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What: 99 Cents Only Stores
So what: Competition in Texas was the main reason 99 Cents Only Stores revenues of $333.6 million missed analysts' estimates of $344 million. Large discounts by large food retailers accounted for the increase in competition.
Now what: Larger retailers appear to be discounting aggressively in certain markets after years of losing business to dollar store formats. Virtually flat same-store sales isn't a positive for 99 Cents Only Stores, but the company did beat its target of 20% pretax operating income growth. I would be cautious with the dollar format as consumers begin to trade up as the economy improves.
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Fool contributor Travis Hoium does not have a position in any company mentioned here. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.