix towards lower margin categories.

Non-Texas operating expenses were $98.6 million, or 33.0% of sales, in the fiscal 2009 fourth quarter versus $97.4 million, or 37.2% of sales, in the fourth quarter of the prior year. The Company's improved operating expense ratio is a result of across the board decreases in the components of operating expense. This is a key objective in the Company's profit improvement plan. A primary driver of this improvement is decreased store labor costs despite minimum wage increases in Arizona and Nevada, reflecting higher labor productivity, contributing to a decrease of 240 basis points in retail operating costs.